What is the formula to determine how much to pay on a loan?

The correct formula to determine how much to pay on a loan actually focuses on understanding the total cost of the loan rather than the specific options provided. When evaluating the options, the formula that would best serve the purpose of calculating the total payment on a loan involves considering the principal, interest, and any additional costs or down payments involved in purchasing an asset.

Selection B suggests that the purchase rate multiplied by the sales tax rate, minus the down payment, equals the amount of the loan. This implies that the final loan amount takes into account the necessary adjustments for the down payment and taxes related to the purchase. However, a more relevant formula for determining total payments would typically consider the total repayment over the duration of the loan, including interest.

The most relevant option detailing how to calculate payments is not directly provided among the choices. For real-world application, when determining how much to pay on a loan, one would typically look at the loan amount, the interest rates, and the payment duration to compute the overall payment using formulas derived from amortization schedules.

For clarity, typical structures would include:

1. Total Amount of Loan = Price of the purchase - Down Payment

2. Total Payment = Monthly Payment x Number of Payments (where monthly payments include principal and