Question 6(12 points)

Raj intends to borrow $1,000,000 from the Business Investments Bank to build a small shopping mall. They intend to pay back the loan with fortnightly payments of $5000, starting a fortnight after they take out the loan. The Business Investments Bank charges interest at j₂₆= 5.2% p.a.

1. [2 marks] Illustrate the cashflows associated with this scenario as a fully labelled timeline diagram.
2. [2 marks] Determine the total number of payments it takes to pay off the loan.
3. [3 marks] Find the size of the final (partial) payment.
4. [2 marks] Carry out two different sanity checks on the size of the partial payment.
5. [3 marks] Determine the outstanding principal immediately after the 200^thpayment.