Based on your answer below, what is the monthly payment to pay back a $1000 over

Question

Based on your answer below, what is the monthly payment to pay back a $1000 over 5 equal monthly payment @ 12% stated interest rate?

Effective rates are usually higher compared to the stated rate of interest. If I had a savings account with a stated rate percentage, and my bank compounds my interest daily; this would double the interest on my account. The purpose of the effective rate is to compare accounts with different terms. For example, accounts compounded daily, monthly, quarterly and annually.

Explanation / Answer

monthly rate = 12/12= 1%

payback = $1000*(1+0.01*5)= $1050

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