SOLUTION: I really hate giving up here, but I can't figure out how to apply the formula and the instructor isn't answering my emails-- How long (in years) will it take to pay off a $3000

Question 921527: I really hate giving up here, but I can't figure out how to apply the formula and the instructor isn't answering my emails--
How long (in years) will it take to pay off a $3000 loan with monthly payments of $135.14 if the add-on interest rate is 5.1%?

Answer by jim_thompson5910(35256) (Show Source): You can put this solution on YOUR website!
The total amount paid back B, is given by this formula

P = principal
I = interest

-------------------------------------------------------

Let t = time in months

Each monthly payment is $135.14. This is given.

Because each monthly payment is $135.14, this means that a total of dollars will be paid back. This is the principal plus interest.

So,

-------------------------------------------------------

Because the add-on interest rate is 5.1%, this means that you are paying 5.1% of the principal in interest every year.

Each year, you pay 5.1% of $3000 = 0.051*3000 = 153 dollars in interest alone.

There are t months in the loan. So there are years in the loan.

You therefore, pay a total of dollars in interest alone over the entire loan.

-------------------------------------------------------

We are given

-------------------------------------------------------

Plug the following

into the formula to get...

Now solve for t

Multiply both sides by 12 (to clear out the fraction).

So it will take approximately 24.5118065201406 months. Round this up to the nearest month to get

Now convert 25 months to years

25 months = 25/12 = 2.08333333333333 years

============================================================================

Answer:

25 months

that is equivalent to

2 years, 1 month

that is equivalent to

2.08333333333333 years (approximate)

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Let me know if that helps or not. Thanks.

If you need more help, feel free to email me at jim_thompson5910@hotmail.com

My Website: http://www.freewebs.com/jimthompson5910/home.html

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