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7.) ​(Annuity number of​ periods) ​You've just bought a new​ flat-screen TV for ​$2800 and the...

7.) ​(Annuity number of​ periods) ​You've just bought a new​ flat-screen TV for ​$2800 and the store you bought it from offers to let you finance the entire purchase at an annual rate of 14 percent compounded monthly. If you take the financing and make monthly payments of ​$140​, how long will it take to pay off the​ loan? How much will you pay in interest over the life of the​ loan? a. The number of years it will take to pay off the loan is nothing years.  ​(Round to one decimal​ place.)

8.) ​(Related to Checkpoint​ 6.4) ​ (Present value of a perpetuity​)  What is the present value of a ​$170 perpetuity discounted back to the present at ​percent? The present value of the perpetuity is​ $ nothing. ​ (Round to the nearest​ cent.)

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Expert Solution

7]

number of months to pay off loan is calculated using NPER function in Excel :

rate = 14%/12 (converting annual rate into monthly rate)

pmt = -140 (Monthly payment. This is entered with a negative sign as it is a cash outflow)

pv = 2800 (Amount financed)

The NPER calculated is the number of months. NPER is calculated to be 22.9 months.

To get number of years, we divide by 12.

The number of years it will take to pay off the loan is 1.9 years

total interest paid = (monthly payment * total number of months) - amount financed

total interest paid = ($140 * 22.9) - $2,800

total interest paid = $407.00

8] - discount rate is not given

jeff jeffy answered 2 years ago
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