Where rate = Annual Percentage Rate divided by 1200
For example, an 8 % annual rate becomes .0066666666666666…
Here, the loan formula has been solved for months.
As you can see from the above formula, solving for months is a bit trickier than solving for monthly payment or principal.
We need to take a loan for $50,000 and we can afford to pay $800.00 per month. The local bank charges 9 per cent interest. How much time will it take to repay this loan?
- The rate would be 9 ÷ 1,200 = .0075
- The principal is $50,000.00
- The monthly payment is $800.00
