plz help! compound interest

[Ice-cream]

hey guys. i need some help with this question:

 

A man borrowed $40000 from a bank at a rate of 24% pa compounded monthly. At the end of each month, he repaid $4000. How much did he still owe the bank after the 5th payment.

 

Can someone give me some tips or tell me the steps i should take to solve this problem. (by the way, the answer is $23347 but i can't seem to get that answer no matter what i try to do)

 

thanx

[Primarygun]

Find out the rate per month*

The money owe after each payment.

[Primarygun]

I am thinking about how to calculate the number of years that he can stop paying that.

[coquina]

hey guys. i need some help with this question:

 

A man borrowed $40000 from a bank at a rate of 24% pa compounded monthly. At the end of each month' date=' he repaid $4000. How much did he still owe the bank after the 5th payment.

 

Can someone give me some tips or tell me the steps i should take to solve this problem. (by the way, the answer is $23347 but i can't seem to get that answer no matter what i try to do)

 

thanx[/quote']

 

 

The annual interest rate is 24% (bloodsuckers!) compounded monthly - that means the monthly interest is 24 divided by the number of months in the year.

 

You have to do it month by month - the first month you multiply the original balance times the monthly interest and add the result to the balance of the loan, then subtract the payment.

 

This gives you the balance of the loan after the end of the first month, which is the number you use to multiply by the monthly interest rate to get the interest charged for month 2, then subtract the payment.

 

Do the same thing for months 3, 4, and 5.

[J.C.MacSwell]

The annual interest rate is 24% (bloodsuckers!) compounded monthly - that means the monthly interest is 24 divided by the number of months in the year.

You have to do it month by month - the first month you multiply the original balance times the monthly interest and add the result to the balance of the loan' date=' then subtract the payment.

 

This gives you the balance of the loan after the end of the first month, which is the number you use to multiply by the monthly interest rate to get the interest charged for month 2, then subtract the payment.

 

Do the same thing for months 3, 4, and 5.[/quote']

 

It is less than 2% per month because it is compounded monthly.

[coquina]

It is less [/b'] than 2% per month because it is compounded monthly.

 

I have been figuring simple interest bank loans for years - this is the way accountants do it - also, I came up with the answer that was given.

 

Annual interest 24% Mo Int. 2%

Month#__Int._______Pmt.________ Bal.

Bal fwd._______________________40000

1_______800______ -4000_______ 36800

2_______736______ -4000_______ 33536

3_______670.72____-4000________30206.72

4_______604.1344__-4000________26810.8544

5_______536.21701_-4000________23347.07149

 

The correct answer was given as 23,347, so, unless you want to quibble about $.07???

[Cyanide]

Wouldn't the equation

A= Pe^(rt) suffice?

[coquina]

Wouldn't the equation

A= Pe^(rt) suffice?

 

1. Some people don't "get" math unless the reasoning behind it is explained step by step.

 

2. In the real world, payment is broken down into interest and principle month by month and the totals are posted to each account. If you make an "amortization schedule" as I did above, you just go to the proper month and break down your post accordingly.

 

3. If you're going to post a formula, then explain what each part of it represents.

[Dave]

Wouldn't the equation

A= Pe^(rt) suffice?

 

Yes, it would; but it's a little confusing for people who are just coming to grips with compound interest (without meaning to be condescending) as coquina rightly says.

 

For the curious who haven't really touched calculus all that much, the equation is derived from a differential equation; i.e. looking at the rate of change of something like a bank balance or other things like a heated object over time. I think that's the best way I can think of to phrase it.

[Guest crawforddavi]

help please

 

i am trying to solve for “T” could u help?

 

P = Principal

R = Rate in decimal

N = Number of times compounded a year

T = Number of Year Compounded

A = Finishing Amount

 

A = P(1 + (R/N))NT

 

And after that could u help me solve for “N”