To calculate Tomasz's monthly payments for the loan, we use the formula for the monthly payment of a loan with compound interest:

$M = \frac{P \cdot r \cdot (1 + r)^n}{(1 + r)^n - 1}$

Where:

• $M$ is the monthly payment.
• $P$ is the loan amount (principal) = 8800.
• $r$ is the monthly interest rate (annual rate divided by 12 months).
• $n$ is the total number of payments (loan term in months).

Step 1: Convert the annual interest rate to a monthly interest rate.

The annual interest rate is 2.6%, so the monthly interest rate $r$ is:

$r = \frac{2.6\%}{12} = \frac{0.026}{12} = 0.0021667$

Step 2: Calculate the total number of payments.

Since the loan term is 3 years, the total number of payments $n$ is:

$n = 3 \times 12 = 36 \text{ months}$

Step 3: Plug the values into the formula.

$M = \frac{8800 \cdot 0.0021667 \cdot (1 + 0.0021667)^{36}}{(1 + 0.0021667)^{36} - 1}$

Now, I'll calculate the monthly payment.

Tomasz's monthly payment is approximately $254.37.

Would you like further details on how the calculations work or have any other questions?

Here are 5 related questions to explore:

1. How does changing the interest rate affect the monthly payment?
2. What would be the total amount paid after 3 years?
3. How much interest will Tomasz pay over the life of the loan?
4. How would a shorter loan term affect the monthly payment?
5. What if Tomasz makes an extra payment every year—how would that impact the loan?

Tip: Making additional payments toward the principal can reduce the total interest paid over the life of the loan.