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If you borrow $31,000 today and your monthly payments are $943.08, how many payments must you...

If you borrow $31,000 today and your monthly payments are $943.08, how many payments must you make to pay off the loan if you are being charged 6%APR compounded monthly?

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Answer #1

Amount borrowed = $31,000
Monthly payment = $943.08

Annual interest rate = 6%
Monthly interest rate = 0.50%

Let it will take n months to pay off the loan

$31,000 = $943.08 * PVIFA(0.50%, n)

Using financial calculator:
I = 0.50%
PV = 31000
PMT = -943.08
FV = 0

N = 36

Number of monthly payments = 36

So, you must make 36 payments to pay off the loan.

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