evan34horton
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In calculating the monthly payment for a five-year loan, what value should be used for [tex]n[/tex], the number of periods over which the loan is repaid, as it appears in the following formula?

[tex]
P = PV \cdot \frac{t}{1 - (1 + i)^{-t}}
[/tex]

a. 5
b. 12
c. 60
d. 120

Please select the best answer from the choices provided:
A
B
C
D



Answer :

GinnyAnswer
To determine the value of [tex]\( n \)[/tex] for calculating the monthly payment for a five-year loan, follow these steps:

1. Understand the Loan Duration: The loan is for a period of five years.

2. Determine the Number of Months in a Year: There are 12 months in a year.

3. Calculate the Total Number of Monthly Payments:
Since the loan is repaid monthly over the entire duration of five years, you need to find the total number of monthly periods.

To do this:
- Multiply the number of years by the number of months per year:
[tex]\[ n = \text{years} \times \text{months per year} = 5 \times 12 \][/tex]

4. Perform the Multiplication:
[tex]\[ n = 5 \times 12 = 60 \][/tex]

Thus, the total number of periods [tex]\( n \)[/tex] over which the loan is repaid is 60.

The correct answer is:
c. 60

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