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4.2 For a loan of R2,750,000 at 12% per year, compounded monthly.
If the loan is to be paid off in 20 years, how much is the monthly payment?
ANSWER:
4.3 For the loan in Question 4.2 above, find the principal repaid in the 190th payment.
ANSWER:
4.4 For the loan in Question 4.2, find the interest paid in the 100th payment.
ANSWER . using a financial calculator
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In this my post, I will solve and answer n.4.2 and n.4.3.
Part 4.2
Use the formula for the monthly payment for a loan
M =
where P is a loan amount; r = = 0.01 is an effective interest rate per month;
n is the number of payments (same as the number of months); M is the monthly payment.
In this problem P = R2,750,000; r = 0.01, n = 20*12 = 240 monthly payments.
Substitute these values into the formula and get for the monthly payment
M = = 30279.87 (rounded).
ANSWER to 4.2. The monthly payment is R30279.87.
Part 4.2 is complete.
Part 4.3
Now they want you find the principal portion of the 190-th payment.
Use the Excel function PPMT, which is specially designed to calculate the principal part
of a classic loan scheme for a specific payment.
For description of this function see this source
wording/text description
https://support.microsoft.com/en-us/office/ppmt-function-c370d9e3-7749-4ca4-beea-b06c6ac95e1b
The format of the function IPMT is as follows
= PPMT(rate, per, nper, principal, fv, type)
In this format "rate" is the effective rate per period = 0.01 (= 0.01 monthly); required parameter
per = 190 - the payment, of which we want to get the principal part; required parameter
nper = 240 - total number of payments; required parameter
principal = 2750000; required parameter
fv is optional (we can omit it);
type is optional (we can omit it, which means that
the payment is due at the end of the monthly period)
So, we write in Excel cell/spreadsheet for the principal part of the 190-th payment
= PPMT(0.01, 190, 240, 2750000), and we get the value of the principal portion for the 190-th payment of R18,229.05.
ANSWER to n.4.3. The principal portion of the 190-th payment is R18,229.05.
Solved.