Fresh Linens wishes to pay off a debt of \( \$ 15,000 \) in 2 years. What amortization payment would they need to make every month, at \( 12 \% \) interest compounded monthly? (Use Table \( 12-2 \). ) Select one: a. \( \$ 625.00 \) b. \( \$ 664.81 \) c. \( \$ 684.10 \) d. \( \$ 706.10 \) Clear my choice
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To find the monthly amortization payment needed to pay off a debt of $15,000 in 2 years at a 12% interest rate compounded monthly, you can use the formula for monthly payments on an amortizing loan, which is \( M = P \times \frac{r(1+r)^n}{(1+r)^n - 1} \). Here, \( P \) is the principal ($15,000), \( r \) is the monthly interest rate (12% annual rate, or 1% monthly), and \( n \) is the total number of payments (24 months for 2 years). Plugging in the values will yield one of the provided options. The payment calculated would be approximately $706.10, making option (d) the correct answer. That means Fresh Linens would need to set aside a nice chunk of change each month to take care of that debt!