While Mary Corens was a student at the University of...

While Mary Corens was a student at the University of Tennessee, she borrowed $\$ 12,000$ in student loans at an annual interest rate of $9 \% .$ If Mary repays $\$ 1,500$ per year, then how long (to the nearest year) will it take her to repay the loan?

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Key Concepts

Annuity Formula

The annuity formula relates to a series of equal payments made at regular intervals and is used to calculate either the present or future value of these payments. In the context of loan repayment, it helps determine the number of payments or the amount of each payment needed to amortize the loan considering the impact of compound interest.

Compound Interest

Compound interest is the process whereby interest is calculated not only on the initial principal but also on the accumulated interest from previous periods. This concept is crucial in financial calculations as it demonstrates how debt or investment grows over time with the effect of earning interest on interest.

Loan Amortization

Loan amortization is the method of repaying a debt through regular payments over a period of time. Each payment typically covers both the interest accrued during the period and a portion of the principal, gradually reducing the total balance until the debt is fully repaid.

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