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a) Mila borrowed RM30,000 on which interest is charged at 6% effective. The loan will be repaid by the sinking fund method with annual deposits
a) Mila borrowed RM30,000 on which interest is charged at 6% effective. The loan will be repaid by the sinking fund method with annual deposits earning a 4% effective rate of interest. The first deposit is RM1,000, the second is RM2,000, and the deposits alternate between RM1,000 and RM2,000 until there have been a total of ten deposits. After that, the annual deposits will be level at RM1,000 plus a smaller final deposit made on the date of the last annual deposit sufficient to pay off the loan. Find the smaller final deposit Mila has to make. (10 marks) b) A fifteen-year adjustable rate mortgage of RM117,134.80 is being repaid with monthly payments of RM988.45 based upon nominal interest rate of 6% convertible monthly. Immediately after the 60th payment, the interest rate is increased to a nominal interest rate of 7.5% convertible monthly. The monthly payments remain at RM988.45, and there will be an additional balloon payment at the end of the fifteen years to pay the outstanding loan balance. i) ii) Calculate the amount of interest in the 84th payment. Calculate the amount of the balloon payment. (10 marks) a) Mila borrowed RM30,000 on which interest is charged at 6% effective. The loan will be repaid by the sinking fund method with annual deposits earning a 4% effective rate of interest. The first deposit is RM1,000, the second is RM2,000, and the deposits alternate between RM1,000 and RM2,000 until there have been a total of ten deposits. After that, the annual deposits will be level at RM1,000 plus a smaller final deposit made on the date of the last annual deposit sufficient to pay off the loan. Find the smaller final deposit Mila has to make. (10 marks) b) A fifteen-year adjustable rate mortgage of RM117,134.80 is being repaid with monthly payments of RM988.45 based upon nominal interest rate of 6% convertible monthly. Immediately after the 60th payment, the interest rate is increased to a nominal interest rate of 7.5% convertible monthly. The monthly payments remain at RM988.45, and there will be an additional balloon payment at the end of the fifteen years to pay the outstanding loan balance. i) ii) Calculate the amount of interest in the 84th payment. Calculate the amount of the balloon payment. (10 marks)
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