SOLUTION: You want to borrow $600,000 to buy an apartment, and you can only afford $4,000 a month to repay the loan. The bank charges you a fixed interest rate of 4% with monthly compounding

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Question 1201798: You want to borrow $600,000 to buy an apartment, and you can only afford $4,000 a month to repay the loan. The bank charges you a fixed interest rate of 4% with monthly compounding.
Required:
How long will it take you to pay off the loan?
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
using the texas insruments business analyst 2 calculator, the length of the loan is shown as 208.2905355 months required to pay off the loan.
round to the next higher integer to get 209 months.
divide by 12 to get 17 years and 4 months.
your last payment will be a partial payment, i.e. not the full 4000 dollars.
i used excel to show you what happens at the beginning and the end of the loan.
based on excel, your last payment probably be equal to 1163.514348, payable at the end of of month 209.
here's what the beginning of payments looks like and what the end of payments looks like in excel.





as the loan progresses, the interest part of the payment decreases and the equity part of the payment increases.

the sum of the equity is equal to the original value of the loan.