Question

He borrows $1.5 million from ABC Bank to start this business. The bank charged him an add-on rate 0.16% per month and the repayment period is 4 year. How much he has to repay every month?

Answer 1

Monthly payment	=	[P × R × (1+R)^N ] / [(1+R)^N -1]
Using the formula:
Loan amount	P	$                                                       1,500,000
Rate of interest per period:
Annual rate of interest		1.920%
Frequency of payment	=	Once in 1 month period
Numer of payments in a year	=	12/1 =	12
Rate of interest per period	R	0.0192 /12 =	0.1600%
Total number of payments:
Frequency of payment	=	Once in 1 month period
Number of years of loan repayment	=	4
Total number of payments	N	4 × 12 =	48
Period payment using the formula	=	[ 1500000 × 0.0016 × (1+0.0016)^48] / [(1+0.0016 ^48 -1]
Monthly payment	=	$                                                      32,490.34

Monthly payment is $32,490.34

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