Many Australian home loans that are interest-only actually require payments to be made on a fully amortising basis after a number of years.

You decide to borrow $800,000 from the bank at an interest rate of 3.6% pa for 25 years. The payments will be interest-only for the first 5 years, than they will have to be paid on a fully amortising basis for the remainder of the loan term. Note that the remaining loan term will be only 20 years. Assume that interest rates will remain constant.

Which of the following statements is NOT correct?

Select one:

a. The 1^st monthly loan payment will be $2,400. The interest component will be $2,400 and the capital component will be zero.

b. The 60^th monthly loan payment will be $2,400. The interest component will be $2,400 and the capital component will be zero.

c. Just after the 60^th monthly loan payment, the home loan principal will be $800,000.

d. The 61^st monthly loan payment will be $4,680.89. The interest component will be $2,400 and the capital component will be $ 2,280.89.

e. The 300^th monthly loan payment will be $4,680.89. The interest component will be zero and the capital component will be $4,680.89. Just after the 300^th monthly loan payment, the home loan principal will be zero and the loan is paid off.