Hey I was wondering if anyone could help me with the working out of the following question.
An investor brought an antique table for $6000. He paid 5% as a deposit and borrowed the remaining from the bank for two years at 18% p.a. simple interest,payable monthly. How much interest does he have to pay each month.
+33663 5% of $6000 is (5/100)*6000 = $300 so he borrowed $5700
18% p.a. of $5700 is (18/100)*5700 = $1026
If he pays this back each month he pays $1026/12 = $85.50 each month.
An investor brought an antique table for $6000. He paid 5% as a deposit and borrowed the remaining from the bank for two years at 18% p.a. simple interest,payable monthly. How much interest does he have to pay each month.
As Alan has calculated, the investor will have to borrow $5,700 from the bank. In loans of this type, he/she can't be paying monthly interest forever!!!!. Therefore, the payment must include principal PLUS interest, so that the loan of $5,700 is paid off in TWO YEARS. Based on that, the monthly payment will be=$284.57. So, in two years, there will be $284.57 X 24 payments=$6,829.68 principal + interest. $6,829.68 - $5,700=$1,129.68 will the total interest paid on the loan in two years. As a monthly average, it will be:$1,129.68/24=$47.08 per rmonth.
The formula you use to calculate this is:PMT=PV. R.{[1 + R]^N/ [1 + R]^N - 1}=PMT NEEDED TO PAY OFF A LOAN OF $1, Where R=Interest rate per period, N=number of periods, PMT=periodic payment. PV=Present value.
