# Math

Andy needs to pay off a loan of \$18,000 in 5 years. Find the amortization payment he would need to make each semi-monthly pay period (twice a month)at 6% compounded bi-monthly, in order to pay off the loan.

1. I understand bi-monthly to mean every other month, or 6 times a year.

The main problem here is that the payment period does not coincide with the interest period, so my normal formula does not work

so we will convert the 6% compounded bi-monthly to one of i compounded semi-monthly since the payment period is semi-monthly

so (1+i)24 = (1.-1)^6

take the 24th root of both sides
1+i = 1.01^(6/24) = 1.01^(1/4)
1+i = 1.00249

(check:
1.00249^24 = 1.06152..
1.01^6 = 1.06152.. OK )

let the payment be P
he will make 30 of these

P( 1 - 1.00249^-30)/.00249 = 18000
P = 623.44

posted by Reiny

First Name

## Similar Questions

1. ### Math

Andy needs to pay off a loan of \$18,000 in 5 years. Find the amortization payment he would need to take each semi-monthly pay period (twice a month) at 6% compounded bi-monthly, in order to pay off the loan.

Andy needs to pay off a loan of \$18,000 in 5 years. Find the amortization payment he would need to make each bi-monthly pay period (twice a month) at 6% compounded bi-monthly, in order to pay off the loan.
3. ### math

Andy needs to pay off a loan of \$18,000 in 5 years. Find the amortization payment he would need to make each bi-monthly pay period (twice a month) at 6% compounded bi-monthly, in order to pay off the loan.
4. ### Maths

Firm has a \$500,000 loan with 9% APR (compounded monthly) Loan is 5-yr based on a 15-yr amortization, meaning loan payments will be calculated as if you take 15 years to pay off the loan, but actually must do so in 5 yr. To do
5. ### math

Five years ago, you bought a house for \$171,000. You had a down payment of \$35,000, which meant you took out a loan for \$136,000. Your interest rate was \$5.6% fixed. You would like to pay more on your loan. You check your bank
6. ### math

Five years ago, you bought a house for \$171,000. You had a down payment of \$35,000, which meant you took out a loan for \$136,000. Your interest rate was \$5.6% fixed. You would like to pay more on your loan. You check your bank
7. ### algebra

Five years ago, you bought a house for \$171,000. You had a down payment of \$35,000, which meant you took out a loan for \$136,000. Your interest rate was \$5.6% fixed. You would like to pay more on your loan. You check your bank
8. ### 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
9. ### Algebra

Financial Project Five years ago, you bought a house for \$171,000. You had a down payment of \$35,000, which meant you took out a loan for \$136,000. Your interest rate was \$5.6% fixed. You would like to pay more on your loan. You
10. ### finance

You would like to buy a Mazda Miata Convertible for a purchase price of \$27,500. You will take out a loan for the entire amount. a. You have excellent credit so you can secure a loan at 5% APR for 3 years. What is your monthly

More Similar Questions