Bloody financial maths. (1 Viewer)

[Muzzaw]

I hate this topic.

How do you do this?

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

Cheers.

 

[danieljarvis]

200 000 = X (1 + 8.4/12 ^ 180 + 1 ) / 0.084 / 12

X = 200000 / (1 + 8.4/12 ^ 180 + 1 ) / 0.084 / 12 (do this sepertely in calc)

X = $310.42

i think this is right.. im tired sorry

 

[PC]

Graphic calculator?

n = 15 x 12
I = 8.4
PV = -200000
PMT = ?
FV = 0
P/Y = 12
C/Y = 12

So monthly repayment is $1957.77.

If you have to use the formula, use the PV formula:
r = 8.4 ÷ 100 ÷ 12 = 0.007
n = 15 x 12 = 180

Now:
N = M [ (1+r)^n – 1 / r(1 + r)^n ]
200000 = M [ (1+0.007)^180 – 1 / 0.007(1 + 0.007)^180 ]
200000 = M [ (1.007)^180 – 1 / 0.007(1.007)^180 ]
200000 = M x 102.1568757
M = $1957.77

So monthly repayment is $1957.77.

 

[danieljarvis]

gotta convert those 8.4/12 to percentage ( divide by 100 ) so 8.4/12 = 0.7

put it in as 0.007 so 1.007

 

[danieljarvis]

im sorry.. i took it as an annuity. i am tired. dont listen to me

 

[PC]

Hey! You get to sleep in on Monday morning too!

 

[danieljarvis]

and super troopers is on 7.. so im not goin anywhere tonight!!

and also.. shouldnt a question like that specify simple or compound interest..

if it was simple it = 1400

 

[PC]

Possibly, but for a loan of $200 000, I doubt a bank would charge simple interest! Always reducible interest for a home loan I'd say.

 

[danieljarvis]

yeah, well.. my legs are falling off, the chinese food isnt working and that 2 litres of water isnt settling.. i think its bedtime.. sleep well brother

 

[7th Sign]

forumula sheet + calculator = answer

 

[Muzzaw]

Got another one:

This is from the CSSA 2003 paper.

Connie wants to travel overseas and so takes out a loan of $8 000 from a bank. She wants to repay it with monthly instalments over 5 years. The interest rate of the loan is 8.4% p.a. compounded monthly.

(i) Calculate what Connie's monthly repayment would be.

(ii) If Connie decided to increase her repayment by 50% (correct to the nearest cent), how long would it take to pay off the loan? Give your answer correct to the nearest month.


I can do the first part, but how do I do the second part?

 

[Muzzaw]

37 months.

Must have rounded.

 

[Muzzaw]

Or it could be because the monthly repayment is $163.75

 

[danieljarvis]

ill do this again. ( im in the same boat as you!! )

8000 x ( 1 + 0.084/12^60 ) = 12 157.89

12 157.89 / 60 = 202.63 ?? isnt that right :S:S

ii) 202.63 x 1.5 = 303.95

12 157.89 / 303.95 = 40 months...

dammit! what am i doing wrong>? my friend got the same as me to

 

[Muzzaw]

Because you're using the compound interest formula to calculate monthly repayments; use the present value formula for annuities.

Don't ask me why. Maybe PC can tell us?

 

[danieljarvis]

my apoligies.. you are right!!

1 ) - 8000 = M (( 1.007)^60-1/ 0.007(1.007)^60)

M= 8000 / (( 1.007)^60-1/ 0.007(1.007)^60)

M = 163.75

2 - 163.75 x 1.5 = 245.62

8000 = 245.62 ( (1.007)^n-1 ) / 0.007(1.007)^n

this is where my maths stops..

am i on the right track now?

 

[Muzzaw]

If that's the case, then we need to know log rules.

Seeing as though this is General Maths, we're most likely doing something wrong.

 

[anita_wax]

Graphic calculator?

n = 15 x 12
I = 8.4
PV = -200000
PMT = ?
FV = 0
P/Y = 12
C/Y = 12

So monthly repayment is $1957.77.

If you have to use the formula, use the PV formula:
r = 8.4 ÷ 100 ÷ 12 = 0.007
n = 15 x 12 = 180

Now:
N = M [ (1+r)^n – 1 / r(1 + r)^n ]
200000 = M [ (1+0.007)^180 – 1 / 0.007(1 + 0.007)^180 ]
200000 = M [ (1.007)^180 – 1 / 0.007(1.007)^180 ]
200000 = M x 102.1568757
M = $1957.77

So monthly repayment is $1957.77.

i was stuck on this question aswell. can you please tell me what is M? i can't see how you get from 102 to 1957.

 

[spartan 117]

i was stuck on this question aswell. can you please tell me what is M? i can't see how you get from 102 to 1957.

Now:
N = M [ (1+r)^n – 1 / r(1 + r)^n ]
200000 = M [ (1+0.007)^180 – 1 / 0.007(1 + 0.007)^180 ]
200000 = M [ (1.007)^180 – 1 / 0.007(1.007)^180 ]
200000 = M x 102.1568757
M = $1957.77

So monthly repayment is $1957.77


20000/102.1568757
= 1957.77

thats how you get M