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Math Help - Loan Question

  1. #1
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    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

    Thanks in advance

    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
    Last edited by LLZUB; January 18th 2010 at 04:09 PM.
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  2. #2
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    What are you asking; which keys to hit on your calculator?
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  3. #3
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    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
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  4. #4
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    Quote Originally Posted by LLZUB View Post
    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?
    PV = 3392
    I/Y = 24.50
    N = 23
    PMT = 123.43
    FV = Compute
    P/Y = 52
    therefore future value = 6818
    NO. Answer is $20,480
    Anyhow, you should realise that balance owing reduces gradually....

    You're having input problems it looks like; check the manual that came
    with your calculator...or ask someone who knows how to help you...
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  5. #5
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    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
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  6. #6
    MHF Contributor
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    Correct.
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