(a) A student takes out a 17000 loan to pay his Master degree fees. Suppose...
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(a) A student takes out a 17000 loan to pay his Master degree fees. Suppose that the bank asks an annual interest rate of 2%. Assume that interest is continuously compounded and that payments are also made continuously. (i) What monthly payment is required to pay off the loan in 3 years? And what if the loan is repaid in 5 years? (ii) Compute the total interest paid during the term of the mortgage in both cases considered in (3(a)i). (b) Consider a mortgage having principal 100000, a fixed monthly interest rate of 0.2%. Suppose that the borrower can only afford to repay 150 per month. What is going to happen in this situation
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