What amortization payment would you need to make every month, at \( 12 \% \) interest compounded monthly, to pay off a loan of \( \$ 8,500 \) in 3 years? (Use Table 12-2.) Select one: a. \( \$ 3,538.97 \) b. \( \$ 282,32 \) e. \( \$ 197.32 \) d. \( \$ 279.53 \)

To find the correct monthly amortization payment for a loan of \( \$ 8,500 \) at an interest rate of \( 12\% \) compounded monthly over 3 years, we can use the formula for monthly payments on an amortization schedule, or refer to an amortization table. Using the formula, the monthly payment \( M \) can be calculated using: \[ M = P \frac{r(1 + r)^n}{(1 + r)^n - 1} \] where: - \( P = 8,500 \) - \( r = \frac{0.12}{12} = 0.01 \) (monthly interest rate) - \( n = 3 \times 12 = 36 \) (number of payments) Plugging in the values will yield the required monthly payment. When calculated, it results in around \( \$ 282.32 \), making the answer \( b. \) This formula reflects a standard approach to managing loans and emphasizes the importance of planning and understanding your financial obligations. Different loan terms can vastly affect the total cost, so it’s always wise to compare options. Have you ever considered how many payments would be left if you were to pay more than the minimum monthly amount? For example, making a few extra payments can significantly reduce the interest paid over the loan term and help you pay off debt sooner! Always keep an eye on your loan details and don’t hesitate to explore your options.