Question

Nick would like to purchase a vacation timeshare, but he can only afford a $350 monthly loan payment. He wants the loan to extend 20 years, and the annual interest rate is 6%. How much money will Nick need to borrow if he repays the loan at $350 per month over the 20-year period of the loan?
350=P * (0.06*20)/12

Answer 1

That's a very creative formula you have there, but it makes no sense to me.

You want the present value of monthly payments of $350 for 20 years at 6% compounded monthly

PV = 350(1 - 1.005^-240)/.005
= 48,853.27

Btw, your P value turns out to be 319.50
Did you find that formula in your text or your notes ?

Answer 2

This question was in a math competition on April 2nd. I could The answer given was 48853.00

Answer 3

why a negative -240?

Answer 4

That's the way the standard formula is.

notice I had the correct answer.