A loan of $16,525 at 10.8% compounded monthly is to be paid off by equal monthly payments of $650. How long will it take to pay off the loan?

A) 26 months
B) 29 months
C) 32 months
D) 36 months
E) 48 months

To determine the time it will take to pay off the loan, we can use the loan amortization formula, which is a form of the present value of an annuity formula. The formula to calculate the number of payments (n) is: $$n=\frac{\log (\frac{PMT}{PMT-PV\times r})}{\log (1+r)}$$ where:- PMT = monthly payment amount = $650- PV = present value of the loan = $16,525- r = monthly interest rate (annual rate divided by 12) = 10.8% / 12 = 0.9% = 0.009Plugging the values into the formula: $$n=\frac{\log (\frac{650}{650-16525\times 0.009})}{\log (1+0.009)}$$$$n\approx 29$$ Therefore, it will take approximately 29 months to pay off the loan, making choice B the correct answer.