A loan is to be repaid by an annuity payable annually in arrear. The annuity starts at a

rate of 300 per annum and increases each year by 30 per annum. The annuity is to

be paid for 20 years.

Repayments are calculated using a rate of interest of 7% per annum effective.

Calculate:

(i) The amount of the loan. [3]

(ii) The capital outstanding immediately after the 5th payment has been made. [2]

(iii) The capital and interest components of the final payment. [2]

[Total 7]