More complicated math problem.

[WRB852]

I take out a 10,000$ loan from the bank. The interest rate they charge me at is 15%. If they compound it yearly, and I make payments every month, how much do I have to pay monthly to finish paying after the 5 years. The only way I know how to do this is make a sequence, then guess and check on a calculator. Could someone show me how to find the exact answer?

Also, here's the equation(sequential). U0=10000, Un=Un-1*1.15-x

X being the amount payed each month. Also, this isn't for math homework, I just don't really know how to look this up myself. If you could just point me in the right direction, that would be just as good as telling me.

[Ad Bot]

[Vertzer]

I was taught how to do these kind of questions in a simpler way. Unfortunately, this was 2 years ago.

[FlyGuy45]

I was taught how to do these kind of questions in a similar way. Unfortunately, this was 2 years ago.

[Randomguy]

Off topic: Hey, I live in Ohio, too!

On topic: Only being in eighth grade (ninth grade math class, though), I honestly have no idea how to do this. But I've always loved math, so this is something I'm going to look into.

EDIT: Also, wasn't this someone's avatar?

If so, I just found it on a math help forum site.

[Otis Da HousKat]

I'm not sure how compounded interest works exactly, When compounded does it add interest to the principle at the time it is compounded or onto the starting principle(and subsequent compounding periods each year).

I know the formula for figuring out compounded interest is

A=P(1+r/n)^nt

A= final amount
P= principle
r= interest rate
n= times compounded per year
t= time

So

A=10000(1+.15/1)⁵

A=10000(2.01135719)

A=$20,113.57

The problem is that's a final amount assuming nothing is added or subtracted. I'd say the proper way to do this is to divide 10,000 by 60 to determine a monthly payment with no interest. That comes out to $166.67 per month. After twelve months you would have payed $2000.04.

$10000-2000.04= $7999.96.    2004.04

7999.96 x 1.15= $9119.95

9199.95/48 = $191.67 per month. 2300.04

6899.91x1.15= 7934.90

7934.90/36 = 220.41 per month. 2644.92

5289.98x1.15 = 6083.48

6083.48/24 = 253.48 per month  3041.76

3041.72x1.15= 3497.98

3497.98/12 = 291.50 per month

Total amount payed = 13,488.74

*edit* ^This method seems to involve minimum payments, which is a no-no.


And of course I could be completely loving wrong.


Ya, I have no idea.


And Bisjac is right, they use an interest calculator. I just thought this would be fun to try and figure out.

[tapemaster21]

I use mah ti84 and graph that stuff :D

[Bisjac]

even those bankers don't do the math, they just enter a few numbers in the comp. press enter
heres your print out

[Reactor Worker]

The bank is going to do it in whatever way possible to maximize it's profits.

If I remember correctly, some "e" value was mentioned in my math classes. It was basically the banks little mathematical way of loving you over even more.

Assuming they compound the remaining unpaid yearly balance...

$10,000 - Principle
Red = remaining balance

Year 1: $2000 + .15(10,000) / 12 = $291.67/month

Year 2: $2000 +.15(8000) /12     = $266.66 / month

Year 3: $2000 + .15(6000) /12   =  $241.66

Year 4: $2000 + .15(4000) /12   =  $216.66

Year 5: $2000 + .15 (2000)/12  =   $191.66

But that is just my best guess

[WRB852]

I use mah ti84 and graph that stuff :D

And you get a wrong answer.

The bank is going to do it in whatever way possible to maximize it's profits.

If I remember correctly, some "e" value was mentioned in my math classes. It was basically the banks little mathematical way of loving you over even more.

Assuming they compound the remaining unpaid yearly balance...

$10,000 - Principle

Year 1: $2000 + .15(10,000) / 12 = $291.67/month

Year 2: $2000 +.15(8000) /12     = $266.66 / month

Year 3: $2000 + .15(6000) /12   =  $241.66

Year 4: $2000 + .15(4000) /12   =  $216.66

Year 5: $2000 + .15 (2000)/12  =   $191.66

But that is just my best guess

Wait, where did you get 2000$?

[Reactor Worker]

$2000 would be the portion of the $10,000 total if you split it between 5 years. Then I just added the interest after wards.

[Otis Da HousKat]

Ya, I used a calculator. I was way off.

[Otis Da HousKat]

3500.04
3199.92
2899.92
2599.92
2299.92

Total: 14,499.72



A real debt calculator tells me that by paying $235 a month you will pay off the debt in 60 months at a final cost of $14,097

[TapeDeck]

P = C (n + r) t
where
    P = future value
    C = initial deposit
    r = interest rate (expressed as a fraction: eg. 0.06)
    n = # of times per year interest in compounded
    t = number of years invested

there now do the maths

[MegaScience]

Distance = squareRoot( (x₁-x₂)+(y₁-y₂) )

[Otis Da HousKat]

P = C (n + r) t
where
    P = future value
    C = initial deposit
    r = interest rate (expressed as a fraction: eg. 0.06)
    n = # of times per year interest in compounded
    t = number of years invested

there now do the maths

no, that would come out to $57,500.