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(Annuity number of? periods) How long will it take to pay off a loan of $48,000 at an annual rate of 12 percent compounded monthly if you make monthly payments of $550?? Use five decimal places for the monthly percentage rate in your calculations
(Annuity number of? periods) How long will it take to pay off a loan of $48,000 at an annual rate of 12 percent compounded monthly if you make monthly payments of $550??
Use five decimal places for the monthly percentage rate in your calculations.
The number of years it takes to pay off the loan is nothing years. ?(Round to one decimal? place.)
Expert Solution
Answer :
Number of Years can be calculated using NPER function of Excel
=NPER(rate,pmt,pv,fv)
where
rate is the rate of interest per period i.e 12%/12 = 1%
pmt is the periodic monthly payments i.e 550
pv is the present value i.e 48000
fv will be taken as 0
=NPER(1%,550,-48000,0)
Therefore number of periods is 207.1713 months
The number of periods in years = 207.1713 / 12 = 17.3 years
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