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 X, the amount of the regular monthly payment?
1. Computation of Regular Monthly Payments
Present Value of Special Payment = Special Payment / (1+r)^n
n = Number of Months
r = interest rate
Present Value of Special Payment = $29855 / (1+ 0.0135)^2
Present Value of Special Payment = $29064.95
Net Loan need to be repaid = Loan Taken - Present Value of Loan
Net Loan need to be repaid = 67668 - 29064.95
Net Loan need to be repaid = $38603.05
Regular Monthly Payment = Net Loan to be paid / PVA due (1.35%, 4)
Regular Monthly Payment = $38603.05 / 3.9208
Regular Monthly Payment = $9845.74
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