If you obtain a loan of 800,000 pesos at the rate of 10% compounded annually in order to build a house, how much must you pay monthly to amortize the loan within a period of ten years starting at the end of first month?
10,382.04 pesos
Step-1:Calculation of equivalent monthly interest | ||||
(1+i)^n | = | (1+i)^n | ||
(1+i)^12 | = | (1+0.10)^1 | ||
(1+i)^12 | = | 1.10 | ||
1+i | = | 1.10^ (1/12) | ||
1+i | = | 1.00797414 | ||
i | = | 0.00797414 | ||
So, | ||||
Equivalent monthly interest rate | = | 0.00797414 | ||
Step-2:Calculation of monthly payment | ||||
Monthly Payment | =-pmt(rate,nper,pv,fv) | |||
= 10,382.04 pesos | ||||
Where, | ||||
rate | = | 0.00797414 | ||
nper | = | 10*12 | = | 120 |
pv | = | 8,00,000 pesos | ||
fv | = | 0 |
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