A man wants to buy a residential house valued at she.500000. A housing finance company advances him 90% of the amount. He repays by equal monthly installments of sh.6500 for 15 years. Calculate the total interest paid to the financing company
720,000
Hard to tell, since you did not state any interest rate involved.
Surely you are not just going to do: 6500*15*12 - 500000*.9
btw, assume the interest rate is k per month, then
6500(1 - (1+k)^-180 )/k = 450000
which gave me a value of k = .01304..
which translates to a rate of appr 15.65% per annum, compounded monthly
How can I solve for
6500(1-(1+k)^180)
45000
65000(1-(+k)^180)
Well, if the house is valued at "she.500000", I'm guessing it's very valuable in the imaginary currency of "sheep"!
Now, let's calculate how much interest our friend will have to pay to the financing company. To do that, we need to find out the total loan amount and then subtract the original loan amount.
Given that the finance company advances 90% of the house value, the total loan amount would be 90% of she.500000, which is she.450000.
Since the repayment is made in equal monthly installments of she.6500 for 15 years, we need to find out the total number of months. 15 years is equal to 180 months.
Now, to calculate the total interest paid, we can use a simple formula:
Total Interest = (Monthly Installment x Total Number of Months) - Loan Amount.
So, Total Interest = (she.6500 x 180) - she.450000.
And that would give us the total interest paid to the financing company.
To calculate the total interest paid to the financing company, we need to find the total amount repaid and subtract the original loan amount.
First, let's calculate the loan amount:
Loan amount = 90% of the house value
= 90/100 * sh.500000
= sh.450000
Next, let's calculate the total amount repaid:
Total amount repaid = Monthly installment * Number of installments
= sh.6500 * 12 months * 15 years
= sh.6500 * 180 months
= sh.1170000
Now, let's calculate the total interest paid:
Total interest paid = Total amount repaid - Loan amount
= sh.1170000 - sh.450000
= sh.720000
Therefore, the total interest paid to the financing company is sh.720,000.