EXAMPLE 2 : CALCULATING LOAN REPAYMENT
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EXAMPLE 2 : CALCULATING LOAN REPAYMENT
Let ' s say you want to borrow R50 000 from a bank . The loan carries an annual interest rate of 11 %, and you want to determine how much you should repay monthly to repay the loan in three years .
Inputs :
• FV ( Future Value ) = 0 ( You want the loan balance to be 0 in three years )
• I ( Interest Rate ) = 11 % ( expressed as a decimal , 0.11 )
• N ( Time ) = 3 years or 36 months ( N needs to align with your payment . If monthly , use months here .)
• PV ( Present Value ) = R50 000
To find PMT ( Payment ), hit the PMT button after inserting the other inputs , and you ’ ll see the monthly payment required to repay the loan in three years at 11 % is R1 636.94 a month .
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Gabriel Botha Business Development Manager Prescient Investment Management
SA Real Estate Investor Magazine AUG / SEPT 2023 66