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Homework answers / question archive / A loan of $50 000 is repaid by monthly level instalments over 20 years at j12 = 9%
A loan of $50 000 is repaid by monthly level instalments over 20 years at j12 = 9%. After 10 years, the loan is refinanced at j2 = 10.5%. What is the new monthly payments?
| PVOrdinary Annuity = C*[(1-(1+i/(f*100))^(-n*f))/(i/(f*100))] |
| C = Cash flow per period |
| i = interest rate |
| n = number of payments I f = frequency of payment |
| 50000= Cash Flow*((1-(1+ 9/1200)^(-20*12))/(9/1200)) |
| Cash Flow = 449.86 |
| Using Calculator: press buttons "2ND"+"FV" then assign |
| PV =-50000 |
| I/Y =9/12 |
| N =20*12 |
| FV = 0 |
| CPT PMT |
| Using Excel |
| =PMT(rate,nper,pv,fv,type) |
| =PMT(9/(12*100),12*20,,50000,) |
| PVOrdinary Annuity = C*[(1-(1+i/(f*100))^(-n*f))/(i/(f*100))] |
| C = Cash flow per period |
| i = interest rate |
| n = number of payments I f = frequency of payment |
| PV= 449.86*((1-(1+ 9/1200)^(-10*12))/(9/1200)) |
| PV = 35512.71 |
| Using Calculator: press buttons "2ND"+"FV" then assign |
| PMT =449.86 |
| I/Y =9/12 |
| N =10*12 |
| FV = 0 |
| CPT PV |
| Using Excel |
| =PV(rate,nper,pmt,FV,type) |
| =PV(9/(12*100),12*10,,PV,) |
| PVOrdinary Annuity = C*[(1-(1+i/(f*100))^(-n*f))/(i/(f*100))] |
| C = Cash flow per period |
| i = interest rate |
| n = number of payments I f = frequency of payment |
| 35512.71= Cash Flow*((1-(1+ 10.5/1200)^(-10*12))/(10.5/1200)) |
| Cash Flow = 479.19 |
| Using Calculator: press buttons "2ND"+"FV" then assign |
| PV =-35512.71 |
| I/Y =10.5/12 |
| N =10*12 |
| FV = 0 |
| CPT PMT |
| Using Excel |
| =PMT(rate,nper,pv,fv,type) |
| =PMT(10.5/(12*100),12*10,,35512.71,) |
