Question

find the final monthly payment required to pay off a loan with $1,200 remaining principal and a 15% annual interest rate. $? round to the nearest cent.

Explanation:

Step1: Determine monthly interest rate

The annual interest rate is 15%, so the monthly interest rate \( r \) is the annual rate divided by 12.
\( r=\frac{0.15}{12}=0.0125 \)

Step2: Calculate monthly payment (assuming 1 - month payoff)

If we are paying off the loan in one month, the monthly payment \( M \) will be the principal plus the interest for one month. The formula for the amount owed after one month is \( A = P(1 + r) \), where \( P=\$1200 \) and \( r = 0.0125 \).
\( M=1200\times(1 + 0.0125)=1200\times1.0125 = 1215 \)

Answer:

\$1215.00