Question

​(Annuity number of​ periods) Alex Karev has taken out a ​210,000$ loan with an annual rate of 9 percent compounded monthly to pay off hospital bills from his wife​ Izzy's illness. If the most Alex can afford to pay is ​$2,500 per​ month, how long will it take to pay off the​ loan? How long will it take for him to pay off the loan if he can pay ​$3,000 per​ month? Use five decimal places for the monthly percentage rate in your calculations

a. If alex can pay $2,500 per month, the number of years it takes for him to pay off the loan is __ years. (round to nearest decimal place)

Answer 1

solution :

a) alex can pay $2,500 per month

given loan amount ( pv) = 210000

annual rate = 9%

monthly rate = 9%/12

pmt = 2500

years taken to pay loan =NPER(0.09/12,-2500,210000)

= 133.06 months

years = 133.06/12 = 11.08 years

years taken to pay the loan = 11.08 years

alex can pay $3000 per month

loan amount ( pv) = 210000

annual rate = 9%

monthly rate = 9%/12

pmt = 3000

years taken to pay loan =NPER(0.09/12,-3000,210000)

= 99.63 months

years = 99.63/12 = 8.3 years

years taken to pay the loan = 8.3 years