Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Batrisyia plans to buy a house but refuse to pay regular installments to the bank at the end of each year. Instead, she customized her

image text in transcribed Batrisyia plans to buy a house but refuse to pay regular installments to the bank at the end of each year. Instead, she customized her loan which requires her to make yearly payments of RM200 in the first year, and the following subsequent payments will be an increment of 8% over the previous payment. This agreement will be maintained up until the tenth payment. After the tenth payment, the subsequent payments now will decrease by 5% over the previous payment. This agreement uses an effective rate of interest of 8% per annum. i) Calculate the present value of this contract if Batrisyia only made payment up until 20 payments. ii) Construct the amortization schedule for the 7th to 14th payment. iii) If Batrisyia wishes to have a level payment from the 15th payment onwards, but still maintain the same present value found in (i), calculate the new level payment. iv) Show the new amortization for the 15th payment onwards. Batrisyia plans to buy a house but refuse to pay regular installments to the bank at the end of each year. Instead, she customized her loan which requires her to make yearly payments of RM200 in the first year, and the following subsequent payments will be an increment of 8% over the previous payment. This agreement will be maintained up until the tenth payment. After the tenth payment, the subsequent payments now will decrease by 5% over the previous payment. This agreement uses an effective rate of interest of 8% per annum. i) Calculate the present value of this contract if Batrisyia only made payment up until 20 payments. ii) Construct the amortization schedule for the 7th to 14th payment. iii) If Batrisyia wishes to have a level payment from the 15th payment onwards, but still maintain the same present value found in (i), calculate the new level payment. iv) Show the new amortization for the 15th payment onwards

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Investment Management

Authors: Geoffrey Hirt, Stanley Block

10th edition

0078034620, 978-0078034626

More Books

Students also viewed these Finance questions