Ice-cream Posted March 12, 2005 Share Posted March 12, 2005 hey guys. i need some help with this question: A man borrowed $40000 from a bank at a rate of 24% pa compounded monthly. At the end of each month, he repaid $4000. How much did he still owe the bank after the 5th payment. Can someone give me some tips or tell me the steps i should take to solve this problem. (by the way, the answer is $23347 but i can't seem to get that answer no matter what i try to do) thanx Link to comment Share on other sites More sharing options...
Primarygun Posted March 12, 2005 Share Posted March 12, 2005 Find out the rate per month* The money owe after each payment. Link to comment Share on other sites More sharing options...
Primarygun Posted March 12, 2005 Share Posted March 12, 2005 I am thinking about how to calculate the number of years that he can stop paying that. Link to comment Share on other sites More sharing options...
coquina Posted March 12, 2005 Share Posted March 12, 2005 hey guys. i need some help with this question: A man borrowed $40000 from a bank at a rate of 24% pa compounded monthly. At the end of each month' date=' he repaid $4000. How much did he still owe the bank after the 5th payment. Can someone give me some tips or tell me the steps i should take to solve this problem. (by the way, the answer is $23347 but i can't seem to get that answer no matter what i try to do) thanx[/quote'] The annual interest rate is 24% (bloodsuckers!) compounded monthly - that means the monthly interest is 24 divided by the number of months in the year. You have to do it month by month - the first month you multiply the original balance times the monthly interest and add the result to the balance of the loan, then subtract the payment. This gives you the balance of the loan after the end of the first month, which is the number you use to multiply by the monthly interest rate to get the interest charged for month 2, then subtract the payment. Do the same thing for months 3, 4, and 5. Link to comment Share on other sites More sharing options...
J.C.MacSwell Posted March 13, 2005 Share Posted March 13, 2005 The annual interest rate is 24% (bloodsuckers!) compounded monthly - that means the monthly interest is 24 divided by the number of months in the year. You have to do it month by month - the first month you multiply the original balance times the monthly interest and add the result to the balance of the loan' date=' then subtract the payment. This gives you the balance of the loan after the end of the first month, which is the number you use to multiply by the monthly interest rate to get the interest charged for month 2, then subtract the payment. Do the same thing for months 3, 4, and 5.[/quote'] It is less than 2% per month because it is compounded monthly. Link to comment Share on other sites More sharing options...
coquina Posted March 13, 2005 Share Posted March 13, 2005 It is less [/b'] than 2% per month because it is compounded monthly. I have been figuring simple interest bank loans for years - this is the way accountants do it - also, I came up with the answer that was given. Annual interest 24% Mo Int. 2% Month#__Int._______Pmt.________ Bal. Bal fwd._______________________40000 1_______800______ -4000_______ 36800 2_______736______ -4000_______ 33536 3_______670.72____-4000________30206.72 4_______604.1344__-4000________26810.8544 5_______536.21701_-4000________23347.07149 The correct answer was given as 23,347, so, unless you want to quibble about $.07??? Link to comment Share on other sites More sharing options...
Cyanide Posted March 15, 2005 Share Posted March 15, 2005 Wouldn't the equation A= Pe^(rt) suffice? Link to comment Share on other sites More sharing options...
coquina Posted March 15, 2005 Share Posted March 15, 2005 Wouldn't the equationA= Pe^(rt) suffice? 1. Some people don't "get" math unless the reasoning behind it is explained step by step. 2. In the real world, payment is broken down into interest and principle month by month and the totals are posted to each account. If you make an "amortization schedule" as I did above, you just go to the proper month and break down your post accordingly. 3. If you're going to post a formula, then explain what each part of it represents. Link to comment Share on other sites More sharing options...
Dave Posted March 15, 2005 Share Posted March 15, 2005 Wouldn't the equationA= Pe^(rt) suffice? Yes, it would; but it's a little confusing for people who are just coming to grips with compound interest (without meaning to be condescending) as coquina rightly says. For the curious who haven't really touched calculus all that much, the equation is derived from a differential equation; i.e. looking at the rate of change of something like a bank balance or other things like a heated object over time. I think that's the best way I can think of to phrase it. Link to comment Share on other sites More sharing options...
Guest crawforddavi Posted April 6, 2005 Share Posted April 6, 2005 help please i am trying to solve for “T” could u help? P = Principal R = Rate in decimal N = Number of times compounded a year T = Number of Year Compounded A = Finishing Amount A = P(1 + (R/N))NT And after that could u help me solve for “N” Link to comment Share on other sites More sharing options...
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