Question

Mr. Abasolo invest some of his savings in a corporate bond paying him dividends of P36,194.96 at the end of each year. He religiously set aside all these dividends in a savings account that yields him insignificant interest value. At the end of the fifth year however, he decided to pull out his accumulated funds as a 10% downpayment for a two- storey residential structure (including the lot) and agreed to pay his loan on monthly installments for some years at an interest rate of 15% compounded monthly. If the monthly installment was 242,821.87, how many years did he pay his balance?

Thats all the given.

Answer 1

Annual Dividend = P 36,194.96

Total Dividend Received till the end of 5th Year = 5 * 36,194.96 = P 180,974.80

Total Value of two-storey residential structure = 180,974.80/0.10 = P 1,809,748

Amount of Loan Taken = P 1,809,748 - P 180,974.80 = P 1,628,773.20

Monthly Installment = P 242,821.87

Interest Rate = 15% Compounding Monthly

Monthly Interest Rate = 15%/12 = 1.25%

EMI = [P x R x (1+R)^N]/[(1+R)^N-1]

242,821.87 = [1,628,773.20*0.0125*(1+0.0125)^N]/[(1+0.0125)^N-1]

N = 7 Months