Question

If you obtain a loan of 800,000 pesos at the rate of 10% compounded annually in order to build a house, how much must you pay monthly to amortize the loan within a period of ten years starting at the end of first month?

Answer 1

10,382.04 pesos

Step-1:Calculation of equivalent monthly interest
(1+i)^n	=	(1+i)^n
(1+i)^12	=	(1+0.10)^1
(1+i)^12	=	1.10
1+i	=	1.10^ (1/12)
1+i	=	1.00797414
i	=	0.00797414
So,
Equivalent monthly interest rate	=	0.00797414
Step-2:Calculation of monthly payment
Monthly Payment		=-pmt(rate,nper,pv,fv)
		= 10,382.04 pesos
Where,
rate			=	0.00797414
nper	=	10*12	=	120
pv			=	8,00,000 pesos
fv			=	0