Loan repayments! (1 Viewer)

[atakach99]

Mr and Mrs Jones mortgage their house for $50 000

a) Find the amount of the monthly repayments they will have to make if the mortgage is over 25 years, and if the interest on the mortgage is 14% p.a.

b) If they want to pay for their mortgage out after 15 years, what monthly repayment will they need to make?

 

[eskimoh]

do u have answers?
i got
a) P= $531.79

and assuming that the same interest of 14%pa is charged for part 2,
b) $595.06 ??

 

[crammy90]

Mr and Mrs Jones mortgage their house for $50 000

a) Find the amount of the monthly repayments they will have to make if the mortgage is over 25 years, and if the interest on the mortgage is 14% p.a.

b) If they want to pay for their mortgage out after 15 years, what monthly repayment will they need to make?

lol i tried
i) 598.82
ii) 663.19

i dont think there right tho as i do 598.82 X 300 mnths = some number like 180,000 aha and i dont think youd pay that much for a 50,000 loan but the rate is quiet high so i dno
if u want working i could aha

 

[Timothy.Siu]

wow all different answers =S

a)601.88
b)665.87

 

[crammy90]

wow all different answers =S

a)601.88
b)665.87

aha diversity!
did u use 14/12 = whatever (dont have calc) for the rate for each month
and then do it for 300 months?

 

[eskimoh]

lol ill do my quick working out (or a basis of what i did) to show how i got my answer

a) let P = monthly repayment
month1 = 50 000 - P
month 2 = 50 000 -2P
.
.
.
month 12 or (A1) = 50 000 - 12P (1.14)
month 13 = [50 000 -12P (1.14)] -P
.
.
month 24 or (A2) = [(50 000(12P)(1.14)) - 12P] [1.14]
= 50000-12P(1.14)^2 - 12P(1.14)

.
.
.
.etc.
.
A25 (25th year) = 50 000-12P(1.14)^25 - 12P(1.14)^24 - ............... - 12P(1.14)
=50000(1.14)^25 -12P(1.14)^25 - 12P(1.14)^24 - .............-12P(1.14)

= 50 000(1.14)^25 - [12P(1.14)] (1(1.14)^25 -1)/(0.14) <---using a G.P SUM


at this time, the amnt left = 0 therefore

[12P(1.14)] (1(1.14)^25 -1)/(0.14) = 50 000 (1.14)^25
then solve and i got $ 531


b) i did the same for part b) except limiting it to 15 years

 

[atakach99]

answers

a) $601.88

b) $665.87

How do u do it???

thnkxs

 

[atakach99]

timothy got the right answers

 

[lyounamu]

That's easy.

Just divide the percentage by 12 and get the numbers multiplied by 12.

 

[Cleft]

Yeah... how do you get that?

As the loan will be repayed after 25 years.
0 = 50 000(1.016^300) - M(1.0116^299 + 1.0116^288 + ... + 1.0116^1 +1)

Thus, 50 000(1.016^300) = M(1.0116^299 + 1.0116^288 + ... + 1.0116^1 +1)

Thus, M = 50 000(1.016^300) / (1.016^299 + 1.0116^288 + ... + 1.016^1 +1)

Now the denominator is a geometric series with a = 1, r = 1.0116 and n = 300

So, Sn = a(r^n - 1) / (r - 1)
= 1(1.0116^300 - 1) / (1.0116 - 1)

Now, that means that 50 000(1.0116^300) / Sn

M = $598.82


That's my working, can you point out where I went wrong?

 

[Timothy.Siu]

Yeah... how do you get that?

As the loan will be repayed after 25 years.
0 = 50 000(1.016^300) - M(1.0116^299 + 1.0116^288 + ... + 1.0116^1 +1)

Thus, 50 000(1.016^300) = M(1.0116^299 + 1.0116^288 + ... + 1.0116^1 +1)

Thus, M = 50 000(1.016^300) / (1.016^299 + 1.0116^288 + ... + 1.016^1 +1)

Now the denominator is a geometric series with a = 1, r = 1.0116 and n = 300

So, Sn = a(r^n - 1) / (r - 1)
= 1(1.0116^300 - 1) / (1.0116 - 1)

Now, that means that 50 000(1.0116^300) / Sn

M = $598.82


That's my working, can you point out where I went wrong?

umm from first glance i hope u didn't just use 1.016 because its 1.01666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666666

 

[crammy90]

Yeah... how do you get that?

As the loan will be repayed after 25 years.
0 = 50 000(1.016^300) - M(1.0116^299 + 1.0116^288 + ... + 1.0116^1 +1)

Thus, 50 000(1.016^300) = M(1.0116^299 + 1.0116^288 + ... + 1.0116^1 +1)

Thus, M = 50 000(1.016^300) / (1.016^299 + 1.0116^288 + ... + 1.016^1 +1)

Now the denominator is a geometric series with a = 1, r = 1.0116 and n = 300

So, Sn = a(r^n - 1) / (r - 1)
= 1(1.0116^300 - 1) / (1.0116 - 1)

Now, that means that 50 000(1.0116^300) / Sn

M = $598.82

That's my working, can you point out where I went wrong?

hah same as mine lol what we doing wrong aha

 

[Cleft]

Haha, seems they're right... I'll try it without terminating the decimal.

Yeah, that was the problem, use the repeating decimal and it comes out fine.
It's a bitch to put into a calculator though... grrr!

 

[eskimoh]

ohhhhhh i see you didnt specify that the interest was calculated monthy so i took it as monthly repayments and yearly interst calculations
lol
but once i did it again i got timothys answers

 

[Cleft]

ohhhhhh i see you didnt specify that the interest was calculated monthy so i took it as monthly repayments and yearly interst calculations
lol
but once i did it again i got timothys answers

Not to be an ass or anything, but isn't that assumed with monthly repayments?

 

[henry08]

Lol at the 3 differernt answers in this thread with 2 people getting each answer. I'll work it out msyelf later.