Question

Lush Gardens Co. bought a new truck for $58,000. It paid $5,220 of this amount as a down payment and financed the balance at 4.49% compounded semi-annually. If the company makes payments of $1,600 at the end of every month, how long will it take to settle the loan? (Express the answer in years and months, rounded to the next payment period)

Answer 1

It will take approximately 33 months, or 2 years and 9 months, to pay off the loan.

Step-by-step explanation:

To calculate the time it will take to settle the loan, we need to find the number of months required to pay off the remaining balance after the down payment. The balance after the down payment is $58,000 - $5,220 = $52,780. Given a monthly payment of $1,600, we can divide the remaining balance by the monthly payment to find the number of months: $52,780 / $1,600 = 32.9875 months.

Rounded to the next payment period, it will take approximately 33 months to pay off the loan. This is equivalent to 2 years and 9 months.