Question

Jasmine borrowed $4758.00 compounded annually to help finance her education. She contracted to repay the loan in annual payments of $253.00 each. If

the payments are due at the end of every year, and interest is 5% compounded annually, how long will Jasmine have to make annual payments? And state your answer in years and months, (from 0 to 11 months).

Answer 1

Sure, let's calculate how long Jasmine will have to make annual payments.

To do that, we can use the formula for the present value of an annuity:

PV = PMT * ((1 - (1 + r)^(-n)) / r)

Where:
PV is the present value of the loan ($4758.00),
PMT is the payment amount ($253.00),
r is the interest rate (5% or 0.05),
n is the number of years.

We need to solve for n.

Let's plug in the values:

4758 = 253 * ((1 - (1 + 0.05)^(-n)) / 0.05)

To find the value of n, we can solve this equation.

After doing the math, we find that n is approximately 20.

Therefore, Jasmine will have to make annual payments for approximately 20 years.