Question

20.00 polnts One of your customers is delinquent on his accounts payable balance. You've mutually agreed to a repayment schedule of $500 per month. You will charge 1.85 percent per month interest on the overdue balance If the current balance is $17,500, how long will it take for the account to be paid off? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Months for account to be pad off References eBook & Resources Learning Objective:06-03 How loans are amortized or paid off Worksheet Section: 6 2 Valuing Level Cash Flows Annuities and Perpetuities Diffioulty: Basic

Answer 1

CALCULATION OF TOTAL MONTH REQUIRED TO PAY OFF
Months	Opening Balance of Account	Interest @ 1.85%	Installment	Closing Balance of the mont
1	$17,500.00	323.75	500.00	17,323.75
2	$17,323.75	320.49	500.00	17,144.24
3	$17,144.24	317.17	500.00	16,961.41
4	$16,961.41	313.79	500.00	16,775.19
5	$16,775.19	310.34	500.00	16,585.53
6	$16,585.53	306.83	500.00	16,392.37
7	$16,392.37	303.26	500.00	16,195.63
8	$16,195.63	299.62	500.00	15,995.25
9	$15,995.25	295.91	500.00	15,791.16
10	$15,791.16	292.14	500.00	15,583.29
11	$15,583.29	288.29	500.00	15,371.58
12	$15,371.58	284.37	500.00	15,155.96
13	$15,155.96	280.39	500.00	14,936.34
14	$14,936.34	276.32	500.00	14,712.67
15	$14,712.67	272.18	500.00	14,484.85
16	$14,484.85	267.97	500.00	14,252.82
17	$14,252.82	263.68	500.00	14,016.50
18	$14,016.50	259.31	500.00	13,775.80
19	$13,775.80	254.85	500.00	13,530.66
20	$13,530.66	250.32	500.00	13,280.97
21	$13,280.97	245.70	500.00	13,026.67
22	$13,026.67	240.99	500.00	12,767.66
23	$12,767.66	236.20	500.00	12,503.87
24	$12,503.87	231.32	500.00	12,235.19
25	$12,235.19	226.35	500.00	11,961.54
26	$11,961.54	221.29	500.00	11,682.83
27	$11,682.83	216.13	500.00	11,398.96
28	$11,398.96	210.88	500.00	11,109.84
29	$11,109.84	205.53	500.00	10,815.37
30	$10,815.37	200.08	500.00	10,515.46
31	$10,515.46	194.54	500.00	10,209.99
32	$10,209.99	188.88	500.00	9,898.88
33	$9,898.88	183.13	500.00	9,582.01
34	$9,582.01	177.27	500.00	9,259.27
35	$9,259.27	171.30	500.00	8,930.57
36	$8,930.57	165.22	500.00	8,595.79
37	$8,595.79	159.02	500.00	8,254.81
38	$8,254.81	152.71	500.00	7,907.52
39	$7,907.52	146.29	500.00	7,553.81
40	$7,553.81	139.75	500.00	7,193.56
41	$7,193.56	133.08	500.00	6,826.64
42	$6,826.64	126.29	500.00	6,452.93
43	$6,452.93	119.38	500.00	6,072.31
44	$6,072.31	112.34	500.00	5,684.65
45	$5,684.65	105.17	500.00	5,289.81
46	$5,289.81	97.86	500.00	4,887.67
47	$4,887.67	90.42	500.00	4,478.10
48	$4,478.10	82.84	500.00	4,060.94
49	$4,060.94	75.13	500.00	3,636.07
50	$3,636.07	67.27	500.00	3,203.34
51	$3,203.34	59.26	500.00	2,762.60
52	$2,762.60	51.11	500.00	2,313.70
53	$2,313.70	42.80	500.00	1,856.51
54	$1,856.51	34.35	500.00	1,390.85
55	$1,390.85	25.73	500.00	916.58
56	$916.58	16.96	500.00	433.54
57	$433.54	8.02	$441.56	-
Complete Month =		56 Months
Required time in 57th Month =		0.88 Month
($ 441.56 / $ 500)
Total Months required for payment = 56 Months + 0.88 Month
Total Months required for payment = 56.88 Months