While Mary Corens was a student at the University of Tennessee, she borrowed $11,000 in student loans at an annual interest rate of 11%. If Mary repays $1,700 per year, then how long (to the nearest year) will it take her to repay the loan? Do not round intermediate calculations. Round your answer to the nearest whole number.

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Business

Reece

24 February, 12:22

While Mary Corens was a student at the University of Tennessee, she borrowed $11,000 in student loans at an annual interest rate of 11%. If Mary repays $1,700 per year, then how long (to the nearest year) will it take her to repay the loan? Do not round intermediate calculations. Round your answer to the nearest whole number.

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Kayley · Answer 1

It will take 23 years for Mary Corens to repay the loan.

Explanation:

Mary Corens obtained her loan of $ 11,000 with an interest rate of 11% per year, with which the annual interest that will accrue on her loan will be $ 1,210 (11,000 x 0.11).

If Mary pays 1,700 each year, we must take into account that each payment will decrease the amount of the loan by $ 490, since she will pay the interest of $ 1,210 and a surplus of $ 490 that will cover said part of the value of the loan. Therefore, to find out how long it will take Mary to repay the entire loan, we must divide the initial amount of the loan without interest by 490, which will be the sum of money that will be charged to the principal payment: 11,000 / 490 = 22.4.

Therefore, it will take Mary almost 22 and a half years to repay her loan, making annual payments of $ 1,700. Since the answer requires a whole number, we can affirm that in 23 years Mary Corens will pay off her debt.