Question

You took out some student loans in college and now owe $14,000. You consolidated the loans into one amortizing loan, which has' an annual interest rate of 7% (APR). If you make monthly payments of $200, how many months will it take to pay off the loan? Fractional values are acceptable.

Answer 1

It will take approximately 81 months to pay off the loan.

Step-by-step explanation:

To calculate the number of months it will take to pay off the loan, we need to use the amortization formula. The formula is:

Number of months = -(log(1 - (loan amount * monthly interest rate) / monthly payment) / log(1 + monthly interest rate))

In this case, the loan amount is $14,000, the monthly interest rate is (7% / 12), and the monthly payment is $200. Plugging in these values into the formula, we get:

Number of months = -(log(1 - (14000 * (7% / 12)) / 200) / log(1 + (7% / 12)))

Using a calculator, the answer is approximately 80.93 months. Therefore, it will take about 80.93 months (or approximately 81 months) to pay off the loan.