A building society offers a low start mortgage of Rs. 40,000with 10 annual repayments starting one year from the loan being taken out. The interest rate applying throughout will be 11 % per annum, but the repayments will only be Rs. 5000 per annum for the first five years. What equal annual payments will be required in each of the last 5 years of mortgage
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Answer:
Step-by-step explanation
A= 40000
R of int= 11 %
1st 5 years, inst will be 5000 each
A = p (1 +r/100 ) ⁿ
25000 = P (1 + 11/100)⁵
25000 = P (111 /100)⁵
25000 =P (1.11)⁵
P = 14836
The A= . 40000 - 14836
= 25164
Int = P ₓ R ₓ T
= 25164 ₓ 11 ₓ 5/100
= 13840
A= 25164 + 13840
= 39000.4
5equal inst = 18873
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