Lavonda took out a $7,500 loan with an APR of 6.875% and agreed to pay it back monthly over six years.      
How many monthly payments did she make?  
Correct answer:
72
What was the monthly payment?  
Incorrect answer:
114.53
What is the sum of all the monthly payments?  
Incorrect answer:
8,246.16
How much was paid in interest?  
Incorrect answer:
746.16

Let's break down each part of Lavonda's loan to find the correct answers.

### Given:
- Loan amount (Principal) = \$7,500
- Annual Percentage Rate (APR) = 6.875% or 0.06875
- Loan term = 6 years
- Monthly payments

First, we'll calculate the correct **monthly payment** using the formula for a fixed-rate loan:

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

Where:
- $ M $ = monthly payment
- $ P $ = loan principal = \$7,500
- $ r $ = monthly interest rate = $\frac{0.06875}{12} $
- $ n $ = total number of payments = $ 6 \times 12 = 72 $

Now, let's compute the monthly payment.

The correct **monthly payment** is approximately \$127.42.

### Now, let's calculate the **sum of all the monthly payments**:

\[
\text{Total payments} = M \times n
\]

Next, I'll compute the total amount paid.The total sum of all the monthly payments is approximately **\$9,174.09**.

### Finally, let's calculate the **total interest paid**:
\[
\text{Total interest} = \text{Total payments} - \text{Loan principal}
\]
I'll calculate the total interest now.The total **interest paid** over the course of the loan is approximately **\$1,674.09**.

### Summary:
1. Number of monthly payments: **72**
2. Monthly payment: **\$127.42**
3. Sum of all monthly payments: **\$9,174.09**
4. Total interest paid: **\$1,674.09**

Would you like further details or explanations on any of these calculations?

Here are 5 related questions to consider:
1. How would the monthly payment change if the APR was higher or lower?
2. How much interest would be paid if the loan term was only 3 years?
3. What happens to the monthly payment if Lavonda made extra payments each month?
4. How does a 15-year mortgage compare to a 6-year loan in terms of total interest paid?
5. What is the impact of refinancing this loan to a lower APR halfway through?

**Tip:** Always review the total interest paid on a loan before agreeing to the terms, as it can significantly increase the cost of the loan over time!

Lavonda took out a $7,500 loan with an APR of 6.875% and agreed to pay it back monthly over six years. How many monthly payments did she make? What was the monthly payment? What is the sum of all the monthly payments? How much was paid in interest?

Learn how to calculate the monthly payments, total payments, and interest paid on a $7,500 loan with a 6.875% APR over six years. Includes step-by-step explanation of loan amortization, suitable for high school students.

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