You are about to complete your BSc study at RIT Kosovo. After a long time consideration of different options on where to go and do your Master degree, you have decided to go to University of London. However, since you have not managed to obtain a scholarship, you decided to finance your study by raising a student loan from Kosovo’s government. This is the information available to you:

- The loan consists of three payments of 5,655 each, made at the beginning of each of the three years of your Master study Programme.

- You have also managed to get a loan from a commercial bank which will cover all living expenses – 5,500 annually.

- The interest rate charged for two loans is 6% per annum for the three years of the Master study.

Required:

a) Calculate the total Future Value, including interest, at the end of Year 3 of the payments made by the Government and bank to you?

The amount you found in Part (a) is the value of the total loan that have obtained from the government and the bank calculated at the end of Year 3. For the rest of the question consider this as the Present Value of the total loan amount. Suppose that this loan has a 30-year maturity starting from the end of the university degree. The nominal interest rate on this loan is 4% per annum. You will have to repay the loans to the government and to the bank with a fixed yearly payment at the end of each year.

b) What is the future value of the loan at the end of 30 years including interest?