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Lush Gardens Co. bought a new truck for $52,000. It paid $5,200 of this amount as...

Lush Gardens Co. bought a new truck for $52,000. It paid $5,200 of this amount as a down payment and financed the balance at 5.21% compounded semi-annually. If the company makes payments of $1,600 at the end of every month, how long will it take to settle the loan?

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Answer #1

Information provided:

Price of new truck= $52,000

Down payment= $5,200

Mortgage= $52,000 - $5,200= $46,800

Interest rate= 5.21%/12= 0.4342% per month

Monthly payment= $1,600

The time taken to settle the loan is computed by entering the below in a financial calculator:

PV= -46,800

I/Y= 0.4342

PMT= 1,600

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

The value obtained is 29.25.

Therefore, the time taken to settle the loan is 29.25 months or 29.25/12= 2.44 years.

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

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