|
Question 1104578: Help please!!!
A line of credit at 15% interest compounded monthly, with a monthly payment of $60
a) How long will it take to pay off the loan?
b) What is the total paid back?
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! you need to know how much is borrowed.
otherwise you can't figure this out.
15% per year compounded monthly results in a percent interest of 15/12 each month.
at that monthly percent interest, with monthly payments of 60 dollars, the maximum amount of the loan has to be less than 4800.
you won't know how many months are required to repay the loan unless you know what the loan amount is.
for example:
if the loan was for 1000, then the number of months to repay the loan is equal to 18.8057 truncated to 4 decimal places.
if the loan was for 2000, then the number of months to repay the loan is equal to 43.3886 truncated to 4 decimal places.
if the loan was for 3000, then the number of months to repay the loan is equal to 78.9557 truncated to 4 decimal places.
if the loan was for 4000, then the number of months to repay the loan is equal to 144.2347 truncated to 4 decimal places.
if the loan was for 4800, then the number of months to repay the loan would be infinite since the payments would only be enough to pay off the interest of the loan and would therefore not be able to reduce the principal of the loan.
if the loan was for greater than 4800, then the number of months to repay the loan would be infinite and the payments would not be enough to pay off the interest of the loan, so the interest on the loan would keep growing and therefore the amount that would have to be paid back would also keep growing.
so, the maximum amount of the loan would have to be 4800 with infinite months to repay.
anything less than 4800 would require a specified number of months to repay.
at 4799, the number of months required to pay off the loan would be equal to 682.3391 truncated to 4 decimal places.
682 / 12 = 56 years.
nobody loans you money for that long.
a line of credit is not a fixed loan.
when you get a line of credit, it's there for you to use when you need it, but you don't pay any interest on it until you actually borrow the money.
in this particular case, the line of credit would have to be less than or equal to 4800.
if you borrowed the full amount, you would never pay it off unless you gave more money than 60 dollars a month, such as an infusion of cash at any point in time to reduce the principal to the point where the next can be payid off.
not exactly sure what you're asking, or if you mean line of credit, but in either case, you have no idea how long it takes to pay it off unless you know the value of what was borrowed, and the value of what was borrowed has to be less than 4800 or the loan would never be paid off.
here's a reference on line of credit and what it means.
http://www.bankrate.com/finance/loans/personal-loan-line-of-credit.aspx
|
|
|
| |
