A simple financial math problem:
Mack obtains $500\ 000$ repayable over $20$ years. If interest is compounded monthly at $9.25\%$ per annum, determine the monthly repayments if the repayment begins in $6$ months time.
I used the formula:
$$P_v = x[(1-(1+i)^{-n})/i]$$
but I'm not getting the right value.
What am I doing wrong?
Because repayment begins in $6$ months, the effective principal is
$$P = 500,000\, \left ( 1 + \frac{i}{12} \right )^6$$
where $i=0.0925$ is the annual interest rate. The monthly payment is then
$$m = \frac{P \, (i/12)}{1-\left [ 1 + (i/12) \right ]^{-240}}$$
Plugging in the numbers, I get a monthly payment of about $\$4795.25$.