math

posted by .

A man borrows $50,000 towards the cost of a house. Compound interest is charge on the loan at 125 per annum. He agrees to pay back the loan in 25 equal installments, at yearly intervals, the first repayment being made exactly 1 year after the loan is taken out. Calculate the value of each installment

  • math -

    I assume you really mean 12.5% per annum.

    R = Pi/[1 - (1+i)^(-n)]

    where R = the periodic payment, n = the number of interest bearing periods and the number of periodic payments and i = the periodic interest in decimal form.

    Thus, R = 50,000(.125)/[(1 - (1.125)^(-25)] = $5,921.10 per year.

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. Business Math

    Terry has an 18-month installment loan for $1,700 at 12% annual interest. Interest is compunded using the Rule of 78. Terry decides to pay back the loan at the end of the first month. 1. What is the total finance charge on the loan?
  2. algebra

    How would you solve this math equation? this is really confusing to me. Ms.Martin was researching the costs of financing $125,000 for a home. She found that the monthly payment for a 6.875% loan for 30 years would be $821.16 per month.
  3. Business Math

    If Wilma borrows $5,000 from her brother (at 5% interest per year) and the loan matures in 10 years, how much will she have to pay annually to pay the loan off in 10 years?
  4. math

    Sonja needs to borrow $2,251 to pay for her college classes. Sallie Mae is offering her a 4.5% simple interest loan with an interest charge of $405.18 over the life of the loan. How many years is Sallie Mae giving her to pay back the …
  5. Math

    I take out a loan for $10,000.00 and the interest rate is 6.3% APR. If I pay this loan back at $300.00 per month, how much interest will I be charged on top of this per month for the first 3 months?
  6. math

    Belle had the choice of taking out a four year car loan at 8.5% simple interest or a Five year loan at 7.75% simple interest. If she borrows $15,000, how much interest would she pay for each loan?
  7. math

    A man agrees to pay Rs.4500 per month for 30 moths to pay off a car loan. If the interest of 18% per annum is charged monthly, the present value of car is:
  8. math

    Mary is borrowing $3130 from a Loan Shark that will charge 4% APR. After being threatened for 18 weeks straight, Mary will pay the Loan Shark back. How much interest will Mary pay for this loan?
  9. Math

    This year (10 years after you first took out the loan), you check your loan balance. Only part of your payments have been going to pay down the loan; the rest has been going towards interest. You see that you still have $108,123 left …
  10. Business Math

    Mary bought a house for RM 350,000 5 years before and paid a 10% down payment and took a 15 years bank loan for the remaining amount. The bank charges 4.38% p.a. compound interest on a reducing balance basis on property loans. Mary …

More Similar Questions