Question

Paul obtained a loan of $15,000 at 6.50% compounded monthly. How long will it take to settle the loan with payments of $1,000 at the end of every month? years months

Answer 1

It will take approximately 21 years and 11 months to settle the loan.

Step-by-step explanation:

To calculate the time it will take to settle the loan, we can use the formula:

n = log(1+r)((P*r) / (P*r - A))

Where:
n is the number of periods, in this case, months
P is the principal amount, which is $15,000
r is the monthly interest rate, which is 6.50% or 0.065
A is the monthly payment amount, which is $1,000

Plugging in the values:
n = log(1+0.065)((15000*0.065) / (15000*0.065 - 1000))

After calculating, we find that n ≈ 21.98. Therefore, it will take approximately 21 years and 11 months to settle the loan.