Question

If a borrower can afford to repay a home loan by making 300 monthly payments of $986.33, how much can be borrowed at 18% per annum compounded monthly?

Answer 1

$X=S\frac{i}{(1-(1+i)^{-n})}$

$986.33=S\frac{0.015}{1-(1+0.015)^{-300}}$

$986.33=S\frac{0.015}{1-(1+0.015)^{-300}}=S\times0.015=65 032.02$

S=65 032.02