12.2 E-Z LOAN
A loan obtained from a lending institution is typically paid off over time using equal monthly payments over a term of many months. For each payment, a portion goes toward interest and the remaining amount is deducted from the balance. This process is repeated until the balance is zero. Interest is calculated by multiplying the current balance by the monthly interest rate, which is usually expressed in terms of an Annual Percentage Rate (APR). This process produces an Amortization Schedule where the amount applied to interest is gradually reduced each month and the amount applied to the balance grows. For example, the following amortization schedule is for a loan of $ 10.000 at an APR of 3.9% over a term of 30 months:3 will match months 12, 24, and 30 respectively.

The loan payment follows an amortization schedule where the amount applied to interest is gradually reduced each month and the amount applied to the balance grows.

The amounts to be paid is calculated using the amortization formula:

P = a ÷ {{[(1 + r/n)^nt] - 1} ÷ [r/n(1 + r/n)^nt]}

where

P is monthly payment
a is credit amount
r is the interest rate
t is the time in years
n is number of times the interest is compounded

For the loan of $10000;

a = $10000
r = 3.9% = 0.039
nt = 30 months

Hence,

P = $10000 ÷ {{[(1 + 0.039/12)^60] - 1} ÷ [0.039/12(1 + 0.0.039/12)^60]}

P = $350.39 per month

Total payment in 30 months = $350.39 × 30 = $10511.7

Therefore, the monthly payments will be $350.39 and the total payment in 30 months will be $10511.7.

Learn more about amortization schedule at: https://brainly.com/question/26433770