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Question:

Bryan agrees to pay back a $50,000 loan over a 10-year period. If the interest rate is 8%, what will his monthly payments be?

A
$450

Explaination

The interest on a $50,000 loan is $50,000 × 8% = $4,000. The amount that must be paid back is $50,000 + $4,000 = $54,000. There are 120 months in 10 years. If this is to be paid over a 10-year period, each monthly payment will be $54,000/120 =$450.