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The value should be used for n, the number of periods over which the loan is repaid in 60 periods.
We have to determine
In calculating the monthly payment for a five-year loan, what value should be used for n, the number of periods over which the loan is repaid, as it appears in the following formula?
<h3>What formula is used to calculate the monthly payment?</h3>The value of the monthly payment is given by;
Where,
- PV is the present value or the amount of the loan.
- i is the interest rate per period and is calculated by dividing the yearly percent rate by 100 and by the number of periods in a year.
- n is the total number of periods and is calculated as the product of the number of periods in a year times the number of years.
Therefore,
The value should be used for n, the number of periods over which the loan is repaid;
n = 6 years × 12 months/year = 60 months = 60 periods.
Hence, The value should be used for n, the number of periods over which the loan is repaid in 60 periods.
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