The following table shows your monthly payment P, in dollars, if you pay off a loan in months.

Which formula below fits these data?
A) $P = \frac { 5099 } { t }$
B) $P = \frac { 50.99 \times 1.01 ^ {t } } { 1.01 ^ { t } - 1 }$
C) $P = \frac { 5099 \times ( 1.01 ) ^ { t } } { t - 1.01 }$
D) None of the above

Question

The following table shows your monthly payment P, in dollars, if you pay off a loan in  months.

Which formula below fits these data?
A) $P = \frac { 5099 } { t }$ 
B) $P = \frac { 50.99 \times 1.01 ^ {t } } { 1.01 ^ { t } - 1 }$ 
C) $P = \frac { 5099 \times ( 1.01 ) ^ { t } } { t - 1.01 }$ 
D) None of the above

Quizplus · Accepted Answer

The formula for monthly payments for a loan with interest compounded monthly is given by P = (rP)/(1-(1+r)^(-nt)), where r is the interest rate per month, P is the principal, n is the number of payments, and t is the time in months. This formula can be simplified by letting x = (1+r) and t = number of payments. By doing this, we get the formula P = (Px)/(x^t-1), which is the same form as option B. Therefore, option B is the correct formula for the given data.

The Following Table Shows Your Monthly Payment P, in Dollars P=5099tP = \frac { 5099 } { t }P=t5099​

The Following Table Shows Your Monthly Payment P, in Dollars $P = \frac { 5099 } { t }$