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 $1,000,000from the bank at an interest rate of4.8% pa for25years. The payments will beinterest-onlyfor the first5years, than they will have to be paid on afully amortisingbasis for the remainder of the loan term. Note that the remaining loan term will be only20years. Assume that interest rates will remain constant. All figures are rounded to the nearest cent.

Which of the following statements isNOTcorrect?

Select one:

a.The 1stmonthly loan payment will be $4,000. The interest component will be $4.000 and the capital component will be zero.

b.The 60thmonthly loan payment will be $4,000. The interest component will be $4,000 and the capital component will be zero.

c.The 61stmonthly loan payment will be $6,489.57. The interest component will be $3,995.04 and the capital component will be $2,494.53.

d.The 62ndmonthly loan payment will be $6,489.57. The interest component will be $3,990.04 and the capital component will be $ 2,499.53.

e.The 63ndmonthly loan payment will be $6,489.57. The interest component will be $3,980.04 and the capital component will be $ 2,509.53.