Answer to Question #176535 in Financial Math for Sumi

Question

4. What is the minimum deposit you would need to reduce monthly repayments to $150 on the best value loan?

Deposit: $10,000

Rate: 5.95%

Time: 5 years

Compounding Periods: 12

Answer 1

This is an annuity:

$FV=A\frac{(1+r)^n-1}{r}$

$FV=150\frac{(1+0.0595)^{12}-1}{0.0595}=2523.12$