Q.5.A firm is advanced a shs 5,000,000 Million loan by a bank to be repaid in equal monthly installments over five years at a rate
Q.5.A firm is advanced a shs 5,000,000 Million loan by a bank to be repaid in equal monthly installments over five years at a rate of interest of 18% per annum.After the 24 th installment,the rate of interest is adjusted to 20% per annum and the monthly installment size recomputed such that the loan is fully repaid in the remaining duration of the initially agreed term.After the 36th Installment ,the rate of interest is lowered by 3% per annum but the monthly installment size is not adjusted,until from the end of 49th month when it is increased by shs29,330.
Required:
(i) Compute the initially agreed instalment and the one after the interest rate adjustment to 20% per annum.
(ii) At the end of which months would the loan be fully repaid?
(iii) What is the total interest that the firm pays on the loan during its term?
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Authors: Peter S Kaufman, Henry F Owsley
2nd Edition
1587983044, 978-1587983047
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