Loans, loan ...

Short-term non-bank loans in Slovakia are considered very unfavourable. Borrowers often end up in a debt spiral, taking out increasingly burdensome loans to repay earlier ones.

Calculate how many 7-year loans of €1400 at 23% APR a person can repay if their entire monthly income of 402 euros goes toward loan repayments and interest.

Final Answer:

m =  5

Step-by-step explanation:

$$\begin{gathered} v=402\text{eur} \\ {r}_0=100\%+23\%=1+\frac{23}{100}=1.23 \\ {r}_1=r_0^7=1.23^7\doteq 4.2593 \\ s=\frac{1400\cdot r_1}{12\cdot 7}=\frac{1400\cdot 4.2593}{12\cdot 7}\doteq 70.9879\text{eur} \\ {m}_0=\frac{v}{s}=\frac{402}{70.9879}\doteq 5.6629 \\ m=\lfloor m_0\rfloor =\lfloor 5.6629\rfloor =5 \end{gathered}$$

Try another example