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Work out the loan schedule for a three-year loan of 100K paid back in equal amounts at the ends of each year 1, 2 and
Work out the loan schedule for a three-year loan of 100K paid back in equal amounts at the ends of each year 1, 2 and 3. We use notation that i(1) = effective annual interest rate for year 1, i(2) effective annual interest rate for year 2, i(3) = effective annual interest rate for year 3. Compare the total amount of nominal repayments for the following three cases: Case 1: Case 2: i(1) = 0.02, i(2) = 0.03, i(3) = 0.04; i(1) = 0.04, i(2) = 0.03, i(3) = 0.02; i(1) = 0.03, i(2) = 0.03, i(3) = 0.03. Case 3: Work out the loan schedule for a three-year loan of 100K paid back in equal amounts at the ends of each year 1, 2 and 3. We use notation that i(1) = effective annual interest rate for year 1, i(2) effective annual interest rate for year 2, i(3) = effective annual interest rate for year 3. Compare the total amount of nominal repayments for the following three cases: Case 1: Case 2: i(1) = 0.02, i(2) = 0.03, i(3) = 0.04; i(1) = 0.04, i(2) = 0.03, i(3) = 0.02; i(1) = 0.03, i(2) = 0.03, i(3) = 0.03. Case 3
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