An apartment is selling at $750 000.
There is a scheme where the buyer is required to pay a downpayment of 15%, the remaining of which is a loan at a simple interest rate of 4.2% per annum to be repaid in monthly instalments over 20 years. Calculate the amount of each monthly instalment. Answer $ ...

1. Find the loan amount after the downpayment

Downpayment is $15\%$, so the loan is $85\%$ of $750 000.

$\text{Loan}=85\%\times 750000=0.85\times 750000=637500$

2. Calculate the total amount repayable using simple interest

Simple interest:

$I=Prt$

where $P=637500$, $r=4.2\%=0.042$, and $t=20$.

$I=637500\times 0.042\times 20=535500$

$\text{Total repayment}=637500+535500=1173000$

3. Find each monthly instalment

There are $20\times 12=240$ monthly instalments.

$\text{Monthly instalment}=\frac{1173000}{240}=4887.5$