Question

You have just received an offer in the mail from Friendly Loans. The company is offering to loan you $3,500 with low monthly payments of $60 per month. If the interest rate on the loan is an APR of 13.9 percent compounded monthly, how long will it take for you to pay off the loan? Multiple Choice 91.26 months 58.33 months 97.78 months 105.30 months 16.97 months

Answer 1

Ans 97.78 months

P =	Regular Payments
PV =	Loan Amount
r =	rate of interest
n =	no of periods
P =	r (PV)
	1 - (1 + r )-n
60 =	(13.9%/12)*3500
	1 - (1 / (1 + 13.9%/12)^n))
60 =	40.54166667
	1 - (1 / (1 + 13.9%/12)^n))
n =	97.78 months