Question

John is repaying a debt with payments of $250 a month. If he misses his payments for

July, August, September and October, what payment will be required in November to

put him back on schedule, if interest is at 14.4% compounded monthly?

pls dun ans in excel.tq

Answer 1

Monthly Payment = $ 250, Interest Rate = 14.4 % compounded monthly, Monthly Rate = 14.4 / 12 =1.2 %

Assuming that monthly payments come in at the end of the month, the payment of July attracts interest for August, September, October, and November, the payment of August attracts interest for September, October and November and so on.

July Payment Accumulated Value = 250 x (1.012)^(4) = $ 262.2177

August Payment Accumulated Value = 250 x (1.012)^(3) = $ 259.1084

September Payment Accumulated Value = 250 x (1.012)^(2) = $ 256.036

October Payment Accumulated Value = 250 x 1.012 = $ 253

November Payment = $ 250

Required Payment at the end of November = 262.2177 + 259.1084 + 256.036 + 253 + 250 = $ 1280.3621 ~ $ 1280.36