# Mary takes a loan of $12000 to buy a car. This loan is consolidated with her current home loan at 7.9%p.a over a 15 years term, calculated monthly with monthly repayments. Calculate the increase...

Mary takes a loan of $12000 to buy a car. This loan is consolidated with her current home loan at 7.9%p.a over a 15 years term, calculated monthly with monthly repayments.

Calculate the increase in home loan monthly repayments and the total interest charged over 15 years.

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As we know how much Mary needs **now**, we can use the 'Present Value Formula' to calculate:

`P=(x[1-(1+i)^-n])/i`

where P=$12 000 n=15 years x 12 (compounded monthly) and

i=7.9% which is `0.079/12` also because of compound interest

`therefore 12 000 =(x[1-(1+(0.079/12))^-(15 times 12)])/(0.079/12)`

`therefore 12 000 times (0.079/12) = x[1-(1.306935881)^(-180)]`

`therefore (12 000 times 0.079/12)/(1-(1.306935881)^-180)=x` (Care not to round off too soon)

`therefore x=$79.00`

If Mary is paying $79 extra per month for 15 years (180 months) she will pay $14 220 - $12 000 in interest = $2220

**Ans: Mary's home loan will increase by $79,00 per month and interest will amount to $2220**

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