A pottery factory purchases a continuous belt conveyor kiln for $50,000.A 6.5% APR loan with monthly payments is taken out to purchase the kiln.If the monthly payments are $501,over what term is this loan being paid?

Question

Quizplus · Accepted Answer

We can use the formula for monthly loan payments:

P = (r(PV))/(1-(1+r)^-n)

Where P is the monthly payment, r is the monthly interest rate (6.5%/12 = 0.005417), PV is the present value of the loan ($50,000), and n is the number of months.

Substituting the given values, we get:

$501 = (0.005417($50,000))/(1-(1+0.005417)^-n)

Simplifying and solving for n, we get:

n = 144 months, or 12 years.

Therefore, the answer is C, 12 years.

A Pottery Factory Purchases a Continuous Belt Conveyor Kiln for $50,000.A