Tim and sally are taking out a personal loan to pay for their wedding expenses. the loan is for $9,000 and comes with an interest rate of 9.5% compounded monthly. the couple wants to pay the loan off as quickly as possible, keeping the monthly payments below $250. the lender offers repayment plans in 12 month increments. how long of a loan should they request? a. 24 months b. 36 months c. 48 months d. 60 months

Option C - 48 months    

Step-by-step explanation:

Given : The loan is for $9,000 and comes with an interest rate of 9.5% compounded monthly. The couple wants to pay the loan off as quickly as possible, keeping the monthly payments below $250. The lender offers repayment plans in 12 month increments.

To find : How long of a loan should they request?

Solution :

Formula of monthly payment  

Monthly payment,  

Discount factor  

Where, Amount (P)= $9,000

Rate r= 9.5%=0.095 compounded monthly

Time = n (to find)

Monthly payment = (below)$250

Now, put all the values we get,  

Using Wolfram calculator

n ≈ 42.54

or n= 43 months

Which means at the monthly payment of $250 they took approx 43 months

And they pay monthly payment below $250 then they take more than 43 months to pay of loan.

So, the nearest result is 48 months

Therefore, They took 48 months to pay off the loan.

Option c is correct.

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