9.1. Obtain the total periodic payments of a loan of 16,000€ and 3 years term, with...

9.1. Obtain the total periodic payments of a loan of 16,000€ and 3 years term, with the following conditions:

a. Adjustable interest rate.
Annual adjustment period: 1 year.
Type of loan: Semi-annually constant principal repayments over 3 years.
Nominal interest rate for the 1st period: 3%
Interest rates for the remaining periods: the index rate plus 0.5 percentage points.

The index rate take the following values for the other periods:

ir = 0.05 ; ir = 0.045

Find the periodic payments to be made.

b. Monthly constant payments over each adjustment period.
Annual adjustment period: 1 year.

Nominal interest rate for the 1st period : 5%.
Remaining periods: index rate plus 0.3 percentage points.
The index rates take the following values for each of the periods:

ir = 0.06 ; ir = 0.04

Find the periodic payments to be made.

c. Adjustable interest rate.
Annual adjustment period: 1 year.
Type of loan: quarterly constant principal repayments over 3 years.
Nominal interest rate for the 1st period: 7%
Interest rates for the remaining periods: the index rate plus 0.2 percentage points.

The index rates take the following values for the other periods:

ir = 0.035 ; ir = 0.05

Find the periodic payments to be made.

Solutions

Expert Solution

a. Semi-annually constant principal repayments over 3 years

Workings:

b. Monthly constant payments over each adjustment period

Workings:

c. quarterly constant principal repayments over 3 years

Workings:

jeff jeffy answered 1 year ago

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