+118613 Help me:You borrow $30,000 from the bank to buy a car. You pay them back MONTHLY at a rate of 17% per annum for 10 years. You are also charged $10 a month on bank fees. Whats your total repayment to the bank?
Melody:Help me:You borrow $30,000 from the bank to buy a car. You pay them back MONTHLY at a rate of 17% per annum for 10 years. You are also charged $10 a month on bank fees. Whats your total repayment to the bank?
Is it 17% reducible?
+118613 Melody:So you are telling me that it is simple interest? That would be extremely unusual.
Simple interest is much easier to work out. Working this out with compound interest is quite advanced. I am not sure which way to go.
Are you sure you want simple interest?
Help me:Melody:So you are telling me that it is simple interest? That would be extremely unusual.
Simple interest is much easier to work out. Working this out with compound interest is quite advanced. I am not sure which way to go.
Are you sure you want simple interest?
Oh sorry it is compounded monthly, my mistake.
+118613 Help me:You borrow $30,000 from the bank to buy a car. You pay them back MONTHLY at a rate of 17% per annum for 10 years. You are also charged $10 a month on bank fees. Whats your total repayment to the bank?
Melody:Help me:You borrow $30,000 from the bank to buy a car. You pay them back MONTHLY at a rate of 17% per annum for 10 years. You are also charged $10 a month on bank fees. Whats your total repayment to the bank?
A = R * a (angle n at i)
where
a (angle n at i) = [1 - (1+i) -n ] / i
i = monthly interest rate = 0.17/12 = 0.01416 (the 6 repeats)
n = the term of the loan = 10*12 = 120 months
A = $30000
R = regular monthly repayment
30000 = R * [ 1 - 1.014166666666 -120 ] / 0.014166666666
30000 * 0.0141666666666 / [ 1 - 1.014166666666 -120 ] = R
30000 * 0.0141666666666 / [ 1 - 1.014166666666^-120]
R = $521.39
Monthly payment = 521.39 + 10.00 = $531.39
Total repayment = 531.39 * 120 = $63,766.80
I have used the forumulas for present value of an ordinary annuity. the payments are made at the end of every month.
Is this what you wanted or did you need to work it out from first principals using geometric progressions?
