Number of years required to pay off a debt of $100,000 with payments of $1,000 made at the end at 5 percent.

I got

N?
I 5%
PV -100,000
PMT -1,000
FV --

N= -36.72

What am I doing wrong.

It's impossible.

It took me a while to figure this out as I was getting the same thing you were. And when you plug it back in, it only comes back out to 16,667 instead of the 100,000. So I played a bit, and finally figured out it doesn't even work.

That's because the interest on the first payment is $5000. The $1000 payment doesn't even cover that. If you can't even pay the interest, you'll never pay the thing down.

The answer you're getting is actually the answer for a future value. I don't know why the calculators are giving a negative version of that.

So... something is wrong with this problem, unless you've left some info out.

It's impossible.

It took me a while to figure this out as I was getting the same thing you were. And when you plug it back in, it only comes back out to 16,667 instead of the 100,000. So I played a bit, and finally figured out it doesn't even work.

That's because the interest on the first payment is $5000. The $1000 payment doesn't even cover that. If you can't even pay the interest, you'll never pay the thing down.

The answer you're getting is actually the answer for a future value. I don't know why the calculators are giving a negative version of that.

So... something is wrong with this problem, unless you've left some info out.


This is exactly how the question is stated, "how many years are required to pay off a debt of $100,000 with payments of $1,000 made at the end of each year with an annual interest of 5%.

Well, you need to talk to whoever wrote that question, because it's impossible to ever get it paid off. It says "years" so we're not talking about monthly payments. (That would be completely different.) It says at the end of the year, so it's not an annuity due. (Not that that would make much difference.)

But the interest on the first year is $5000. It's simply impossible to pay that if you're only paying $1000. You have $4000 interest unpaid, bringing it to $104,000. And it's just going to get worse. (You've probably heard about it being impossible to pay off a big credit card debt - this is sometimes why.)

Perhaps the answer is infinity years. ;) I only know it can't be done. Maybe someone with a sick sense of humor wants to see if you realize this. (More likely, they just screwed up and didn't bother to check if the problem could actually be done. Maybe they meant 10,000 payments?)

If I'm missing something here, I'm sure someone will find it, but I just don't see how it can be done.