• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Equal monthly (re)payments

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Equal monthly (re)payments

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • December 23, 2016 at 6:18 pm #364348
    accaed
    Member
    • Topics: 23
    • Replies: 0
    • ☆

    Are questions like the below still examinable in F2?

    Augustine wishes to take out a loan for £2,000. The interest rate on this loan would be 10% per annum and Augustine wishes to make equal monthly repayments, comprising interest and principal, over three years starting one month after the loan is taken out.

    What would be the monthly repayment on the loan (to the nearest £)?
    A £56
    B £64
    C £66
    D £67

    The answer to the above question is B. But I can’t see how you go about getting it.

    Sydney wishes to make an investment on a monthly basis starting next month for five years. The payments into the fund would be made on the first day of each month.
    The interest rate will be 0·5% per month. Sydney needs a terminal value of £7,000.

    What should be the monthly payments into the fund to the nearest £?
    A £75
    B £86
    C £100
    D £117

    This question uses the formula [A(1+r)^n – 1]/r and equates it to a terminal value of £7,000. But where has this formula come from? I can’t see it in the notes.

    December 23, 2016 at 10:37 pm #364362
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    In theory both questions could be asked, but these days they are both extremely unlikely!!

    For the first one, you need to calculate the equivalent monthly interest rate, and then divide 2,000 by the 36 period annuity factor at the equivalent monthly interest rate using the normal formula for the annuity factor.

    For the second one, the formula is not in the notes because you do not need it and it is not given in the exam.
    First you need to calculate the equivalent annual interest rate and then discount the 7,000 for 5 years at the equivalent annual interest rate.
    To get the monthly payment you then divide the present value of the 7,000 by the annuity factor for 60 periods at interest of 0.5%.

    In both cases you need to use the formula that is given for the annuity factor because 36 and 60 periods are obviously not in the tables.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • OmarAlbeity on ACCA BT Chapter 6 – Some legal obligations – Questions
  • Salimbek909 on The nature and structure of organisations – ACCA Paper BT
  • Sefater on Chapter 3 – Property Income and Investments – Individuals TX-UK FA2023
  • adityachaudhry on Discounted cash flow techniques (part 3) – ACCA (AFM) lectures
  • nuripamir on ACCA Administrative Review

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in