A grandmother has been forced to put her house up for sale after she ended up owing a

massive $83 000 on a $15 000 loan. Andrea lane, 57, borrowed the money in 2002 to pay

for her father's funeral and to buy a new oven for her Clayton home.

But she could not meet the cost of the loan and 18 years later, the amount she owed had

grown to $83 000 ... Andrea said: 'I borrowed the money when I was grieving for my father. I

just signed the papers.'

a) Based on original loan of $15 000, calculate the monthly repayments to be repaid over

5 years. Assume an interest rate of 25% p.a.

Andrea can afford to pay $600 per month into the loan, and she has been able to negotiate

a new interest rate of 8% p.a.

b) How long would it take Andrea to repay the loan?

c) If she cannot afford to increase her current repayments, and is unable to negotiate a

better interest rate, recommend a strategy to reduce the total length of time to repay

the loan? Based on this strategy, how much interest would she save?