Eric must pay off a loan of $3,500 in 5 years. Use the appropriate formula to find the amortization payment he would need to make each six months, at 12% interest compounded semiannually

Given:

Principal = 3,500

term = 5 years

interest rate = 12%

compounded semi-annually

A = P (1 + r/n) ^nt

A = 3,500 (1 + 12%/2) ²ˣ⁵

A = 3,500 (1 + 0.06) ¹⁰

A = 3,500 (1.06) ¹⁰

A = 3,500 (1.79)

A = 6,265

5 years * 2 = 10 semi-annual payments

6,265 / 10 = 626.50 amortization payment.