You owe $30,000 and want to pay it off at $500 per month

Finance Aug 22, 2020

You owe $30,000 and want to pay it off at $500 per month. If the interest rate on the loan is 6% per year, compounded monthly, how long will it take you to pay off the loan?

Expert Solution

Computation of Time it will take to pay off the loan using NPER Function in Excel:

=nper(rate,-pmt,pv,fv)

Here,

Nper = Number of periods = ?

Rate = 6%/12 = 0.005

PMT = $500

PV = $30,000

FV = 0

Substituting the values in formula:

=nper(0.005,-500,30000,0)

Nper or Number of Periods = 71.51 months or 5.96 years or 6 Years

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