# Loan Question

• Jan 18th 2010, 03:44 PM
LLZUB
Loan Question
Hey everyone, im having a bit of trouble remembering how to do these questions from corporate finance

A 29 year old loan requires weekly payments of 125.43 including interest at 24.50% compounded weekly.

a) What was the original amount of the loan?
b) What is the loan's balance 23.00 years later (just after the schedualed payment)?

I have a texes instruments BAII Plus calculator so im able to use that to do the calculations

So far I have:

PV = Compute
I/Y = 24.50
N = 52*29 = 1508? (compounded weekly)
PMT = 125.43
FV = no clue how to calculate this
• Jan 18th 2010, 05:35 PM
Wilmer
• Jan 18th 2010, 06:05 PM
LLZUB
I think I got it,

A)

PV = Compute
I/Y = 24.50
N = 29
PMT = 125.43
FV = 0
P/Y = 52

therefore PV = \$3392

B)

PV = 3392
I/Y = 24.50
N = 23
PMT = 123.43
FV = Compute
P/Y = 52

therefore future value = 6818
• Jan 18th 2010, 08:28 PM
Wilmer
Quote:

Originally Posted by LLZUB
PV = Compute
I/Y = 24.50
N = 29
PMT = 125.43
FV = 0
P/Y = 52
therefore PV = \$3392

NO. Answer is much higher: \$26,600
If I lend you \$3392, will you pay me back \$125.43 per week for 29 years?
Quote:

PV = 3392
I/Y = 24.50
N = 23
PMT = 123.43
FV = Compute
P/Y = 52
therefore future value = 6818
Anyhow, you should realise that balance owing reduces gradually....

You're having input problems it looks like; check the manual that came
• Jan 19th 2010, 02:43 AM
LLZUB
Ooo, ok!

ya i thought that it was too low

so if I change N to:

N=1508 (29*52)

then my PV = 26599.65
• Jan 19th 2010, 04:48 AM
Wilmer
Correct.