You borrowed $1,500 at 6% compounded annually. your payments are $90 at the end of each year. how many years will you make payme

Question

marusya05 [52]

3 years ago

13

You borrowed $1,500 at 6% compounded annually. your payments are $90 at the end of each year. how many years will you make payme

nts on the loan?

Mathematics

1 answer:

olga nikolaevna [1] · Answer 1 · 2022-08-31T06:56:43+03:00

Given the formula for future value annuity:
FV of annuity=P[(1+r)^n-1]/r
where:
P=principle
r=rate
n=time
the time taken to repay the loan will be:
1500=90[(1+0.06)^n-1]/0.06
90=90[(1+0.06)^n-1]
1=(1+0.06)^n-1
1+1=(1+0.06)^n
2=1.06^n
introduce natural log
ln2=nln1.06
n=ln2/ln1.06
n=11.8957=12 years
the answer is 12 years.