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Mr Smith is struggling to repay his loan of K200,000 with payments of K4,279 made monthly...

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Finance

Mr Smith is struggling to repay his loan of K200,000 withpayments of K4,279 made monthly in arrears for 5 years. (i) Findthe amount of the level annual repayment. (ii) Hence, otherwise,calculate the APR of Mr Smiths loan, After exactly one year, a loancompany oers to `help' Mr Smith by restructuring his loan with newmonthly payments of K2,744.90 made in arrears. (iii) Assuming thecompany charges the same APR as Mr Smiths original loan, calculatethe term of the new loan. (iv) Calculate how much more interest intotal Mr Banda will pay on his restruc- tured loan than on hisoriginal loan.

Answer & Explanation Solved by verified expert
4.3 Ratings (827 Votes)
Tenure of loan 51260 monthSo for the first loanSo monthly interest rate is 0858 Level PaymentAnnual427912 K51348ii APR of the Loan18581211080Below is the amortization    See Answer
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Mr Smith is struggling to repay his loan of K200,000 withpayments of K4,279 made monthly in arrears for 5 years. (i) Findthe amount of the level annual repayment. (ii) Hence, otherwise,calculate the APR of Mr Smiths loan, After exactly one year, a loancompany oers to `help' Mr Smith by restructuring his loan with newmonthly payments of K2,744.90 made in arrears. (iii) Assuming thecompany charges the same APR as Mr Smiths original loan, calculatethe term of the new loan. (iv) Calculate how much more interest intotal Mr Banda will pay on his restruc- tured loan than on hisoriginal loan.

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