Question

How many payments will it take Martha to repay a loan of $12 000 by making monthly payments of $350 at the beginning of each month if interest is 9% compounded monthly? When is the final payment made? Give answer in years and months.

Answer 1

Loan amount =$12,000

Interest rate =9%

Monthly payment=$350

General formula NPER(rate, pmt, pv)

Formula, NPER$(\frac{C6} {12} ,C7,-C5)$

rate - The interest rate per period. We divide the value in C6 by 12 since 9% represents annual interest: $\frac{C6} {12}$

pmt - The payment made each period. This is the known amount $350, which comes from cell C7

pv - The present value, or total value of all payments now. In the case of a loan, this is input as a negative value by adding a negative sign in fron of C5: - C5

With these inputs, the NPER function returns 40 payments.

3yrs 4 months