The monthly payments for this add on interest loan are of $164.71.
Given Information and Formula Used
It is given that for an add on interest loan,
Principal Amount, p = $8,276.17
Annual Interest Rate, r = 5.7%
Term of the loan, T = 5.5 years
The formula for simple interest is given as follows,
I = (p)(r)(t)/100 ............... (1)
The formula for total amount of add on interest is given by,
A = p + I ....................... (2)
Computing the Interest
Substitute the given values of p, r, and t in the formula (1) of interest to get,
I = (8276.17)(5.7)(5.5)/100
I = 259457.9295/100
I = $2,594.58
Computing the Monthly Payment for Add-on Interest Loan
Substituting the values of p and I in the formula (2), we obtain the total amount as,
A = $ (8276.17 + 2594.58)
A = $ 10,870.75
Monthly payment for the add on interest loan = A/t(in months)
= $ (10,870.75/66)
= $164.71
Therefore, monthly payments of $164.71 are to be made for the add on interest loan.
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