Question #961df

1 Answer
Apr 5, 2017

Answer:

The thing is; some of your repayment will reduce the outstanding principle sum at every payment cycle (monthly). This will have a bearing on the total amount paid.

Explanation:

#color(blue)("Using compound interest")#

Just using the information provided, without repayment

For annual calculation cycle:

#P(1+x/100)^n#

#$120000(1+6/100)^25 = $515024.486...#
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
For monthly calculation cycle:

#$120000(1+6/(12xx100))^(12xx25) = $535796.3774....#