need help on Finance Qns

• vbhelper

  12 Jun 06, 17:24

  hi guys and gals, need some help in this finance qns.
  
  A company borrow $1000 000 to finance the project. Initially, the monthly instalment is based on monthly rest at 8% interest and repayment period of 6 yrs.
  Calculate the revised monthly instalment if the company refinances the loan at the end of the second yr at a new interest rate of 6% for the remaining loan period.
  
  err, how do we solve this?
  the ans is $16866.78
  
  This is what I did
  For the first 24 months (2 yrs), the person already paid 17533.20 x 24= $4207996.80
  
  So leftover $1000 000 - $4207996.80 = $579203.20 to be paid
  
  by using monthly rest formula
  6% /12 =0.005 interest per mth
  12 x 4yr = 48 months
  
  $579203.20 x (1.005^48 x 0.005) / (1.005^48 - 1) = $13602.60
  
  What went wrong?
• Inzaghi

  12 Jun 06, 17:34

  Originally posted by vbhelper:

  hi guys and gals, need some help in this finance qns.
  
  A company borrow $1000 000 to finance the project. Initially, the monthly instalment is based on monthly rest at 8% interest and repayment period of 6 yrs.
  Calculate the revised monthly instalment if the company refinances the loan at the end of the second yr at a new interest rate of 6% for the remaining loan period.
  
  err, how do we solve this?
  the ans is $16866.78
  
  

  use a fin calculator to work out the PMT based on the original loan deal..den at end of 2nd yr, calculate how much is still left unpaid lor..den use this unpaid principle to work out the PMT based on the new loan deal lor..
  
  n u mustnt forget any potential penalty to retire the original loan deal..