How do I calculate this bond repayment sum?

You wish to purchase your first home. The bank will only allow a bond repayment, which is no greater than 30% of your net monthly salary. Your gross salary is $8250 per month and you have deductions of 25% per month from your salary.

Q: Calculate net salary (amount after deductions)

A: $6187.5

Q: Maximum bond repayment you can afford?

A: $1856.25

Q: The bank offers a fixed bond rate of 13,5% p.a. compunded monthly, over a 20 year period. Can you afford a flat that costs $150 000?

A: ???

Please show me how to calculate this. Thanks.

How do I calculate this bond repayment sum?yes loans

Required EMI = 150,000/ AF(13.5/12% , 20*12)

where AF is annuity factor, 13.5/12% is the monthly rate and 20*12 is number of months.

where AF (r,n)= annuity factor with rate r and number of periods n

= 1/(1+r) + 1/(1+r)^2 + .... (1/(1+r)^n

= 1/r - 1/(r(1+r)^n)

Alternatively use PMT function on Excel.

So, EMI = $1181

Thus you can afford the loan.