A loan of $50 000 is repaid by monthly level instalments over 20 years at j12 = 9%. After 10 years, the loan is

Question

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?

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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,)

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A loan of $50 000 is repaid by monthly level instalments over 20 years at j12 = 9%

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