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I've been given the following information:

MR bob borrows 50000 now and promises to repay it in monthly installments over the next eight years. Interest is compounded monthly at 18% per year. He only starts to repay the loan at the end of the sixth month.

Question:

His last payment of y, if his monthly payment of 1450 is only paid at the end of the first year and he stops these payments at the end of the sixth year. He redeems the loan at the end of the eighth year with a one-off payment of y.

I've come up with the following equation, yet it does not seems to be right.

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  • $\begingroup$ "His last payment of y, is his monthly payment of 1450 is only paid at the end of the first year" What does this mean? $\endgroup$ – Tyler Oct 13 '13 at 15:09
  • $\begingroup$ Edited, sorry, should of been "His last payment of y, if his monthly payment of 1450 is only paid at the end of the first year". $\endgroup$ – Luke Taylor Oct 13 '13 at 15:14
  • $\begingroup$ I don't understand this either: "his monthly payment of 1450 is only paid at the end of the first year and he stops these payments at the end of the sixth year." Is he making a yearly payment equivalent to 1450 monthly every year for 6 years? $\endgroup$ – Tyler Oct 13 '13 at 15:18
  • $\begingroup$ Yes, I believe so. $\endgroup$ – Luke Taylor Oct 13 '13 at 15:21

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