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Bell took aloan of RM30000 from a financial department that charges 4.8% compounded monthly. Find the number of payments required if he has to pay back RM480 every month in order to settle the loan.

User Follyroof
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Final answer:

To find the number of payments required, we can use the formula for the future value of an ordinary annuity. Plugging in the given values, we find that the number of payments required is approximately 86.

Step-by-step explanation:

To find the number of payments required, we have to use the formula for the future value of an ordinary annuity:

FV = P * ((1 + r)^n - 1) / r

Where FV is the future value, P is the monthly payment, r is the monthly interest rate, and n is the number of payments.

In this case, the future value is the loan amount of RM30,000, the monthly payment is RM480, and the monthly interest rate is 4.8% / 12 = 0.04.

Plugging in these values, we get:

30,000 = 480 * ((1 + 0.04)^n - 1) / 0.04

Simplifying and solving for n, we get:

n = log(30,000 * 0.04 / 480 + 1) / log(1.04)

Using a calculator, we find that n is approximately 85.13. Since we can't have fractional payments, the number of payments required is 86.

User Erik Kalkoken
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