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March 15th, 2016, 01:19 AM   #1
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Answer for t using PVA giving r greater C

Hi
So I am asked how many years long the term of a loan would have to be for monthly payments equal to 28% of pre-taxed monthly income?

Weekly income is $1,844 ( assuming working 52 weeks a year)
Intrest rate 5.4%
and loan is $929,000 with a $20% deposit.

So
monthly income is $1844*52= $95,888/12= $7,990.67*.28= $2,237.38
intrest rate per month is 0.054/12= 0.0045
amount remaining on loan is $929,000*.8= $743,200
time=?

using PVA formula to find t
C= 2237.38
r= 0.0045
PVA=743,200
t=?

t= ln(C/(C- r x PV))/ ln(1+r)

= ln(2237.38/(2237.38-0.0045*743200))/ ln(1.0045)

in my answer for the first bracket I get a negative number because 2237.38 < 0.0045*743200 (3344.30). Therefore not possible as interest is greater than monthly earnings.

Have I gone wrong somewhere?

any help is much appreciated
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March 15th, 2016, 01:24 AM   #2
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Hi, welcome to MMF!

Can you edit your post and take any sentences out of the "[MATH] [MATH]". That way your words won't bunch together like this:

Quote:
$\displaystyle is 1,844(assumingworking52weeksayear)Intrestrate5.4an dloanis1,844(assumingworking52weeksayear)Intrestra te5.4andloanis929,000$
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March 15th, 2016, 08:20 AM   #3
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Quote:
Originally Posted by jsav View Post
C= 2237.38
r= 0.0045
PVA=743,200
t=?

t= ln(C/(C- r x PV))/ ln(1+r)

= ln(2237.38/(2237.38-0.0045*743200))/ ln(1.0045)

in my answer for the first bracket I get a negative number because 2237.38 < 0.0045*743200 (3344.30). Therefore not possible as interest is greater than monthly earnings.

Have I gone wrong somewhere?
Your calculations are correct.
Probably an error/typo in loan amount.
Who d'hell would borrow that amount, with such a salary
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March 15th, 2016, 08:01 PM   #4
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Hey
Sorry still new here and can't quite find how to edit my post


Cheers for the confirmation Denis
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March 15th, 2016, 08:38 PM   #5
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Quote:
Originally Posted by jsav View Post
Hey
Sorry still new here and can't quite find how to edit my post


Cheers for the confirmation Denis
Unfortunately there's only a small window of time before you no longer have the option to edit your post...
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March 15th, 2016, 08:46 PM   #6
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Quote:
Originally Posted by Joppy View Post
a small window of time..
What d'hell s'that ?
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March 27th, 2016, 10:38 PM   #7
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Quote:
Originally Posted by Denis View Post
What d'hell s'that ?
Somewhere out there, in the vast nothingness of space, there exists a window, which is composed of time.

What else could it mean Denis?

Psst. Don't you have firewood to be collecting?
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Last edited by Joppy; March 27th, 2016 at 10:41 PM.
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March 28th, 2016, 05:05 AM   #8
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Quote:
Originally Posted by Joppy View Post
Psst. Don't you have firewood to be collecting?
Not a this point in time
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