Brenda took out a personal loan for $12,000 at an interest rate of 12% compounded monthly. She made arrangements to pay the loan off in 5 years. What will her monthly payment be?

Answer: her monthly payments would be $267

Step-by-step explanation:

We would apply the periodic interest rate formula which is expressed as

P = a/[{ (1+r) ^n]-1}/{r (1+r) ^n}]

Where

P represents the monthly payments.

a represents the amount of the loan

r represents the annual rate.

n represents number of monthly payments. Therefore

a = $12000

r = 0.12/12 = 0.01

n = 12 * 5 = 60

Therefore,

P = 12000/[{ (1+0.01) ^60]-1}/{0.01 (1+0.01) ^60}]

12000/[{ (1.01) ^60]-1}/{0.01 (1.01) ^60}]

P = 12000/{1.817 - 1}/[0.01 (1.817) ]

P = 12000 / (0.817/0.01817)

P = 12000/44.96

P = $267