Claude took out a 1-year loan for $1,500 at 10% interest per year. he must repay the loan plus interest in 12 equal installments. how much will each payment be?

Payments on an installment loan are usually calculated using the amortization formula:
  A = P(i/n)/(1 -(1 +i/n)^(-nt))
where P is the principal, i is the annual interest rate, n is the number of payments per year, and t is the number of years.

Putting the given information into this formula, you have
  A = 1500·(0.10/12)/(1 -(1 +0.10/12)^-12)
  A ≈ 131.87

If interest is paid only on the unpaid balance, each payment is $131.87.


Short term loans often have simple interest charged for the period of the loan. (Usually those are paid in one lump sum, not equal payments.) If simple interest on the full amount is charged for the whole period, then each payment will be $1500*(1+0.10)/12 = $137.50.

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