Question

Please show your work with the formulas written out. Please answer as if you can not use a calculator, or only use a four function calculator (because that is how I have to learn it). Do not just put down the calculator keystrokes I need to see every step and number to learn how to do it.

17. If you borrow $25000 and repay $800 monthly at a rate of 6%, how many months will it take to repay the loan?

Answer 1

We can consider it as a annuity,

Present Value of Annuity = P/r[1 - (1 + r)^-n]

25,000 = 800/(0.06/12)[1 - (1 + 0.06/12)^-n]

Solving for n,

N = 34 months

So,

Time Period = 34 months