Amount due at end of loan: 2k + 1600 = 3,600
FV = PV(1 + r)^n
FV/PV = (1 + r)^n...substitute your values...n = 10 yrs * 12 months per year = 120
3600 / 2000 = (1 + r)^120
1.8 = (1 + r)^ 120
1.8^(1 / 120) = 1 + r
1.00491 = 1 + r
0.00491 = r, where r is the monthly rate, so r times 12 will give you the annual stated rate which, when compounded monthly, would give you $3600 in 10 years
so....
0.00491 * 12 = 0.05892 or 5.892%
(1.00491^12) - 1 = 0.06054, or 6.064%
check math...0.05892 /12 = 0.00491
2,000*(1.00491^120) = $3600
I have a question that i have no idea how to get the reverse from it.
You are able to borrow 2,000 for 10 years from a local financier at a simple interest rate of 8% per annum. Assume a single repayment will be made. How much will you need to repay at the end of the loan term? What is the equivalent compound interest rate per annum, assuming monthly compounding.
How do i get the compound from the interest amount. I have no idea the method on doing this.
Thanks if you can help me.
