A loan of 4,000 is to be repaid over 5 years by a level annuity payable monthly in arrears. The amount of the monthly payment is calculated on the basis of an interest rate of 1% per month effective.

Find the total capital repaid and interest paid in the first and last month, respectively.

Answer: The interest paid in the first month is

a) 4000x1.01= 4040

b) 4000x(1-exp(-0.01))=39.807

c)4000x0.01= 40

d)4000x0.12= 480

The repaid capital is

a)0.535

b)48.9778

c)49.1771

d)587.734

In the last month, the interest paid is

a) 0.00535

b)0.489778

c) 0.889778

d)0.491771

In the last month, the capital repaid is

a)479.645

b)431.358

c)88.088

d)39.8007

They are multiple-choice questions