Tuesday, September 21, 2010

compound interest help?

yu decided to borrow $200000 to buy investment property.

bank agreed to lend the money over a period of 25 years at 6% per annum by monthly installments

1. calculate the repayment yu must make on the loan

A = 200000 * 0.005

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1 – (1.005)25*12

= $1288.60

2. at the end of the fifth year you is repaying the loan . How much interest he would save if he repaid at this point.

No. of remaining instalment = 20 * 12 =240

Payout figure = 1288.60 * 1-(1.005)-240

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0.005

=179863.78

Savings=1288.60 * 240 – 179863.78

= $129400.22

3. at the end of tenth year there is a rise in interest to 9%

calculate the new repayment amount.

Terms of loan = (25-10) = 15*12 =180

I = 9%/12

= 179863.78 * 0.0075

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1- 1.0075-180

= $1824.29

4. if he wants to continue with original repayments how many additional years are required to repay the loan.

Additional payment for 15 yrs = (1824.29-1288.60)*120