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One of your customers is delinquent on his accounts payable balance. You've mutually agreed to a...

One of your customers is delinquent on his accounts payable balance. You've mutually agreed to a repayment schedule of $500 per month. You will charge 1.40 percent per month interest on the overdue balance. If the current balance is $13,000 how long will it take for the account to be paid off?

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Answer #1

Information provided:

Present value= $13,000

Monthly repayment= $500

Interest rate= 1.40% per month

The time to payoff the account is calculated by entering the below in a financial calculator:

PV= -13,000

PMT= 500

I/Y= 1.40

Press the CPT key and N to compute the time taken to payoff the account.

The value obtained is 32.55.

Therefore, the time taken to payoff the account is 32.55 months or 32.55/12= 2.71 years.

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

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