a. A loan of RM20,000 is repayable by an annuity payable anmally in arrear for 25 years. The annual repayment is calculated at an effective interest rate of 8% per aumm and increases by RM50 each year Calculate the amount of the first payment [3 marks) Calculate the capital outstanding after the first three payments have been made [2 marks] iii. Explain your answer to part (11) [2 marks) iv. Calculate the total amount of interest paid over the term of the loan. [3 marks) b. You are given the following spot interest rates: Time Spot Rate 1 4.00% 2 5.00% 3 5.75% 4 6.25% 5 6.50% Rosyam and Associates has a line of credit that will permit it to borrow 400,000 in year one: an additional 200,000 in year two for a total of 600,000; and an additional 400,000 in year three for a total of one million. Under the loan, the interest rate resets at the beginning of each year and is equal to the one-year spot interest rate at the time of reset. Rosyam enters into a three year interest rate swap where the notional amotut matches the amount available under the line of credit and variable rate matches the rate for the line of credit. Determine the swap rate. [6 marks) C. At annual effective interest rate i: 1 grows to 5 in x years, 2 grows to 8 in y years and 3 grows to 20 in 2 years. Calculate 12(1 + 1)2x-2y+ a. A loan of RM20,000 is repayable by an annuity payable anmally in arrear for 25 years. The annual repayment is calculated at an effective interest rate of 8% per aumm and increases by RM50 each year Calculate the amount of the first payment [3 marks) Calculate the capital outstanding after the first three payments have been made [2 marks] iii. Explain your answer to part (11) [2 marks) iv. Calculate the total amount of interest paid over the term of the loan. [3 marks) b. You are given the following spot interest rates: Time Spot Rate 1 4.00% 2 5.00% 3 5.75% 4 6.25% 5 6.50% Rosyam and Associates has a line of credit that will permit it to borrow 400,000 in year one: an additional 200,000 in year two for a total of 600,000; and an additional 400,000 in year three for a total of one million. Under the loan, the interest rate resets at the beginning of each year and is equal to the one-year spot interest rate at the time of reset. Rosyam enters into a three year interest rate swap where the notional amotut matches the amount available under the line of credit and variable rate matches the rate for the line of credit. Determine the swap rate. [6 marks) C. At annual effective interest rate i: 1 grows to 5 in x years, 2 grows to 8 in y years and 3 grows to 20 in 2 years. Calculate 12(1 + 1)2x-2y+
