Suppose you are borrowing $25,000 and making monthly payments with 1% interest. Show that the monthly payments should equal $556.11. The key relationships are that for any month t

(Ending month t balance)        = (Ending month t – 1 balance) – ((Monthly payment) – (Month t interest))

(Month t interest)                     = (Beginning month t balance) × (Monthly interest rate)

Of course, the ending month 60 balance must equal 0.