SOLUTION: A mortgage is taken for GH�10,000 and is repaid by annual installments of GH�2,000. Interest is charged on the outstanding debt at 10% calculated annually. If the first repayment i

Question 1121367: A mortgage is taken for GH�10,000 and is repaid by annual installments of GH�2,000. Interest is charged on the outstanding debt at 10% calculated annually. If the first repayment is made one year after the mortgage is taken out. Find the number of years it takes for the mortgage to be repaid.
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
mortgage is 10,000.
payments are 2,000 at the end of every year.
interest rate is 10% compounded annually.

you can do this manually or you can use a financial calculator.

i used this calculator at https://arachnoid.com/finance/

here's my results.

$$$

your inputs will be.....

pv = -10000
fv = 0
np = clear or leave as is because this is what we want to find.
pmt = -2000
ir = 10
pay at end

click on np and the calculator tells you that it will take 7.27 years to pay off the loan.

what this means is that:

at the end of the 7th year you still have a remaining balance.

therefore it takes you 8 years to pay off the loan.

here's the year by year calculations using excel.

$$$

for the calculator.....

pv is positive because this is what you receive from the bank.
pmt is negative because this is what you send to the bank.
interest rate is in percent form.

for excel, the interest rate is in decimal form.
percent form = 10
decimal form = .10
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