Question

A man has borrowed $10,000 which he will repay in 60 equal monthly installments. After his...

A man has borrowed $10,000 which he will repay in 60 equal monthly installments. After his twenty-fifth payment he desires to pay the remainder of the loan at the time of the 26th payment in a single payment. At an interest rate of 2% per month what is the amount of the payment?

Homework Answers

Answer #1
Step 1 :
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
Where,
EMI= Equal Monthly Payment
P= Loan Amount
R= Interest rate per period  
N= Number of periods
= [ $10000x0.02 x (1+0.02)^60]/[(1+0.02)^60 -1]
= [ $200( 1.02 )^60] / [(1.02 )^60 -1
=$287.68
Step 2 : Loan due after 25th payment
Present Value Of An Annuity
= C*[1-(1+i)^-n]/i]
Where,
C= Cash Flow per period
i = interest rate per period
n=number of period
= $287.6796[ 1-(1+0.02)^-35 /0.02]
= $287.6796[ 1-(1.02)^-35 /0.02]
= $287.6796[ (0.5) ] /0.02
= $7,191.59
Step 3 : Calculation of single payment
=7191.59*1.02
=$7335.42
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You borrowed $20,000 from a bank at an interest rate of 12%, compounded monthly. This loan...
You borrowed $20,000 from a bank at an interest rate of 12%, compounded monthly. This loan will be repaid in 60 equal monthly installments over 5 years. Immediately after your 30th payment if you want to pay the remainder of the loan in a single payment, the amount is close to:
a) "Clay borrowed $32,000 from a bank at an interest rate of 11.16% compounded monthly. The...
a) "Clay borrowed $32,000 from a bank at an interest rate of 11.16% compounded monthly. The loan will be repaid in 72 monthly installments over 6 years. Immediately after his 48th payment, Clay desires to pay the remainder of the loan in a single payment. Compute the total amount he must pay." b) "Suppose that $5,000 is placed in a bank account at the end of each quarter over the next 7 years. What is the future worth at the...
On 1 January 2012, Vivian borrowed money from his parents. He promised that he would repay...
On 1 January 2012, Vivian borrowed money from his parents. He promised that he would repay the money with interests at 12% p.a. on 1 January 2018. The total amount that he was due to pay to his parents at that time was exactly $10,000 but he started his studies at university so he couldn’t afford to repay the loan. If interest continues to accrue, what amount must Vivian pay on 1 January 2022 to fully pay off the loan?...
Angelo Lemay borrowed $8000 from his credit union. He agreed to repay the loan by making...
Angelo Lemay borrowed $8000 from his credit union. He agreed to repay the loan by making equal monthly payments for five years. Interest is 9% compounded monthly. (Please use financial BAII calculator method by showing calculator inputs) (a) What is the size of the monthly payments? (b) How much will the loan cost him? (c) How much will Angelo owe after 18 months? (d) How much interest will he pay in his 36th payment? (e) How much of the principal...
Sherman Jacobs plans to borrow $10,000 and to repay it in 36 monthly installments. This loan...
Sherman Jacobs plans to borrow $10,000 and to repay it in 36 monthly installments. This loan is being made at an annual add-on interest rate of 14 percent. Calculate the finance charge on this loan, assuming that the only component of the finance charge is interest. Round the answer to the nearest cent. Use your finding in part (a) to calculate the monthly payment on the loan. Round the answer to the nearest cent. Using a financial calculator, determine the...
You borrow $24,000 . The loan is to be repaid in 60 equal monthly installments at...
You borrow $24,000 . The loan is to be repaid in 60 equal monthly installments at an annual interest rate of 6.0 percent. What percentage of your first month's payment is interest?
John borrowed $84,000 at 9.60% compounded monthly He agreed to repay the loan in equal monthly...
John borrowed $84,000 at 9.60% compounded monthly He agreed to repay the loan in equal monthly payments over a 15 year amortization term. (a) What is the size of the monthly payment? Enter answer to 2 decimal places For parts (b),(c) and (d) DO NOT round the monthly payments but use exact results as found in your calculator. Nevertheless enter answers you find in each answer box to 2 decimal places. (b) How much of the 22nd payment is interest?...
Question 1 Jack took a $ 5,000 loan, which he repaid in monthly installments over seven...
Question 1 Jack took a $ 5,000 loan, which he repaid in monthly installments over seven months. Payments were always made at the end of the month (each payment month was 1/12 part of the year) so that the first repayment was made 4 months after the loan was drawn down. Each equal installment consisted of an installment of the loan amount of $ 5,000 / 7 and an interest component of $ 30 and an account management fee of...
A loan of $ 10000 is to be repaid in 30 equal monthly installments with the...
A loan of $ 10000 is to be repaid in 30 equal monthly installments with the first one paid seven months after the loan is made. The nominal annual interest rate is 6 % compounded quarterly. Determine the amount of the monthly payment. Please show detailed process
Sang just took out a loan from the bank for 67,668 dollars. He plans to repay...
Sang just took out a loan from the bank for 67,668 dollars. He plans to repay this loan by making a special payment to the bank of 29,855 dollars in 2 months and by also making equal, regular monthly payments of X. If the interest rate on the loan is 1.35 percent per month, he makes his first regular monthly payment later today, and he makes his last regular monthly payment made in 4 months from today, then what is...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT