SOLUTION: a man buys a house for R200000. he makes a R50000 down payments and agree to amorised the rest of the debt with qurterly payments over 10 years. interest on debt is 12% compounded

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Question 1076755: a man buys a house for R200000. he makes a R50000 down payments and agree to amorised the rest of the debt with qurterly payments over 10 years. interest on debt is 12% compounded quaterly.
1)what is size of quarterly payment?
2)what is the total amount of payment?
3) what is the total amount of interest paid?
Answer by jorel1380(3719) (Show Source):
You can put this solution on YOUR website!
1)The house is 200000. The down payment is 50000, bringing the value of the loan to 150000. The following formula is used to calculate the fixed monthly payment (P) required to fully amortize a loan of L dollars over a term of n months at a monthly interest rate of c. [If the quoted rate is 6%, for example, c is .06/12 or .005].
P = L[c(1 + c)^n]/[(1 + c)^n - 1]. So:
P=150000 [.03(1+.03)^40]/[(1+.03)^40 -1]
P=150000 [0.04326237789046288227786713810852]
P=R 6489.357 as the quarterly payment
2) 6489.357 x 40=R 259574.267 in total payments.
3) 259574.267-150000=R 109574.267 in interest payments. ☺☺☺☺