Exercise 2 For a debt to be settled of $12,000, determine the value equivalent of 3 monthly payments due. The interest rate is 30% annual compounded monthly.

**Step 1:** Convert the interest rate from percentage to decimal.

r = 0.025

**Step 2:** Use the formula to calculate M .

M = 12000 \times \frac{0.025(1+0.025)^3}{(1+0.025)^3 - 1}

M = 12000 \times \frac{0.025(1.025)^3}{(1.025)^3 - 1}

M = 12000 \times \frac{0.025 \times 1.07576}{1.07576 - 1}

M = 12000 \times \frac{0.026894}{0.07576}

\boxed{M \approx 4201.65}

**Answer:** The monthly payment required to settle the debt of $12,000 with an annual interest rate of 30% compounded monthly over three months is approximately $4,201.65.