Question

Q5. The information below provides details of an off-exchange tailor-made loan obtained by Royal Oceania Cruises to fund their operations.

• Today is June 30 2019, which is the initiation date of the loan.

• The Commonwealth Bank is loaning money to Royal Oceania Cruises.

• The amount borrowed is $50 million.

• The maturity date of the loan is three years.

• A minimum interest payment of $1 million is due in each financial year. The financial

  year ends on 30 June each year.

• The nominal interest rate associated with this loan is the Reserve Bank of Australia

  cash rate (as at June 30 2019) plus a margin of 3.75%. This interest rate is compounded monthly and is fixed from the initiation date.

  Assume the following payments are made by Royal Oceania Cruises during the term of the loan:

• Monthly repayments of $2 million at the end of each month beginning on January 31 2020 until April 30 2021 (inclusive).

• May 31 2021: a single payment of $2 million.

• April 30 2022: a single payment of $10 million.

  Given such payments, your job is to determine the outstanding value of the loan on the maturity date.

Answer 1

	30-Jun-19
	Principal	50000000
	Maturity	3	years
	RBA Cash Rate on 30-Jun-2019	1.25%
	Interest Rate	5.00%	yearly
		0.417%	monthly
		opening balance	Interest	Payment	Extra Top Up Payment	Closing Balance
	30-Jun-19	50000000				50,000,000.0
	31-Jan-20	50000000	1476690	2000000		49,476,689.6
	28-Feb-20	49476689.62	206152.9	2000000		47,682,842.5
	31-Mar-20	47682842.49	198678.5	2000000		45,881,521.0
	30-Apr-20	45881521	191173	2000000		44,072,694.0
	31-May-20	44072694.01	183636.2	2000000	2000000	40,256,330.2
	30-Jun-20	40256330.23	167734.7	2000000		38,424,064.9
	31-Jul-20	38424064.94	160100.3	2000000		36,584,165.2
	31-Aug-20	36584165.21	152434	2000000		34,736,599.2
	30-Sep-20	34736599.23	144735.8	2000000		32,881,335.1
	31-Oct-20	32881335.07	137005.6	2000000		31,018,340.6
	30-Nov-20	31018340.63	129243.1	2000000		29,147,583.7
	31-Dec-20	29147583.71	121448.3	2000000		27,269,032.0
	31-Jan-21	27269031.98	113621	2000000		25,382,652.9
	28-Feb-21	25382652.95	105761.1	2000000		23,488,414.0
	31-Mar-21	23488414	97868.39	2000000		21,586,282.4
	30-Apr-21	21586282.39	89942.84	2000000		19,676,225.2
	31-May-21	19676225.23	81984.27			19,758,209.5
	30-Jun-21	19758209.51	82325.87			19,840,535.4
	31-Jul-21	19840535.38	82668.9			19,923,204.3
	31-Aug-21	19923204.28	83013.35			20,006,217.6
	30-Sep-21	20006217.63	83359.24			20,089,576.9
	31-Oct-21	20089576.87	83706.57			20,173,283.4
	30-Nov-21	20173283.44	84055.35			20,257,338.8
	31-Dec-21	20257338.79	84405.58			20,341,744.4
	31-Jan-22	20341744.36	84757.27			20,426,501.6
	28-Feb-22	20426501.63	85110.42			20,511,612.1
	31-Mar-22	20511612.06	85465.05			20,597,077.1
	30-Apr-22	20597077.11	85821.15		10000000	10,682,898.3
	31-May-22	10682898.26	44512.08			10,727,410.3
	30-Jun-22	10727410.34	44697.54			10,772,107.9

Outstanding amount - 10772107.9