Ask Question
21 May, 13:36

One of your customers has just made a purchase in the amount of $12,000. You have agreed to payments of $290 per month and will charge a monthly interest rate of 0.84 percent. How many months will it take for the account to be paid off?

+3
Answers (1)
  1. 21 May, 14:04
    0
    It will take 51 months.

    Explanation:

    As we know the constant payment of $290 monthly is the annuity payment to pay $12,000 with interest rate of 0.84% per month. The Number of Months can be calculated by following formula.

    Loan amount = PV = $12,000

    Rate of interest = r = 0.84 %

    Monthly Payment = P = $290

    PV of annuity = P x [ (1 - (1 + r) ^-n) / r ]

    $12,000 = $290 x [ (1 - (1 + 0.84%) ^-n / 0.84% ]

    $12000 x 0.84% / $290 = 1 - (1 + 0.84%) ^-n

    0.347586 = 1 - (1 + 0.84%) ^-n

    0.347586 - 1 = - (1 + 0.84%) ^-n

    -0.652414 = - (1 + 0.84%) ^-n

    1 / 0.652414 = 1.0084^n

    1.532769 = 1.0084^n

    Log 1.532769 = n x log 1.0084

    n = Log 1.532769 / log 1.0084

    n = 51
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “One of your customers has just made a purchase in the amount of $12,000. You have agreed to payments of $290 per month and will charge a ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers