Question

Jordan got a loan from her mom for school at $11,000 at 4% interest, compounded monthly. If she pays off $200 per month, how long will it take to pay off the loan? ________ months, or about _______ years. ?

Answer 1

61 months, about 5.07 years

Explanation:

You want the time it takes to pay off a loan of $11,000 at 4% compounded monthly when the payment is $200 per month.

Number of payments

The number of payments required can be found by solving the amortization formula, or using any spreadsheet, financial calculator, or suitable app.

The attachment shows the number of months required is about 60.9.

It will take 61 months, or about 5.07 years to pay off the loan.

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Additional comment

The formula for the number of monthly payments on a loan amount of P at interest rate r with monthly payments of A is ...

`N = -\frac{\log{\left(1-(Pr)/(12A)\right)}}{\log{\left(1+\frac{\vphantom{R}r}{12}\right)}}`