Question

You borrow 90,000€ from the bank. The bank offers the following conditions: r12:9%; n=10years; and the loan is to be paid back in constant monthly payments. You agree on a waiting period for the first year. Find the payments.

Answer 1

Loan will be paid in monthly payments, however there is a wait period of one year, so in one year amount will grow to.

Loan amount = 90000 * (1 + .129/12)¹²

                        = 90000 * (1.01075)¹²

                         = 90000* 1.136907

                        = 102321.64

Now we will calculate EMI.

If the loan amount is P, rate on interest (monthly is r, and loan term is n the EMI will be

EMI = P*r[(1 +r)^n]/ [(1+ r)^n- 1]

Where,

              Loan amount (P) = $102321.64

                Time (n) = 120

               Interest rate [r] = 1.075% /period

Let's put all the values in the formula to calculate EMI

EMI = 102321.64*0.01075[(1 +0.01075)^120]/ [(1+ 0.01075)^120- 1]

        = 1099.95763[(1.01075)^120]/ [(1.01075)^120- 1]

        = 1099.95763[3.607862691]/ [3.607862691- 1]

        = 1099.95763[3.607862691]/ [2.607862691]

        = 1099.95763[1.38345577144499]

        = 1521.74

EMI = $1521.74

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