Question

1. Kristina took out a bank loan for $60,000 that must be repaid with regular monthly payments of $1100. The bank charges her an interest rate of 3.0% compounded monthly a) How many payments will Kristina have to make to pay off the loan. N=? I= ?PV = ?PMT= ? FV=? P/Y = ?C/Y =? END BEGIN b) How much interest will Kristina Pay? ​

Answer 1

• See below

Explanation:

Given:

• Loan amount PV = $60000
• Interest rate r = 3% PA
• Time t = x years
• Number of compounds n = 12
• Monthly payment PMT = $1100

FV is:

• 60000*(1 + (3/100)/12)^(12x) = 60000*(1.0025)^(12x)

Which is same as total payment:

• 1100*12*x

Solve the following by graphing:

• 60000*(1.0025)^(12x) = 1100*12*x

See attached

The solution is:

• x = 5.333 = 5 1/3 years = 5 years 4 months = 64 months

Total payment:

• FV = $70 395.95

The amount of interest:

• I = FV - PV = 70395.95 - 60000 = $10395.95