Question

Tendai bought an empty stand for R240 000,00. He made a down payment of R100 000,00
and obtained a 20 year mortgage bond for the balance at an interest rate of 19,5% per
annum, compounded monthly. The size of his monthly payments are? [1] R3 983,20. [2] R2 924,11. [3] R2 323,53. [4] R28 096,70.

Answer 1

Given :  Tendai bought an empty stand for R240 000 . down payment of R100 000 obtained a 20 year mortgage bond for the balance at an interest rate of 19,5% per  annum, compounded monthly.

To find : EMI

Solution:

Using the Formula for EMI , (EMI = Equated Monthly Installments)

EMI = [P x (R/100) x (1+(R/100))ⁿ]/[(1+(R/100))ⁿ-1]

P = 240000 - 100000 = 140000

R = 19.5 % per annum = 19.5/12 % per month

n = 20 years = 240 months

EMI  = (140000 * 0.01625  * (1 + 0.01625)²⁴⁰)/( (1 + 0.01625)²⁴⁰- 1)

EMI = 2275 * (1.01625)²⁴⁰)/( (1.01625)²⁴⁰- 1)

EMI =   2,323.53

 [3] R2 323,53.  is correct option

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