Question

Bob Pearson borrowed $24000 from a bank at an interest rate of 9% compounded monthly. The loan will be repaid in 72 equal monthly installments over 6 years. What is his monthly payment amount? Immediately after his 20th payment, Bob desires to pay off the remainder of the loan in a single payment. What is this remaining balance? Monthly Payment =$ Single payment for remaining Balance after 20th payment = $ Last saved at 10:20:17

Answer 1

1)
	EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
	Where,
	EMI= Equal Monthly Payment
	P= Loan Amount
	R= Interest rate per period
	N= Number of periods
	= [ $24000x0.008 x (1+0.008)^72]/[(1+0.008)^72 -1]
	= [ $180( 1.008 )^72] / [(1.008 )^72 -1
	=$432.61
2)	Single payment after 20th payment
	Present Value Of An Annuity
	= C*[1-(1+i)^-n]/i]
	Where,
	C= Cash Flow per period
	i = interest rate per period
	n=number of period
	= $432.6129[ 1-(1+0.0075)^-52 /0.0075]
	= $432.6129[ 1-(1.0075)^-52 /0.0075]
	= $432.6129[ (0.322) ] /0.0075
	= $18,571.04