Mr. Mahmood has borrowed Rs. 800,000 from house building finance corporation of Pakistan to construct his?

house. He will have to pay back the loan in equal monthly installments for a period of 20 years. I the rate of interest is 12% compounded monthly what amount would he have to pay each month to repay the loan?Mr. Mahmood has borrowed Rs. 800,000 from house building finance corporation of Pakistan to construct his?
8808.69 per month





The formula to calculate the monthly payment (amortization) of a loan is:





p = Pi/[1 - 1/(1 + i)^n]





where


P = the principal amount


p = payment per period


i = interest rate per payment period


n = number of payments





For this problem:


P = 800000


p = what we want to calculate - the monthly payment


i = 12% per year = 1% per month (the payment period)


n = 240 the number of payments





p = 800000*0.01/[1 - 1/(1 + 0.01)^240]


p = 8000/(1 - 1/10.89255)


p = 8808.68907


rounded to the nearest 1/100


p = 8808.69 per monthMr. Mahmood has borrowed Rs. 800,000 from house building finance corporation of Pakistan to construct his?
85,714.29
Tom is right, assuming that the loan payments are made at the end of each month.

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