Calculating the Loan Payment on a Slmple-Interest Installment Loan Installment loans allow borrowers to repay the loan with periodic payments over time. They are more common than single-payment loans because It Is easler for most people to pay a fixed amount perlodically (usually monthly) than budget for paying one blg amount in the future. Interest on Instaliment loans may be computed using the simple interest method or the add-on method. For an Installment Ioan using simple Interest and equal payments throughout the life of the Ioan, a portion of each repayment is dedicated to the princlpal and a portion to the interest. Remember that interest is charged only on the outstanding balance. This means that as each payment is made, more of It Is allocated to The following table lists the monthly installment payment amounts required to repay $1,000 over varlous time frames and at varlous flxed-interest rates. The payment is the same each month, and the allocation between principal and Interest is always Monthly Installment Loan Payments to Repay a $1,000, Slmple Interest Loan To estimate the required monthly payment amount for an Installment loan, divide the amount to be borrowed by 1 ,000 and multiply the result by the appropriate flgure from the table. Suppose that you are repaying an automoblle Ioan In the amount of $23,000. The rate of Interest on the Ioan is 14%, and you have agreed to pay back the loan In 72 monthly payments. Using the values in the preceding table, complete the following steps to calculate the required monthiy payment amount for this loan. Step 1: Divide the amount of the loan by 1,000 . Dividing $23,000 (loan amount) by 1,000 glves you a value of Step 2: Use the rate of Interest and the number of monthly payments to identify the appropriate flgure to use from the table. In this case, the rate of Interest is 14%, and the loan requires 72 monthly payments. Therefore, the relevant amount from the table is \$ Step 3: Multiply your answer from Step 1 by the approprlate value from the table cell (from Step 2). This gives you a required monthly payment amount of $ Calculate your total payments and finance charge by completing the following table. (Note: Enter all figures as positive numbers to two decimal places.) Total Payments $ Loan Amount $23,000.00 Finance Charge \$