Alex Karev has taken out a $180,000 loan with an annual rate of 8 percent compou

Question

Alex Karev has taken out a $180,000 loan with an annual rate of 8 percent compounded monthly to pay off hospital bills from his wife Izzy

Alex Karev has taken out a $180,000 loan with an annual rate of 8 percent compounded monthly to pay off hospital bills from his wife Izzy's illness. If the most Alex can afford to pay is $3,500 per month, how long will it take to pay off the loan? How long will it take for him to pay off the loan if he can pay $4,000 per month? Use five decimal places for the monthly percentage rate in your calculations If Alex can pay, the number of years it takes for him to pay off the loan is? (years) please show work on how answer was obtained

Explanation / Answer

Since A = P(1 + r/n) ^ nt

we have A = 180000(1+ 0.08/12) ^12t where t is no. of years it takes for alex to pay the loan

and A = 12 * 3500 * t

So t = 4.28571 *(1.006667) ^12t

which t = 18 so it takes alex 18 years to pay the loan

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