Kamil has taken a loan of K10000 from a bank to renovate his family home. He paid the loan in two years at an interest rate of 12% compounded annually. How much did he pay per month?

Answer 1

To find out how much Kamil paid per month, we first need to find the total amount he paid back after two years.

The formula to calculate compound interest is given by: A = P (1 + r/n)^(nt), where:
A = the future value of the investment/loan
P = the principal investment/loan amount
r = annual interest rate (as decimal)
n = number of times that interest is compounded per year
t = number of years

In this case, the principal loan amount (P) is K10000, the annual interest rate (r) is 12% or 0.12 as a decimal, the number of times interest is compounded per year (n) is 1, and the number of years (t) is 2.

Using the compound interest formula:
A = 10000(1 + 0.12/1)^(1*2)
A = 10000(1 + 0.12)^2
A = 10000(1.12)^2
A = 10000(1.2544)
A = 12544

Therefore, Kamil paid back a total of K12544 after two years.

To find out how much he paid per month, we divide the total amount paid back by the number of months in two years (24 months).
Monthly payment = total amount paid back / number of months
Monthly payment = 12544 / 24
Monthly payment ≈ K522.67

So, Kamil paid approximately K522.67 per month to the bank for the loan.