Question

Using the loan particulars below, determine the monthly payment to be done against the loan. Loan Amount: $10,000.00 Interest Rate: 10%/ / Year Periods: 5 years Monthly repoyment: PMT (Interest Rate, Periods of Repoyment, Amount of Loan today) Totol Repayment: Monthly repoyment x Periods Totol interest: Total Repayment - Loon Amount Questions:

1. What could be the ideal Period of Repayment for a customer who is able to pay $1,500 a year?
2. How much is the total repayment done by the customer at the end of that year?
3. What is the total interest paid?

Answer 1

The monthly payment for a loan of $10,000 with an interest rate of 10% and a repayment period of 5 years is $212.47. For a customer who can pay $1,500 a year, the ideal period of repayment would be 15 years. At the end of the first year, the total repayment would be $2,549.64 and the total interest paid would be -$7,450.36.

Step-by-step explanation:

To determine the monthly payment on a loan, you can use the formula PMT (Interest Rate, Periods of Repayment, Amount of Loan today). In this case, the loan amount is $10,000, the interest rate is 10%, and the period of repayment is 5 years. Plugging these values into the formula, we get PMT(10%, 5, $10,000) = $212.47 as the monthly payment.

1. To find the ideal period of repayment for a customer who can pay $1,500 a year, we can rearrange the formula to solve for periods. In this case, the customer is able to pay $1,500 annually, so we have $1,500 = PMT(10%, Periods, $10,000) and solving for Periods, we get Periods = 15 years. Therefore, the ideal period of repayment for this customer would be 15 years.
2. The total repayment done by the customer at the end of that year can be calculated by multiplying the monthly payment by the number of periods, which is $212.47 x 12 = $2,549.64.
3. The total interest paid can be obtained by subtracting the loan amount from the total repayment. In this case, it would be $2,549.64 - $10,000 = -$7,450.36.