- #1
Shakattack12
- 24
- 2
Homework Statement
We are asked to calculate the comparison rate of an offset loan.
Loan amount = $735000
Offset amount = $100000
Original term length = 300 months
Offset term length = 254 months
Original repayments = $4228.50
Adjusted Repayments (for comparison rate) = $4224.57
Total amount = $1 073 040.97 - please help with this too
I want to double check that I got the total amount correct (see below for calculations)
Homework Equations
We have been asked to compute the comparison rate like this:
1. total cost of loan/number of repayments
2. Use adjusted repayments to solve for new interest rate (using calculator)
The Attempt at a Solution
So I have computed all the above information correctly. however, I am unsure of which value to call the present value of the loan in the TVM solver.
Using PV = 735000, comparison rate = 3.82%pa
Using PV = 635000, comparison rate = 5.46%pa
Which version do I use?
Edit
For total cost:
C = Interest + account fees
= 1 069 825.97 + 3215
= 1 073 040.97
*Do I need to add back the offset amount or not?*
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