A college student receives an interest-free loan of $8,875 from a relative. The student will repay $155 per month until the loan is paid off. After how many months will the student owe $5,000?
A)after 32 months.
B)after 26 months.
C)after 22 months.
D)after 25 months.
E)after 12.5 months.

Question

Quizplus · Accepted Answer

To find out after how many months the student will owe $5,000, we can calculate the total amount paid until the loan reduces to this amount. Starting with an $8,875 loan, subtracting $5,000 gives us $3,875, which is the amount the student will have paid off. Dividing this amount by the monthly payment of $155 gives us $3,875 / $155 = 25. Therefore, it will take 25 months for the student to owe $5,000.

A College Student Receives an Interest-Free Loan of $8,875 from a Relative