Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please show works Problem 2 (25 marks) Peter borrows an amount $L from the bank. The loan charges interest at an annual nominal discount rate
Please show works Problem 2 (25 marks) Peter borrows an amount $L from the bank. The loan charges interest at an annual nominal discount rate of 16.2% convertible monthly. He repays the loan by making monthly payments that are M times the interest due until he can make a final payment of no more than $12000 to repay the loan completely. The first payment is made one month after the loan is made. You are given that The first repayment is made one month after today The outstanding balance at the end of 2nd year (just after the repayment) is $27383.11. The outstanding balance at the end of 3rd year (just after the repayment) is 15734.4. (a) Find the value of M, (b) Hence, calculate the total amount of payments paid by the borrower for the loan. Hint: Look at the related example in the lecture note)
Please show works
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started