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You can also take a home loan valued at R750 000 to start property rental business. The interest on the home loan is 12% per annum, and the repayment period is 20 years. Calculate your monthly repayment amount

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To calculate the monthly repayment amount for a home loan, we can use the formula for a monthly loan payment:

M = P * (r * (1+r)^n) / ((1+r)^n - 1)

Where:
M is the monthly repayment amount,
P is the principal loan amount,
r is the monthly interest rate,
n is the total number of monthly payments.

In this case, the principal loan amount (P) is R750,000, the annual interest rate is 12%, the repayment period is 20 years.

First, we need to convert the annual interest rate to a monthly interest rate. Since there are 12 months in a year, the monthly interest rate (r) is 12% / 12 = 1% = 0.01.

Next, we need to calculate the total number of monthly payments (n). Since the repayment period is 20 years, the total number of monthly payments is 20 * 12 = 240.

Now, we can substitute these values into the formula:

M = 750,000 * (0.01 * (1+0.01)^240) / ((1+0.01)^240 - 1)

Using a calculator, we can evaluate this expression to find M = R8,258.94

Therefore, the monthly repayment amount for the home loan is approximately R8,258.94.
User Kenny Meyer
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