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Please solve all three parts. Mr. Vinnie Totti is seeking to purchase an apartment for $200,000. The Wakpak Bank is prepared to lend Vinnie 75%
Please solve all three parts.
Mr. Vinnie Totti is seeking to purchase an apartment for $200,000. The Wakpak Bank is prepared to lend Vinnie 75% of the purchase price with the remaining amount to be funded from personal savings. The loan repayments to Wakpak are to be made monthly (with the first payment due one month after the loan is provided) for a term of 15 years, and the stated annual interest rate quoted by Wakpak is 9.25% p.a. compounded monthly. (i) Using the information provided at the start of this question (including the interest rate of 9.25% p.a. compounded monthly), however Vinnie commences to make loan repay- ments which were now equal to an amount of 50% of the repayment calculated in part a) of this question. Also, the loan repayments were now made at the commencement of each fortnight (that is, the first repayment would be made at the date of the loan and fortnightly thereafter). Given this information, over what approximate total term (ex- pressed in years and months) would Vinnie now repay the loan in full? (ii) ignoring the amount of the final loan repayment to reduce the loan balance to nil, approximately how much interest would Vinnie save (expressed in nominal dollars) by undertaking the repayment strategy in part d) i) of this question, as compared to making end-of-month loan repayments over a term of 15 years (as calculated in part a) of this question)? (iii) Given the new loan repayment strategy in part d) i) of this question, what would be the amount of the final repayment required to reduce the loan balance to nil? Assume that the final repayment will be made 1 fortnight after the last regular fortnightly repay- ment amount. Mr. Vinnie Totti is seeking to purchase an apartment for $200,000. The Wakpak Bank is prepared to lend Vinnie 75% of the purchase price with the remaining amount to be funded from personal savings. The loan repayments to Wakpak are to be made monthly (with the first payment due one month after the loan is provided) for a term of 15 years, and the stated annual interest rate quoted by Wakpak is 9.25% p.a. compounded monthly. (i) Using the information provided at the start of this question (including the interest rate of 9.25% p.a. compounded monthly), however Vinnie commences to make loan repay- ments which were now equal to an amount of 50% of the repayment calculated in part a) of this question. Also, the loan repayments were now made at the commencement of each fortnight (that is, the first repayment would be made at the date of the loan and fortnightly thereafter). Given this information, over what approximate total term (ex- pressed in years and months) would Vinnie now repay the loan in full? (ii) ignoring the amount of the final loan repayment to reduce the loan balance to nil, approximately how much interest would Vinnie save (expressed in nominal dollars) by undertaking the repayment strategy in part d) i) of this question, as compared to making end-of-month loan repayments over a term of 15 years (as calculated in part a) of this question)? (iii) Given the new loan repayment strategy in part d) i) of this question, what would be the amount of the final repayment required to reduce the loan balance to nil? Assume that the final repayment will be made 1 fortnight after the last regular fortnightly repay- ment amountStep by Step Solution
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