A man paid 10% as down payment of P200,000 for a house and lot and agreed to pay the balance on monthly installments for 5 years at an interest rate of 15%, compounded monthly. What was the monthly installment in pesos?
Answer (1)
The monthly installment is P4,271.40.Data Given and ProcessedDown payment = 10% of 200,000 = P20,000Balance = 200,000 - 20,000 = P180,000Monthly interest rate (r) = 15% ÷ 12 = 0.0125Number of months (n) = 5 × 12 = 60 We use the formula for amortization which is [tex]\sf A = P \: \frac{r(1 + r)^{n} }{(1 + r)^{n} - 1} [/tex][tex]\sf A = 180,000 \: \frac{0.0125(1 + 0.0125)^{60} }{(1 + 0.0125)^{60} - 1} [/tex][tex]\sf A = 180,000 \: \frac{0.0125(2.11357) }{2.11357 - 1} [/tex][tex]\sf A = 180,000 \: \frac{0.0264196}{1.11357} [/tex][tex]\sf A = 180,000 \times 0.02373 [/tex][tex]\sf A = P4,271.40 \: per \: month [/tex]
