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1. Kevin takes out a 10-year loan of L, which he repays by the amortization method at an annual effective interest rate of i. Kevin

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1. Kevin takes out a 10-year loan of L, which he repays by the amortization method at an annual effective interest rate of i. Kevin makes payments of 1000 at the end of each year. The total amount of interest repaid during the life of the loan is also equal to L. Calculate I and L. 2. Paul lends 8000 to Peter. Peter agrees to pay back in 10 annual instalments at 7% with the first payment due in one year. After making 4 payments, Peter renegotiates to pay off the debt with 4 additional annual payments. The new payments are calculated so that Paul will get a 6.5% annual yield over the entire 8-year period. Determine how much money Peter saved by renegotiating. 3. John has a 30 year $100000 mortgage with monthly payments based on a 12% interest rate convertible monthly. The first payment is due in one month. Find X such that if John decides to add X to each monthly payment (starting with the first payment) the term of the mortgage would be reduced to 25 years. 4. A purchase is financed by five annual payments of $1,000 the first payment due at time of purchase. The effective rate of discount, d, is 10%. Find the total amount of interest paid. 5. A fifteen year monthly payment mortgage loan for 250,000 is offered at a nominal rate of 6% convertible monthly. Find a) The monthly payment b) The total principal and interest that would be paid on the loan over 15 years c) The balance in 15 years

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