Mr. Salazar pays ₱300,000 cash and 15,000 monthly for 20 years for a house and lot. If money is at 8.5% compounded every month, how much is the cash value of the property?

Question

Mr. Salazar pays ₱300,000 cash and 15,000 monthly for 20 years for a house and lot. If money is at 8.5% compounded every month, how much is the cash value of the property? 

Answer 1

Mr. Salazar pays 300,000 cash and 15,000 monthly for 20 years for a house and lot. If money is at 8.5 % compounded every month, how much is the cash value of the property?

To find he cash value of the property use the following steps:

Present value of cash payment: $300,000

Present value of monthly payments: $15,000

Calculate Monthly interest rate: 8.5 % per year 8.5% divided by 12 = 0.7083% per month or 0.007083

Total number of payments: 20 years x 12 months = 240 months

Use the Present Value Formula: PV = PMT x 1 - ( 1+i ) divide by interest

Substitute the given values into the formula:

PV = 15,000 x 1 - ( 1 + 8.5% divide by 12) exponent -240

8.5% divide by 12

Calculate the present value of the monthly payments:

PV = 15,000 x 1 - (1 + 0.007083) exponent -240 = 0.08696

divide by 0.007083

PV = 15,000 x 1- 0.08696

divide by 0.007083

PV = 15,000 x 112.846260 = 1,728,462.60

Add the cash payment to the present value of the monthly payments to

find the total cash value of the property.

Total Cash Value = 1,728,462.60 + 300, 000 = 2,028,462.60 round off as specified

Total Cash Value = 2,028,462.60 round off as specified

So, the cash value of Mr. Salazar property is 2,028,462.60 or 2,028,463 round off as specified

I hope the mathematical calculations (step by step approach) was helpful. Please let me know if you require any more assistance. If anyone in my neighborhood is interested in setting up an in-person math tutoring session. I look forward to hearing from them. Have an amazing day. Doris H.