Question
A debt of N$ 172000 is being repaid in equal installments at the beginning of each period for 15 years. The bank charges 12.5 %
A debt of N$ 172000 is being repaid in equal installments at the beginning of each period for 15 years. The bank charges 12.5 % p.a, for the first 10 years thereafter it reduces the rate to 10% p.a. (a) i) What is the amount of installment paid by the borrower in the first period of 10 years, assuming a semi-annual compounding? N$ (li) What is the amount of interest paid in the first installment in this case? N$ (ili) What is the principal repaid in the first installment in this case? N$ (b) How much money is the lending institution expected to receive after the first 10 years while still assuming a semi-annual compounding? N$ (c) What is the outstanding debt amount after 10 years of repaying the debt, assuming a semiannual compounding? N$ (d) What is the total amount of interest paid in the remaining 5 years in this case? N$ (e) What is the total amount of money paid to the lending institution after15 years while stills asuming a semi-annual compounding? N$ (n) What is the total interest paid after 15 years? N$
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