a) Sammy borrows $50,000 fromhisuncle to buya car.Sammy'suncle charges interest at6%p.a (compounding monthly).Theloanmustberepaid by equal, month-end repayments over5years.

a)Complete the loan amortisation schedule for first two months of theloan. (4marks)

Month Loan ( beginning of month) Interest Repayment Loan (end of month)

1 50,000.00 ? ? ?

2 ? ? ? ?

b) Sammy expects to receiveabonus fromhisemployerinexactly12months'time. Thereis a60% chancehisbonus willbe$50,000,a 30%chanceitwillbe$20,000 anda 10%chanceitwillbe zero.

i - Calculate the expected value and the standard deviation of thebonus.

ii- Isthe expected bonus sufficient to pay out Sammy'sloan? Answer thisbycalculating the loan outstanding immediately after the12threpayment and comparingitto your answer to 'i'above.