A person took a loan of $1000 to be paid in four payments. The first payment is due at the end of the 3rd month. The second payment is 2 times the first payment and is due at the end of the 6th month. The third payment is 3 times the first payment and is due at the end of the 9th month, and the final payment is due at the end of the 12th month, and is 4 times the first payment. Calculate the amount of payment that will be done using the simple interest rate of8%pa and the focal date of: a. 6th month b. 12th month
(Solved Homework): A person took a loan of $1000 to be paid in four payments. The first payment is due at the end of the 3rd month…
Expert Answer
Don't use plagiarized sources. Get Your Custom Essay on
(Solved Homework): A person took a loan of $1000 to be paid in four payments. The first payment is due at the end of the 3rd month…
Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT!
| The total loan amount to be paid back in 12 months along with interest = $1000 + ($1000*8%) = $1080 | |||||||||
| Let us assume ne first payment after 3 months be x. | |||||||||
| Hence, 2nd Installment = 2x, 3rd Installment = 3x and Final payment = 4x | |||||||||
| We can derive the following equation to find out the value of x. | |||||||||
| $1080 = x + 2x + 3x + 4x | |||||||||
| $1080 = 10x | |||||||||
| x = $108 | |||||||||
| 6th month payment = 2x = 2 * $108 = $216 | |||||||||
| 12th month payment = 4x = 4*$108 = $432 | |||||||||
