OMG genius
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I couldn't think how to get 1/e. Im gonna rep you for that
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anyhow
loan repayment question..: Keirren borrows $150,000 on a 7.5% p/a interest, calculated at the end of each month after Keirren repays an amount.
a)How much is each monthly repayment if Keirren pays off the loan in 10 years.
b)How much would Keirren save if he pays off the loan in 5 years as opposed to 10 years.
P=$150,000, I=0.075/12=1/160 (monthly interest), n=120 monthly repayments
i) A_1=P+I-M
=150000+150000(1/160)-M
=150000(1+1/160)-M
A_2=A1+A1(I)-M
=A1(1+1/160)-M
=[150000(1+1/160)-M](1+1/160)-M
=150000(1+1/160)^2-M(1+1/160)-M
=150000(1+1/160)^2-M[1+(1+1/160)]
A_3=A2(1+1/160)-M
=[150000(1+1/160)^2-M[1+(1+1/160)](1+1/160)-M
=150000(1+1/160)^3-M[1+(1+1/160)+(1+1/160)^2]
...
A_10=150000(1+1/160)^10-M[1+(1+1/160)+(1+1/160)^2+...+(1+1/160)^9]
After 10 years, A_10=0; a=1, r=(1+1/160)
M[(1+1/160)^9-1]/(1/160)=150000(1+1/160)^10
M=[1875(1+1/160)^10]/ 2[(1+1/160)^9 -1]
Don't have a calculator here atm, but that's the answer
ii) Where ever n=10, insert n=5. For the (n-1)term (ie. the 9) insert 4
Then minus it from i) to get difference
Enjoy, Addison