The accurate amount regarding the monthly payment of a loan of $7500 will be $216.11 for a period of 60 months or 5 years. Any of the options given in the statement quoted is not correct.
The compounded monthly payment will happen over a span of 5 years on the amount of principal as well as the interest accrued over such loan amount at the rate of 11%.
- Compound Interest is also referred to as the payment of interest which accrued over the interest accrued over the principal amount of such loan by the way of compounding at regular intervals.
- The formula for calculation of compounded interest is as follows,
- [tex]\rm Compound\ Interest = P(1+ \dfrac{r}{n})^n^t[/tex]
- We will put the given values in the formula to obtain the values as under,
- [tex]\rm Compound\ Interest = \$7500(1+ \dfrac{0.11}{12})^1^2\ ^x\ ^5\\\\\\\rm Compound\ Interest = \$7500(1.009)^6^0\\\\\\ \rm Compound\ Interest = $12966.87[/tex]
- The interest paid in total will be divided by number of monthly payments to derive the values as,
- [tex]\rm Compounded\ Monthly\ Payments= \dfrac {Amount\ Accrued}{no.\ of\ Months}\\\\\\\rm Compounded\ Monthly\ Payments=\dfrac{12966.87}{60}\\\\\\\rm Compounded\ Monthly\ Payments=$216.11[/tex]
- So, we have derived that a compounded monthly payment of $216.11 needs to be done.
Hence, the correct relevant amount for the payment of monthly loan repayment $216.11 will be paid monthly.
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