Megan borrowed $50,000 at 5% simple interest for 6 years. Joseph borrowed $60,000 at 4% simple interest for 8 years. The formula m= p+prt/12t can be used to calculate the monthly payment, m, where P is the principle amount borrowed, r is the rate expressed as a decimal, and t is the amount of time for the loan, in years. Who will have a greater monthly payment, and by how much?
Answers
Megan will pay a greater monthly payment by approximately $78 per month.
Monthly payment m = (p + prt) / (12t)
According to the formula Megan pays
m = (50,000 + (50000)(.05)(6) / 12(6)
m = 50000 + 15000 / 72
m = 65000/72
m = 902.78
According to the formula Joseph pays
m = (60000 + (60000)(.04)(8) / 12(8)
m = 60000 + 19200 / 96
m = 79200/96
m = 825
So Megan pays 902.7-825 = 77.78 (approximately 78) more per month .
Answer:
Megan will have a greater monthly payment by $77.78
Step-by-step explanation:
We have the formula already so we will fix the values and work out.
Megan
m = [(P + Prt)/12t]
In this case:
P = $50000
r = 5/100 = 0.05
t = 6 years
m = [(50000 + 50000 × 6 × 0.05)]/12 × 6
m = [(50000 + 15000)]/72
m = 65000/72 = $902.78
Joseph
m = [(P + Prt)]/12t
Doing the substitution we have:
m = [(60000 + 60000 × 0.04 × 8)]/12 × 8
m = (60000 + 19200)/96
m = $825
Megan will have a greater monthly payment by:
= $902.78 - $825 = $77.78