what is the monthly payment for a $20,230 loan at 11.5 percent for 20 years?
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In this question we will use the concept of Annuities to solve get the amount paid monthly.
We will use the formulae for annuity paid in arrears.
a¬n = (1 - v^n) /i where I is the interest rate and V the present value.
V^n = 1 - (1 + i) ^-n
i = 11.5%
n = 20 × 12=240 since the loan is paid monthly.
Substituting this in the formula we have :
(1 - (1.115)⁻²⁴⁰) / 0.115
= (1 - 4.5085 × 10⁻¹²) / 0.115 =8.6957
Let X be the amount paid monthly then :
Loan = X a¬n
a¬n = 8.6957
Loan =$ 20230
X = 20230/8.6957 = $2326.44
Amount paid monthly is thus $ 2326.44
We will use the formulae for annuity paid in arrears.
a¬n = (1 - v^n) /i where I is the interest rate and V the present value.
V^n = 1 - (1 + i) ^-n
i = 11.5%
n = 20 × 12=240 since the loan is paid monthly.
Substituting this in the formula we have :
(1 - (1.115)⁻²⁴⁰) / 0.115
= (1 - 4.5085 × 10⁻¹²) / 0.115 =8.6957
Let X be the amount paid monthly then :
Loan = X a¬n
a¬n = 8.6957
Loan =$ 20230
X = 20230/8.6957 = $2326.44
Amount paid monthly is thus $ 2326.44
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