Question

Suppose that you borrow Po dollars (called the principal) from a bank at I percent yearly interest and repay the amount in equal monthly installments of M dollars. (a) If P(t) is the money owed at time t, show that P(0) = Po and P(t + At) = P(t)(1 + n) — M. What is At and n? (b) For example, part of the first payment consists of Po I/n interest. How much of your first payment goes towards reducing the amount owed? (c) Solve the equation for P(t + iit). (d) How much should your monthly payments be if the money is to be completely repaid to the bank in N years ? (e) What is the total amount of money paid to the bank? (f) If you borrow $3000 for a car and pay it back monthly in 4 years at 12.5 percent yearly interest, then how much money have you paid in total for the car?

          Suppose that you borrow Po dollars (called the principal) from a bank at
I percent yearly interest and repay the amount in equal monthly installments of M dollars.
(a) If P(t) is the money owed at time t, show that P(0) = Po and
P(t + At) = P(t)(1 + n) — M.
What is At and n?
(b) For example, part of the first payment consists of Po I/n interest. How
much of your first payment goes towards reducing the amount owed?
(c) Solve the equation for P(t + iit).
(d) How much should your monthly payments be if the money is to be
completely repaid to the bank in N years ?
(e) What is the total amount of money paid to the bank?
(f) If you borrow $3000 for a car and pay it back monthly in 4 years at
12.5 percent yearly interest, then how much money have you paid in
total for the car?

Added by Elizabeth P.

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