# Superannuation

• Dec 2nd 2011, 11:45 PM
Sunyata
Superannuation
Hey guys,

I've been trying to solve this question for ages but I seem to get the same (but wrong) answer ....

The equation I derive is the amount remaining = 200 000 x r^n - 1051.41 (r^n - 1)/(r - 1) [where r = interest = 3013 / 3000]. However, when I try what it is after 6 years (72 months - isn't it just subbing it in?), I keep on getting \$184 428.94. That doesn't seem right at all.... which made my answer for the final question really really off (19 years?!??!)

Thanks for your help!
• Dec 3rd 2011, 05:26 AM
bjhopper
Re: Superannuation
I went to a mortage calculator on line and get a monthly payment of 1342 dollars per month.There is a CPR (capital recovery factor) which you can find on line where you can aso find how the factor is derived, Principal times factor = monthly repayment not including any other charges
• Dec 3rd 2011, 06:52 PM
Wilmer
Re: Superannuation
Quote:

Originally Posted by Sunyata
The equation I derive is the amount remaining = 200 000 x r^n - 1051.41 (r^n - 1)/(r - 1) [where r = interest = 3013 / 3000].

Monthly payment is NOT 1051.41; should be 1336.32

And r = .052/12 ; where does 3013/3000 come from?
• Dec 4th 2011, 01:04 AM
Sunyata
Re: Superannuation
Re: Wilmer

Are you sure about the monthly repayment? Because the question itself states it is?

As for the 3013/3000, it's just the fraction of the decimal u get from diving 5.2 by 100 then 12...
• Dec 4th 2011, 05:14 AM
Wilmer
Re: Superannuation
Quote:

Originally Posted by Sunyata
Are you sure about the monthly repayment? Because the question itself states it is?
As for the 3013/3000, it's just the fraction of the decimal u get from diving 5.2 by 100 then 12...

YES. Did you not read BJHopper's reply?
He's correct with ~\$1,342; 1342.108103 to be exact...
My 1336.32 was assuming beginning of period payments...

The formula is:
P = A*R / [1 - 1/(1 + R)^N]
where:
P = monthly Payment (?)
A = Amount borrowed (200000)
N = Number of months (20*12 = 240)
R = Rate per month (.052 / 12 = .0043333...)

P = 200000 * .0043333 / [1 - 1 / (1 + .0043333)^240] = 1342.108103...

You can easily confirm above by googling "loan payment formula".

As far as "the question" stating 1051.41, I have no idea; we're not
here to "guess" the intentions of your teacher!

Using 3013/3000 gives 1.0043333... which is 1 + i, not i;
I suggest you don't use that method: NOT standard.
If your teacher insists on this method, have him/her fired (Wink)