Consider 10-year Sh. 200,000 loan with an initial interest rate of 10% p.a. payable monthly. The subsequent rates are based on index plus a margin
Consider 10-year Sh. 200,000 loan with an initial interest rate of 10% p.a. payable monthly. The subsequent rates are based on index plus a margin of 2%. The index is expected to be at 11% and 9% in the coming two years. There is a 6% cap on PMT year on year.
Required
a)Calculate the monthly PMT for years 1, 2 and 3
b)Calculate Loan balances at the end of Year 1, 2 and 3
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To solve this problem we can use the formula for the monthly payment PMT of a loan PMT P r12 1 1 r12...
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Step: 2
Step: 3
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Authors: Eugene F. Brigham and Michael C. Ehrhardt
13th edition
1439078106, 111197375X, 9781439078105, 9781111973759, 978-1439078099
