Question

How long will it take to pay off a loan of $55,000 at an annual rate of 9 percent compounded monthly if you make monthly payments of $650 ? Use five decimal places for the monthly percentage rate in your calculations.

 ​(Round to one decimal​ place.)

Answer 1

Information provided:

Present value= $55,000

Interest rate= 9%/12= 0.75% per month

Monthly payment= $650

The time to pay off the loan is calculated by entering the below in a financial calculator:

PV= -55,000

I/Y= 0.75

PMT= 650

Press the CPT key and N to calculate the time to pay off the loan.

The value obtained is 134.7434.

Therefore, the time to pay off the loan is 134.7434 months or 134.7434/12= 11.2286 years11.2 years.

In case of any query, kindly comment on the solution.