The monthly payments for each add-on interest loan is computed to be $29.71.
Given Information and Formula Used
Principal Amount of the loan, P = $1150
Rate of Interest of the loan, R = 6%
Term of loan in years, T = 4
The formula for simple interest is given as follows,
I = (P × R × T)/100
The formula for amount of add-on interest loan is given by, A = P + I
Calculating the Interest of the Loan
Interest of the loan, I = (P × R × T)/100
Now, substituting the given values of P, R, and T in the above formula, we get,
I = $ (1150 × 6 × 4)/100
I = $ 27600/100
I = $276
Calculating the Total Monthly Payment for the Loan
Amount of loan, A = P+I
A = $1150 + $276
A = $1426
Monthly payment of the loan with interest = A/(4×12)
= $ 1426/48
= $29.71
Thus, the monthly payments for each add-on interest loan comes out to be $29.71.
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