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#1 2007-01-27 23:41:25

Toast
Real Member
Registered: 2006-10-08
Posts: 1,321

Mortgages

A person borrows $10 000 to repay a loan in equal instalments over 20 years. The interest rate is 12% p.a.
What is the repayment amount (to the nearest cent) for annual instalments?

dunno

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#2 2007-01-28 00:02:56

Patrick
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Registered: 2006-02-24
Posts: 1,005

Re: Mortgages


Where y is the annual installments, r being the interest rate (0.12), n being the amount of dates of payment and A[sub]0[/sub] being the size of the loan.


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#3 2007-01-28 00:06:50

Toast
Real Member
Registered: 2006-10-08
Posts: 1,321

Re: Mortgages

Hmm thanks Patrick, that works

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#4 2007-01-28 01:17:37

Toast
Real Member
Registered: 2006-10-08
Posts: 1,321

Re: Mortgages

How did you come up with the formula?

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#5 2007-01-29 01:53:55

Patrick
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Registered: 2006-02-24
Posts: 1,005

Re: Mortgages

Well.. It's kinda hard for me to explain in english, but if A[sub]0[/sub] is the amount of money you borrow, y is the size of the installment, r interrest rate pr. installment and n is the amount of installments, the following applies:


and from there I just isolated y since n, r and A[sub]0[/sub] was known.

I could post a proof for the A[sub]0[/sub] formula, but I don't have the time right know. Also, this isn't exactly my favorite topic tongue Maybe when I have some more time I will.


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#6 2007-01-29 06:34:18

Toast
Real Member
Registered: 2006-10-08
Posts: 1,321

Re: Mortgages

Ok thanks Pat, it's ok if you don't post one, anyway I'll be starting school tomorrow so I can ask my teacher.

And it's not my favorite topic either hmm

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#7 2007-01-31 01:58:29

George,Y
Member
Registered: 2006-03-12
Posts: 1,379

Re: Mortgages

$112 in next year isn't the same as that in this year, however, is the same as today's $100.

So you can suppose annual supposedly payment as A in corresponding year. And then calculate their equivalent value today.


X'(y-Xβ)=0

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