Question

In: Finance

You have taken out a $700,000 blended payment loan. The interest rate is 4% and you...

You have taken out a $700,000 blended payment loan. The interest rate is 4% and you will repay your loan in 10 equal annual instalments (each payment is due at the end of the period). Each equal annual instalment is comprised of both principal and interest, the proportion of which varies per period. How much is the balance outstanding at the end of the third year (i.e. how much principal has not yet been repaid)?
A) $581,061.
B) $517,999.
C) $489,264.
D) $441,089.
E) $258,911.

Solutions

Expert Solution

Calculate the third year balance as follows:

Third year end balance is $517,999.29.

Formulas:


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