Changing Conditions Tricky Questions

7a)

N: 20 x 12 = 240

I: 10.5%

PV: 35 000

Pmt: Unknown

FV: 0

PpY: 12

CpY: 12

The payment amount is found to be $349.43

7b)

This is the (payment amount per month x 12 x 20) – (35 000) = $48 900

7c)

Sub in the Pmt to find the FV after 4 years

FV = $32,437.73

7d)

This is where things get difficult. We first need to take the FV after 4 years, and make this the new PV (However, remember
to change the sign).

N: 16 x 12 = 192

I %: 13.75

PV: 32,473.73

Pmt: Unknown

FV: 0

PpY: 12

CpY: 12

Therefore, the monthly payment amount is now $418.66

7e)

Now, we just need to find the difference between the new and original monthly payments. Then, multiply this by 12 x 16.

(418.66 – 349.43) x 16 x 12 = $13,300 (rounded to the nearest $100)

9a)

N: 30 x 12 = 360

I % = 8.5

PV: Unknown

Pmt: -1384

FV: 0

PpY: 12

CpY: 12

This will find the PV, then we add $50,000 as this is how much they paid as well.

Therefore, the answer is $229,994.24

9b)

(Pmt x 16 x 12) – (amount borrowed)

The amount borrowed is the PV we found earlier, excluding the 50,000 as this was essentially how much they borrowed
from the bank

$318,246

9c)

N: 6 x 12

Therefore, the amount they owe is $169,780.80

9d)

It is a very similar idea to Question 7. We find the FV after 6 years, which becomes the PV (remember to change the sign).

Change N: 24 x 12

Change Interest Rate: 8.5 + 0.9

Keep Pmt the same

Therefore, the FV is $111,567.70

9e)

Put FV = 0
Therefore, the Pmt is $1487.29