Consider a loan that is repayable by regularly increasing monthly instalments over a 8-year period....
90.2K
Verified Solution
Link Copied!
Question
Finance
Consider a loan that is repayable by regularly increasing monthly instalments over a 8-year period. Thus, the instalment at the end of the first month is set to \\( 3630 \\) and subsequent payments increase by an amount of \\( 25 \\) each month. Assuming that the rate of interest is \4.1 per annum effective for the entire term of the contract, calculate, to 2 decimal places, the following: a) The initial amount of loan that was borrowed: \\( \\mathrm{E} \\) ; [3] b) The total amount of loan repaid up until the start of the \\( 3^{\\text {th }} \\) year: \\( \\mathrm{E} \\) ; [3] Hint: This is the opposite of the loan outstanding. c) The amount of interest component in the \\( 25^{\\text {th }} \\) instalment: \\( \\mathrm{E} \\) . [2]
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Consider a loan that is repayable by regularly increasing monthly instalments over a 8-year period. Thus, the instalment at the end of the first month is set to \\( 3630 \\) and subsequent payments increase by an amount of \\( 25 \\) each month. Assuming that the rate of interest is \4.1 per annum effective for the entire term of the contract, calculate, to 2 decimal places, the following: a) The initial amount of loan that was borrowed: \\( \\mathrm{E} \\) ; [3] b) The total amount of loan repaid up until the start of the \\( 3^{\\text {th }} \\) year: \\( \\mathrm{E} \\) ; [3] Hint: This is the opposite of the loan outstanding. c) The amount of interest component in the \\( 25^{\\text {th }} \\) instalment: \\( \\mathrm{E} \\) . [2] 