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You borrow $1,600 at 6% (SA) and owe $2,026.83. What is the termof the loan?...

You borrow $1,600 at 6% (SA) and owe $2,026.83. What is the term of the loan? Round the answer to n to a whole (i.e. n = 13.999 = 14, n= 4.00005 = 4) - do this before you convert to years and months. Answer in Years and Months (if years or months are zero, place 0).

Expert Solution

- Future value of amount you woe = $2026.83

Borrowed Loan amount = $1600

Calculating the term of the loan:-

where, r= Interest rate = 6%

m = no of times compounding in a year = 2

n = no of years

1.26676875 = (1+0.03)^(2n)

Taking Log on both sides,

Log(1.26676875) = 2n*Log(1.03)

0.1026973412 = 2n*0.0128372247

8.00 = 2n

n = 4 years

So, the term of the loan is 4 years and 0 months

jeff jeffy answered 2 years ago

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