Monthly Loan Repayments? (1 Viewer)

[honky tonk]

A little help?

Calculate the monthly loan repayment for a loan of $200 000 at 8.4% p.a for 15 years.

(A) $14 092.15
(B) $1957.77
(C) $16 800.01

Thanks!

 

[-=«MÄLÅÇhïtÊ»=-]

B

edit: assuming you mean 8.4% compounded monthly, not simple interest...didnt know general maths did that stuff.

 

[honky tonk]

Thanks for your reply, may I ask how you got the answer? For some reason I'm completely stumped with this question!

 

[Misturi]

Me too, l would have converted the percentage into a decimal and then times everything else and convert it into months...

 

[Benovista]

yeah ive tried it and cant get it either

 

[honky tonk]

Does anyone else have problems with annuities? I can usually tell when it should be Future or Present Value, but the whole "compounding monthly" stuff really gets to me.

 

[Lundy]

Ok, this is the way I worked it out...

using the present value of an annuity formula: N = M[(1+r)^n-1 / r(1+r)^n]

1) divide 8.4% by 12 to get the monthly percentage = 0.007%
2) multiply 15 by 12 to get the number of payments = 180

200000 = M[(1.007)^180-1 / 0.007(1.007)^180]

200000 = M(102.1568757)

M = 200000 / 102.1568757

M = $1957.77

There's probably a simpler way to do it, but that's how I worked it out (that's assuming the correct answer is actually B, lol)

 

[Misturi]

Thanks Lundy, you cleared everything up for me...l really better start studying for my yearly maths exam....

 

[-=«MÄLÅÇhïtÊ»=-]

This type of question is done in 3u maths. So dunno if general maths ppl do these.

But yeah, it's an annuity type question. I used a formula we learnt at uni which is lazy (but fast) because 3u ppl have to derive it themselves and use geometric progression formula.

Basically I formed an equation of value with the focal date at time 0, which is when the initial 200k is borrowed. That 200k equals 15x12 payments discounted back to time 0. Payments are compounded.


If you're in exam situation and can't do this question. Look at your options. You know there are gonna be 15x12 payments. B is the only realistic option. Interest rate of 8.4% isn't gonna increase your debt by that much to have you pay $16k etc a month

 

[honky tonk]

Thanks Lundy!

sarah_#1_eel, I know what you mean.. I started to do a bit of Maths study today by doing practice questions on Expected Frequency and Financial Expectations, and I got.. *gulp*.. 7/16.

To the books I go!

 

[Misturi]

hey honky, maybe we should both take a vow, that we will study for 4 or 5 days straight..no BoS! Whatcha say?

 

[Lundy]

No problem

I'm similarly very behind in studying for maths. I think i've done all of about.....hmm.....1 1/2 hours so far. oops.

 

[Misturi]

Ok, rephrase that, Honky, Lundy and me should take the vow.. l'm in!

 

[Lundy]

I would take the vow if I had any will power or work ethic

But hang on...wasn't I just doing study by answering Honky's question??

 

[Misturi]

yes, but thats not enough

I have my maths yearly on first day back

 

[Huy]

Originally posted by -=MLhtʻ=-
This type of question is done in 3u maths. So dunno if general maths ppl do these.

My base-class (roll call, administration) class happens to be a general maths class, 12-6.

So they do learn about money, loan repayments, supperannuation and the like.

But I do know that Maths and of course, Maths Ext 1 learn about sequences/series and applications of sequences/series (ie loan repayments, annuities, superannuation)

 

[honky tonk]

4-5 days straight sounds good. There are a lot of things I need to relearn for the HSC. I managed to fluke a 91.5% for the trial, but I know I won't get that for the HSC without a few good days of study. *sign*