The Suduko family are buying a new 4 bedroom house in a country town and will...

The Suduko family are buying a new 4 bedroom house in a country town and will borrow $600 000 from a bank at a rate of 8.0 per cent per annum compounded monthly for 25 years.

REQUIRED:

(i) Calculate the monthly loan repayment.
(ii) Calculate the principle and interest components of the 48^th repayment

(4 + 6 = 10 marks)

Expert Solution

(i)	Monthly Loan repayment	$ 4,630.90

Working:

	Monthly Loan repayment	=-pmt(rate,nper,pv,fv)
		$ 4,630.90

	Where,
	rate	=	8.0%/12	=	0.006666667
	nper	=	25*12	=	300
	pv	=			$ 6,00,000
	fv	=			0

(ii)		48th repayment
	Principal	$ 862.16
	Interest	$ 3,768.74


Working:
	Loan Value at the end of 47th repayment	=pv(rate,nper,pmt,fv)
		$ 5,65,311.15

	Where,
	rate	=	8.0%/12	=	0.006666667
	nper	=	300-47	=	253
	pmt			=	$ -4,630.90
	fv			=	0


	Interest in 48th payment	=	Loan Value at the end of 47th repayment	*	Monthly Interest rate
		=	$ 5,65,311.15	*	0.006666667
		=	$ 3,768.74

	Principal repaid	=	Monthly Payment	-	Interest Paid
		=	$ 4,630.90	-	$ 3,768.74
		=	$ 862.16

jeff jeffy answered 2 years ago

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