Question
In: Finance
A loan of $50,000 is made today. This loan will be repaid by a first smaller...
A loan of $50,000 is made today. This loan will be repaid by a first smaller repayment, followed by 15 level repayments, i.e., there are 16 repayments in total.
The first smaller repayment will occur exactly 3 years from today and each subsequent repayment (starting from the first level repayment) will occur exactly 1 year after the previous repayment. Explicitly, the final repayment will occur exactly 18 years from today.
If the interest being charged on this loan is 4.8% per annum compounded half-yearly, and the first smaller repayment is $570,
(c) Calculate the amount of the level repayments.
Solutions
Expert Solution
Answer is $5446.04
| Loan amount | 50000 |
| FV of loan after 3 years | $57,646.08 |
| Loan amount after first repayment | $57,076.08 |
| This is the PV of loan at end of year 3 | |
| Effective rate for repayments | 4.86% |
| level repayment amount | $5,446.04 |
jeff jeffy answered 8 months agoRelated Solutions
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