If I borrow RM 100,000 to buy a house and I have to pay RM 3000 a month into an account that charges 5 % p.a compounded monthly, how many payments are needed to fully settle the loan?
100000 = 3000( 1 - 1.0041666...^-n)/.0041666..
.3888.. = 1 - 1.0041666..^-
1.0041666..^-n = .61111..
take log of both sides and use log rules
- n = log .61111../log 1.0041666..
-n = - 118.44
n = 118.44
So there are 118 full payments of 3000 plus another partial payment at month 119
so there will be 119 monthly payments