can anyone do this?? (1 Viewer)

[=slade=]

nat and andy take out a loan of $150 000 over 30 years at 8.25% pa interest compunding monthly. thier repayment is $1127/month. after 5 years of repaying the loan they make a lump sum payment of $40 000.

a) how long will it take to repay the loan?

b) how much is saved by making the lump sum payment?

i have no idea which formula's to use etc, can anyone help me out here? thanks!!


** also, does anyone have any guidelines they could give me so i know when to use future value, present value, or compund interest formula (when the exam doesn't specify) ??

 

[sally_33]

i posted exactly the same question here (third post down) and no one answered it. PC did it with a graphics calculator but thought it was too hard for the general course without one. so im not bothering and just hoping we dont have to know it. but i am going to go a bit early and ask my teacher just in case

 

[polomolo]

nat and andy take out a loan of $150 000 over 30 years at 8.25% pa interest compunding monthly. thier repayment is $1127/month. after 5 years of repaying the loan they make a lump sum payment of $40 000.

a) how long will it take to repay the loan?

b) how much is saved by making the lump sum payment?

i have no idea which formula's to use etc, can anyone help me out here? thanks!!


** also, does anyone have any guidelines they could give me so i know when to use future value, present value, or compund interest formula (when the exam doesn't specify) ??

I have problems with that "knowing which formula to use" too, i'm guessing in this question, first u gota find how much the loan of $150 000 will be over 5 years time with the Compound interest formula
150000(1+(0.0825/12))^5 = $155 227.64
then do a future value seperately using the $1127 and 8.25% (0.0825/12 = 0.006875) then get the answer, of that, and i think it'll be about $83,350.27.
155 227.64 - 83 350.27= $71 877.37
71 877.37 - 40 000 = $31 877.37

ok...i'v done sumin wrong, but like i think this has to be your structure
good luck, look at me struggeling on a bloody financial maths question and i thought i was good at that lol

 

[polomolo]

lol just ignore my answer, i dunoo wat the hell i did right there, i keep readin it and i'm like "what the!"

 

[=slade=]

lol, thanks for trying anyway!!!

n sally33, thanks i think i might go in early too!

good luck guys i hate f maths its the worst topic that n algebra

 

[polomolo]

lol, thanks for trying anyway!!!

n sally33, thanks i think i might go in early too!

good luck guys i hate f maths its the worst topic that n algebra

financial maths can be extremely annoying sometimes, but algebraic modelling, i'm alright with that...i just hate...i hate PROBABILITY!! who cares HOW MANY BLOODY TIMES THE COIN IS GONA SHOW HEADS, LIKE AM I GONA SIT THERE AND DRAW A BLOODY DIAGRAM EVERYTIME I TOSS A COIN!
lol

anyway good luck to you too, that question seems really hard compared to HSC exam questions, their very much easier (unles thats from an exam lol, i duno )

 

[Jayphen]

Well I know that an annuity is when you continue to invest amounts of money over the period of time ..

For example, say you invested $100 at the end of each month every month for 5 months, and the interest rate was 1% per month compound .. The first $100 invested would earn compound interest for 4 months, the second $100 would earn compound interest for 3 months, etc.

So that seperates annuities from normal compound interest. The key is, the person keeps investing over a period of time.

Current value of an annuity is when the question asks how much you need to invest NOW to get X amount in the end, and future value of an annuity is when it asks how much money you will have at the end of the periods.