# The time taken to settle a debt of $705, repaid in monthly instalments of$25 at the end of each month, with interest rate of 15% compounded monthly.

Lewis Harvey 2021-08-15 Answered
The time taken to settle a debt of $705, repaid in monthly instalments of$25 at the end of each month, with interest rate of 15% compounded monthly.
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Monthly interest rate $=\frac{\text{Annual interest}}{\text{No. of months}}$
$=\frac{15\mathrm{%}}{12}$
$=1.25\mathrm{%}$
The no. of months taken to repay the debt may be calculated as follows:
$P=A\left(\frac{P}{A},1.25\mathrm{%},n\right)$
$705=25\left(\frac{P}{A},1.25\mathrm{%},n\right)$
$28.2=\left(\frac{P}{A},1.25\mathrm{%},n\right)$
Looking at the 1.25% interest table we infer that $n=35$ months.