series (finance) help (1 Viewer)

[vanush]

how do you do this question? in particular 20iii)

 

[SoulSearcher]

Ok, where have I recognised this question from?

Oh well, I'll do it anyway.
i)at the end of the first month, the amount owing is equal to
A₁ = 50000 * 1.01 = %50500
ii)the amount after 12 months is equal to
A₁₂ = 50000(1.01)¹² - M
iii)remember here that the annual payment M also attracts the interest rate of 0.01% per month for the last 12 months, and thus for the end of 24 months,
A₂₄ = 50000(1.01)²⁴ - M(1.01)¹² - M
= 50000(1.01)²⁴ - M(1.01¹² + 1)
but since A₂₄ = 0
0 = 50000(1.01)²⁴ - M(1.01¹² + 1)
M(1.01¹² + 1) = 50000(1.01)²⁴
M = 50000(1.01)²⁴ / (1.01¹² + 1)
iv)to find the total interest, find the amount of one payment, then find the total amount repaid, then subtract $50000
so M = 29850.48, and since there are 2 payments, therefore total amount repayed is $59700.95
now subtract $50000 from the total repaid, and it should get you $9700.95 repaid in interest.

 

[vanush]

thanks a lot..

y r u doing series in year 11

Screw dat

 

[SoulSearcher]

I'm not doing it in Year 11, I did it in Year 10