Loans

**joblo** · December 9th 2007, 06:49 PM

if anyone can give me a hand I am doing a test review and am stuck on this question.. thanks in advance so much

Question:
A $6500 dollar loan at 11.25% compounded monthly is to be repaid by three equal payments due three, six, and twelve months after the date of the loan. Calculate the size of each payment....

Thanks so much guys i know this is my 1st post..
thanks...
-Eric

**kalagota** · December 10th 2007, 05:43 AM

Originally Posted by joblo

if anyone can give me a hand I am doing a test review and am stuck on this question.. thanks in advance so much

Question:
A $6500 dollar loan at 11.25% compounded monthly is to be repaid by three equal payments due three, six, and twelve months after the date of the loan. Calculate the size of each payment....

Thanks so much guys i know this is my 1st post..
thanks...
-Eric

so you would have to pay at equal amounts in different times..

thus, if $X$ is the amount of payment, then out working equation would be

$i^{(12)} = .1125 \implies i = .009375$

so,

$<br /> 6500 = X(1.009375)^{-3} + X(1.009375)^{-6} + X(1.009375)^{-12}$
$= X((1.009375)^{-3} + (1.009375)^{-6} + (1.009375)^{-12})<br />$

thus, $X = \frac{6500}{(1.009375)^{-3} + (1.009375)^{-6} + (1.009375)^{-12}}$

and $X = 2311.5134$

**joblo** · December 10th 2007, 06:57 AM

thanks a lot, very helpful!!!!

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