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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?
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Hmm thanks Patrick, that works
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How did you come up with the formula?
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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:
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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
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$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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