Hello. I have been trying to do the following question, but am always getting the same answer, and the answer is high. (doesn't make sense.)
Mr. Kelly wishes to borrow $ 120,000 by way of a loan to purchase a home unit. If the interest rate is 10% per annum compounded annually and the loan extends over 30 years, what will be Kelly’s annual repayment?
* note : The -n, - 30 are to the power of, copy and paste didn't quite work.
Pay = PV / (1 – ((1+I ))-n)/ i
= 120,000 / (1 – ((1+0.1))-30)/ 0.1
= 120,000 / (1 – 0.05730555) / 0.1
= 120,000 / 9.4269144
Pay = $12,729.50
FV = n x pay
30 x 12,729.50
FV = $381,885
I = FV – PV
381,885 – 120,000
I = $261, 885
Hopefully my working outs are understandable.
Any assistance with this problem, would be appreciated.
Mr. Kelly wishes to borrow $ 120,000 by way of a loan to purchase a home unit. If the interest rate is 10% per annum compounded annually and the loan extends over 30 years, what will be Kelly’s annual repayment?
* note : The -n, - 30 are to the power of, copy and paste didn't quite work.
Pay = PV / (1 – ((1+I ))-n)/ i
= 120,000 / (1 – ((1+0.1))-30)/ 0.1
= 120,000 / (1 – 0.05730555) / 0.1
= 120,000 / 9.4269144
Pay = $12,729.50
FV = n x pay
30 x 12,729.50
FV = $381,885
I = FV – PV
381,885 – 120,000
I = $261, 885
Hopefully my working outs are understandable.
Any assistance with this problem, would be appreciated.
