Question

A loan of 10,000 is being repaid with payments of 500 starting one month after the loan is made and lasting as long as necessary. A final smaller payment is made one month after the last regular payment of 500. What is the amount of the additional smaller payment using an interest rate of 12% compounded monthly?

Answer #2

Interest per month will be (12%/12) = 1%.

Loan amount is 10,000.

Payment per months is 500.

the number of payment is calculated below:

take log on both sides

Hence, there will be 22 regular payments and 1 extra payment of smaller amount.

The amount of last payment is calculated below:

The amount of addtional payment is 213.48.

answered by: anonymous

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