For a 5-year loan of $50000 with an interest rate of 12% compounded monthly If I

Question

For a 5-year loan of $50000 with an interest rate of 12% compounded monthly If I don't make any payment for two years (assuming no penalties) and pay off the entire loan at the end of the second year, what amount do I need to pay? (please round your answer to the nearest integer) Determine the current amount of money that must be invested at 12% nominal interest. compounded monthly, to provide an annuity of S15000 (per year) for 6 years, starting 12 years from now. The interest rate remains constant over the entire period of time $15,000 11 12 13 14 15 16 17 End of Year Po-?

Explanation / Answer

1 A) First you need to divide the annual interest rate by 12, which is = 12/12=1%.
You also need to calculate the number of time periods ('n') in months, which is 24.

                A = $ 5000(1.01)^24
           A = $ 6348.67

2 A) given the amount total to be paid =$ 6* 15000 =$ 90000
the initial amount taken P = ?
total no of months = 17* 12 = 204
       
            A = $ 90000 = P (1.10)^204
           P = $ 90000/7.6
           P = $ 11821.76

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