High School

A loan of $2500 taken out on April 2 requires equal payments on May 25, July 20, September 10, and a final payment of $500 on October 15. If the focal date is October 15, what is the size of the equal payments at 9% simple interest?

Answer :

The size of the equal payments at 9% simple interest is approximately $778.

To find the size of the equal payments, we need to calculate the interest on the loan and distribute it evenly across the payment periods.

first, let's calculate the interest charged on the loan. the loan amount is $2500, and the interest rate is 9%. the time period from april 2 to october 15 is approximately 6.5 months.

interest = principal * rate * time

interest = $2500 * 0.09 * (6.5/12)

interest = $2500 * 0.09 * 0.5417

interest = $113.96 (rounded to the nearest cent)

next, we need to distribute the interest and the principal equally across the four payments, with a final payment of $500 on october 15.

equal payments = (principal + interest) / number of payments

equal payments = ($2500 + $113.96 + $500) / 4

equal payments = $3113.96 / 4

equal payments = $778.49 (rounded to the nearest cent) 49.

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