Question

Suppose you decide to take out a loan to purchase a plot of land. You have taken out a loan of $85,000 for a term of 36 months that is compounded monthly at an APR of 70%. Find:

Monthly payment in numerator only:

Monthly payments in denominator only:

Find monthly payments:

Find payment in 34 months:

Answer 1

ANS:

Formula for Calculating monthly payments of loan

  = [Interest Rate/1200* (1+interest rate/1200)^months*loan amounts]/ [ (1+interest rate/1200)^months-1]

Interest Rate = 70%

Loan Amount = $85000

Period = 36 months

Monthly Payments= [70/1200*(1+70/1200)³⁶*85000]/[(1+70/1200)³⁶-1]

= [0.058333*(1+0.58333)³⁶*85000]/[(1+0.058333)³⁶-1]

= 38171.3404/6.6985

= 5698.4908

Hence the monthly payments for loan $85000 is 5,698.4908

Total of 36 months = 5698.4908*36 = 205,145.66

Total Interest = 120,145.66