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Chaplin27
06-09-2005, 08:40 AM
Hey everyone,
I'm writing this simple program that does a little math, and I felt like I wasnt given enough information. How can I go about figuring out the following problem:



Suppose a loan has a face value of $1000, the interest rate is 15%, and the duration is 18 months. The interest is computed by multiplying the face value by 0.15 to get $150. That figure is then multiplied by the loan period of 1.5 years to yield $225 as the total interest owed. That amount is immediately deducted from the face value, leaving the consumer with only $775. This calculation may be ok if the consumer need $775, but the calculation is a bit more complicated if the consumer needs $1000.


So the program is to take the amount the consumer wants, the interest rate, and the loan duration. It is then to calculate the face value required in order for the consumer to receive the amount needed.

The problem I'm having is that all the calculations need the face value to fulfill the calculation, so I find myself with too little info to go on. I'm pretty sure this is due to my own mathematical shortcomings haha. I wrote the program by just assuming a $1000 face value in the first place (which is different than the face value needed to receive the amount requested), anyone have any ideas? Any help would be great! -Chap

elad
06-09-2005, 11:12 AM
Say the unknown total to borrow is A, rather than the 1000 in your example. Then A times .15 is the total interest in the first year and A times .15 times 1.5 is the interest over 18 months. That value is then subtracted from A to give a total to the customer of 1000. So

A - A(.15)(1.5) = 1000;

Now solve for A which is the actual amount to borrow to receive 1000 at the usurous rate of 15%/y off the top under the current scenario.

Chaplin27
06-09-2005, 02:37 PM
ok I read the problem wrong, I'm retarded (not that there's anything wrong with that....must remain PC :p ) that's the way I solved it as well....now I understand the question. Thanks for the help elad! -Chap