The monthly loan payment should be $168.75.
Calculation of the monthly loan payment;
Since Ally is buying a speed boat for $10,000 with a down payment of $2,500. The bank approved a simple interest flat rate loan for 5 years at 7% APR.
The net principal should be
= $10,000 - $2,500
= $7,500
Now simple interest should be
= $7,500(5)(7%)
= $2,625
Now the total amount should be
= $7,500 + $2,625
= $10,125
Now the monthly payment is
[tex]= 10125\div (12\times 5)\\\\= 10125 \div 60[/tex]
= $168.75
Therefore, The monthly loan payment should be $168.75.
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