Problem:
Sarah buys a new dining room table for $12,000. Sarah puts a 5% down payment on the furniture. She finances the rest through her bank with a loan at 6% compounded monthly.
Required:
Question 1: What is the size of her down payment?
Question 2: What is her monthly payment if she will pay this loan off in 18 months?
Question 3: How much interest does she pay on this loan?
Note: Provide support for your underlying principle.