Note: Correct answer to calculations-based questions will only be awarded full mark if clearly stated numerical formula (including the left-hand side of the equation) is provided. Correct answer without calculations support will only receive a tiny fraction of mark assigned for the question.

Question 3 (12 marks)

Larissa borrowed $8 million and planned to repay the loan by making equal month-end payments over a period of 10 years. The interest rate on the loan is 4.8%, compounded monthly.

a) Determine the size of the monthly payments. (4 marks)

b) Of the 72nd payment, how much are used to repay the principal and the interest payment for the month respectively?

(8 marks)