Answer: $507.70
Step-by-step explanation:
1): Find how much money is added on to the loan at the end of the year
To find that we find 7.25% of $15,000.00 this is $1087.50
2): Now that we know how much is added on to the loan each year, we times that amount by 3, since it is a three-year-loan.
$3,277.50 + $15,000.00 = $18,277.50
3). Now we have the total amount of money that Rachel owes in the total 3 years, but the problem is asking us to find the monthly payment, so we have to divide this by 36 since there is 12 months in a year and this is a 3 year loan (3 x 12). Once you have divided this you get $507.70. Which is how much Rachel owes a month
