Question

A loan of P500,000 was signed by Liza who promised to pay it at the beginning of each month for 5 years. If money is worth 12% compounded monthly, what will be the total sum paid by Liza?

Answer 1

Answer:

3,604,389

Step-by-step explanation:

Monthly payment P = $\frac{a}{[(1+r)^{n} - 1] / [r(1+r)^{n}] }$

where a = total loan amount, r = periodic rate, n = number of payment periods

a = 500,000 ; r = 0.12 ; n = (5 x 12) = 60 months

P = $\frac{500000}{[(1+0.12)^{60} - 1] / [0.12 (1+0.12)^{60} ] }$

P = $\frac{500000}{(896.597) / (107.712)}$

p = 60,073.151

Total amount paid = 60073.151 x 60 = 3,604,389