The Art Gallery is notoriously known as a slow-payer. The firm currently needs to borrow $25,000 and only one company will loan to them. The terms of the loan call for weekly payments of $500 at a weekly interest rate of .45%. What is the loan term?

The correct answer is 56.77 weeks.

Explanation:

According to the scenario, the given data are as follows:

PV = $25,000

Payment (pmt) = $500

Rate of interest (r) = .45% per week

Time period (t) = ?

So, we can calculate the loan term period by using following formula:

PV ÷ Pmt = (1 - (1 + r)^ -t) ÷ r

So, by putting the value we get,

$25,000 ÷ $500 = ( 1 - ( 1 + 0.0045)^-n) ÷ 0.0045

$50 = ( 1 - ( 1 + 0.0045)^-n) ÷ 0.0045

$50 × 0.0045 = ( 1 - ( 1 + 0.0045)^-t)

0.225 = ( 1 - ( 1 + 0.0045)^-t)

( 1 + 0.0045)^-t) = 1 - 0.225

(( 1.0045)^-t ) = 0.775

t = 56.77

Hence, the loan term period is 56.77 weeks.

forbearance of student loan payments. under forbearance, your loan payments are postponed (or reduced) but interest continues to accrue during the period of forbearance. if you don't pay the interest during that period, the interest may be “capitalized,” which means it is added to your principal balance.

1. c

2. b

3. a

4. c

5. a

6. b

7. c

8. c

9.b

10. d

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