Question
find the total cost to repay a five year long bank loan with a principal of $340,000 and an interest rate of 4.5% APR. (Assume evenly-split monthly payments and monthly compound interest)
Answers
Answered by
GPT 3.5
To find the total cost to repay the loan, we first need to calculate the monthly payment.
The formula to calculate the monthly payment for a loan is:
PMT = P[r(1 + r)^n]/[(1 + r)^n - 1]
Where:
PMT = Monthly Payment
P = Principal amount of the loan ($340,000)
r = Monthly interest rate (4.5% APR/12 = 0.375% or 0.00375)
n = Total number of payments (5 years x 12 months = 60 payments)
Using the formula:
PMT = $340,000[0.00375(1 + 0.00375)^60]/[(1 + 0.00375)^60 - 1]
PMT = $1944.33
Next, we calculate the total amount repaid over the 5 year period by multiplying the monthly payment by the number of payments:
Total amount repaid = $1944.33 x 60 = $116,659.80
Therefore, the total cost to repay a five-year long bank loan with a principal of $340,000 and an interest rate of 4.5% APR would be $116,659.80.
The formula to calculate the monthly payment for a loan is:
PMT = P[r(1 + r)^n]/[(1 + r)^n - 1]
Where:
PMT = Monthly Payment
P = Principal amount of the loan ($340,000)
r = Monthly interest rate (4.5% APR/12 = 0.375% or 0.00375)
n = Total number of payments (5 years x 12 months = 60 payments)
Using the formula:
PMT = $340,000[0.00375(1 + 0.00375)^60]/[(1 + 0.00375)^60 - 1]
PMT = $1944.33
Next, we calculate the total amount repaid over the 5 year period by multiplying the monthly payment by the number of payments:
Total amount repaid = $1944.33 x 60 = $116,659.80
Therefore, the total cost to repay a five-year long bank loan with a principal of $340,000 and an interest rate of 4.5% APR would be $116,659.80.
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