Question

You decide that you want to purchase a Tesla SUV. You borrow $95,000 for the purchase. You
agree to repay the loan by paying equal monthly payments of $1,200 until the balance is paid off. If
you're being charged 6% per year, compounded monthly, how long will it take you to pay off the
loan?

Answer 1

Answer:

8.5 years

Step-by-step explanation:

It will take 102 more payments

8.5 years

Interest will be $26,239

Answer 2

It would take approximately 15 years to pay back the loan of 95000 which is compounding monthly and the rate of interest is 6%.

What is compound interest?

Compound interest is basically the interest which is calculated on the primcipal with addition to aggregate interest. The formula of sum after compounding is as under:

S=P$(1+r/n)^{nt}$ in which P is principal amount, r is rate per annum, n is number of times of compounding and t is time period.

How to calculate time?

We have been given that the amount of loan is $95000, installment is $1200 , rate of interest is 6% and it is compounded monthly.

First of all we have to find the effective rate=6%/12=0.005.

The future value of 95000 at a rate of 6% compunded monthly should be equal to the amount of all installments. So,

95000$(1+0.005)^{12n}$=12*1200*n

95000$1.005^{12n}$=14400n

$1.005^{12n}$=14400n/95000

$1.005^{12n}$=0.1515n

We have to make graph of this to find the value of n which after graphing will come approx 15.

Hence it would take 15 years to pay back loan amount.

Learn more about compound interest at https://brainly.com/question/24924853

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