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Question 1011179: A pottery factory purchases a continuous belt conveyor kiln for $50,000. A 6.5% APR loan with monthly payments is taken out to purchase the kiln. If the monthly payments are $501, over what term is this loan being paid?
Select one:
1. 10 years
2. 11 years
3. 12 years
4. 13 years
Next
Found 2 solutions by Theo, MathTherapy:
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! monthly loan of 6.5% apr on 50,000 with a payment of 501 per month. leads to 12 years.
it's not exact, however, but it's the one that's closes to the answer.
the answer is 143.9828434.
divide that by 12 and you get 11.99857028.
round that off to the nearest integer and you get 12 years.
here's a picture of the results from the online calculator that i used.
i also used a texas instruments BA II Plus which gave me the same answer but carried it out to more decimal places than the online calculator did.
in the online calculator pictures, everything there is an input except for the number of periods.
that was the result after i pressed the np key.
the number of periods is in months.
the interest rate of 6.5% per year was divided by 12 to provide the monthly interest rate of 6.5/12 = .541666667% which the software showed as .541667.
the present value was entered as a positive value because that was money coming in.
this caused the payment to show up as a negative number because that was money going out.
the first picture below shows the inputs and the result.
the second picture below shows what the payment would be when the number of periods is equal to 144.
the payment was really 500.96 rather than 501.
the 501 was a rounded numbe of the actual payment.
in the first picture, all the fields are inputs except the number of periods field which is an output caused by pressing the np button.
in the second picture, all the fields are inputs except the the payment amount field which is an output caused by pressing the pmt button.
bottom line is your answer is 144 months which, when divided by 12 months in a year, yields 12 years.
Answer by MathTherapy(10549)  (Show Source):
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