Joseph buys a Hummer for $59,000, financing it with a five-year 7.60% APR loan paid monthly. He decides to pay an extra $50 per month in addition to his monthly payments. Approximately how long will he take to pay off the loan under these conditions?
A) 59.57 months
B) 57.07 months
C) 54.57 months
D) 60.57 months

Question

Quizplus · Accepted Answer

B) The first step is to calculate the monthly payment using a present value (PV) of $59,000, monthly interest rate of 11ea84dc_f573_a650_9a63_c354eae2e9ee_TB1316_11_TB1316_11 and 60 periods, which = $1185.04; the second step is to add $50 to this monthly payment giving the new monthly payment of $1235.04; the last step is to calculate the time required to pay off the loan = 57.0740 months.

Joseph Buys a Hummer for $59,000, Financing It with a Five-Year