To find the final monthly payment required to pay off a loan with $1600 remaining principal and a 12% annual interest rate, you can use the formula for calculating monthly loan payments.
1. Convert the annual interest rate to a monthly rate by dividing it by 12:
Monthly Interest Rate = Annual Interest Rate / 12
Monthly Interest Rate = 12% / 12 = 1% or 0.01
2. Determine the number of monthly payments remaining by considering the remaining principal and the monthly payment:
Remaining Principal = Monthly Payment * Number of Payments Remaining
3. Use the formula for calculating monthly loan payments to find the final monthly payment:
Monthly Payment = Principal * (Monthly Interest Rate * (1 + Monthly Interest Rate)^Number of Payments) / ((1 + Monthly Interest Rate)^Number of Payments - 1)
4. Plug in the values:
$1600 = Monthly Payment * ((0.01) * (1 + 0.01)^Number of Payments) / ((1 + 0.01)^Number of Payments - 1)
5. Solve for the final monthly payment amount by trial and error, adjusting the monthly payment value until you reach $1600 as the remaining principal.
6. Round the final monthly payment to the nearest cent.
By following these steps, you can determine the final monthly payment required to pay off the loan with $1600 remaining principal and a 12% annual interest rate.
