Q5. The information below provides details of an off-exchange tailor-made loan obtained by Royal Oceania Cruises to fund their operations.

• Today is June 30 2019, which is the initiation date of the loan.

• The Commonwealth Bank is loaning money to Royal Oceania Cruises.

• The amount borrowed is $50 million.

• The maturity date of the loan is three years.

• A minimum interest payment of $1 million is due in each financial year. The financial

  year ends on 30 June each year.

• The nominal interest rate associated with this loan is the Reserve Bank of Australia

  cash rate (as at June 30 2019) plus a margin of 3.75%. This interest rate is compounded monthly and is fixed from the initiation date.

  Assume the following payments are made by Royal Oceania Cruises during the term of the loan:

• Monthly repayments of $2 million at the end of each month beginning on January 31 2020 until April 30 2021 (inclusive).

• May 31 2021: a single payment of $2 million.

• April 30 2022: a single payment of $10 million.

  Given such payments, your job is to determine the outstanding value of the loan on the maturity date.