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A man borrowed $300,000 from the bank, the bank charges 18% interest for the entire period of the loan. If repayments are 36 monthly installments. Calculate rhe amount of each installments.​

1 Answer

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To calculate the amount of each installment, we can use the formula for the present value of an annuity.

PV = (PMT / r) x [1 - (1 + r)^(-n)]

Where PV is the present value of the loan, PMT is the monthly payment, r is the monthly interest rate (which is 18% divided by 12 months), and n is the total number of payments (which is 36).

Substituting the given values into the formula, we get:

PV = 300,000

r = 0.18/12 = 0.015

n = 36

300,000 = (PMT / 0.015) x [1 - (1 + 0.015)^(-36)]

Solving for PMT, we get:

PMT = PV x r / [1 - (1 + r)^(-n)]

PMT = 300,000 x 0.015 / [1 - (1 + 0.015)^(-36)]

PMT = $11,877.64

Therefore, each installment will be $11,877.64.

User Richard Jones
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