Freddie decides to buy the fleet of vehicles after all, for a price of $410,000....
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Finance
Freddie decides to buy the fleet of vehicles after all, for a price of $410,000. Freddies friend Kiki, who is an executive at Mercury Bank, has arranged a special interest rate of 2.4% p.a. compounding monthly for Freddie to take out a loan for this purchase.
Freddie is considering taking this special offer, and intends to fully repay the loan using level monthly repayments over the coming 8 years. The first payment is exactly one month from today.
(a) Calculate the size of the level monthly repayment. Give your answer in dollars, to the nearest cent. (1 mark)
(b) What is Freddie's loan outstanding after 1 year? Give your answer in dollars, to the nearest cent. (1 mark)
(c) Calculate the interest Freddie is charged in the first year. Give your answer in dollars, to the nearest cent. (1 mark)
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