Posted by **Gibbons** on Tuesday, June 22, 2010 at 2:33am.

A loan of $7,000,000 is being amortised over 48 months at an interest rate of 12% compounded monthly. Find:

(a) the monthly payment;

(b) the principal outstanding at the beginning of the 36th month;

(c) the interest in the 36th payment;

(d) the principal in the 36th payment and

(e) the total interest paid.

- Mathematics -
**MathMate**, Tuesday, June 22, 2010 at 8:57am
You can tackle most monthly monthly payment questions with the following formula.

AR^n=P(R^n-1)/(R-1)

where

n=number of compounding periods

A=Amount borrowed

P=payment at each period

R=interest rate per period, in the form of 1.08 for 8%

For the given case,

A=7000000

R=1.01

n=48

(a)Solve for P to get $184336.84 for the monthly payment

(b) The amount outstanding is the amount of the last payment less one month interest, $184336.84/1.01=$182511.72

(c) = difference between (a) and (b)

(d) = (b)

(e) = 48*(a)-7000000

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