Question

A to Hails borrowed birr 200000 at 6% compounded monthly for 30 years and agree to repay the loan in 360 equal monthly instalments including all interests due. Suppose that immediately after the 24th payment a to hails decides to increase the monthly payment by birr600 per month. How much is the total payment for the first 24th periodic payments

Answer 1

The total payment for the first 24 periodic payments is approximately birr 28,720.16.

Step-by-step explanation:

To calculate the total payment for the first 24 periodic payments, we need to find the monthly payment amount and then multiply it by 24.

Using the formula for the present value of an annuity, we can find the monthly payment amount:

PV=PMT*(1-(1+r)^-n)/r

Plugging in the values: PV = 200,000, r = 0.06/12, and n = 360, we get:

PMT = 200,000 * (0.005*(1+0.005)^360) / ((1 + 0.005)^360 - 1) ≈ 1,196.74

So, the monthly payment is approximately birr 1,196.74.

To find the total payment for the first 24 periods, we multiply the monthly payment amount by 24:

Total payment = monthly payment * number of periods = 1,196.74 * 24 ≈ birr 28,720.16.