Mary wants to take out a loan. Suppose she can afford to make monthly payments of 200 dollars and the bank charges interest at an annual rate of 5 percent, compounded monthly. What is the maximum amount that Mary could afford to borrow if the loan is to be paid off eventually?
I am not sure how to do a problem with "eventually."
I have tried to approach this like a regular compound interest problem, but it is not working.
Yn = Yo (1 + i )^n
b / (1-a) = 200 / (1 - 1.041667) = -4799.96
i = 0.5 / 12 = 0.041667
n = ????
-4799.96 + (Yo - (-4799.96)(1.041667^n) = ????
How can I do this without knowing how much she took out, or how long it will take to pay off?