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?