You borrow $12,000 from the bank to invest in shares. You plan to repay the loan through fortnightly payments of $1,000, with the first payment occurring one fortnight after you receive the funds from the bank, and the final payment possibly being a partial payment. The bank charges interest at a rate of j₂₆= 2% p.a.

1. Determine how long it will take you to repay the loan. Describe and apply a sanity check for the duration of the loan.

[2+1=3 marks]

1. Determine the size of the final (partial) payment.

[5 marks]

1. Construct an amortization table showing the last three payments, that is, two full payments and a partial payment. Ensure that you show how you got your starting value for the table. Describe and apply a sanity check to your table.

[5 marks]

1. Immediately after your 5^thpayment, the interest rate increases to j₂₆= 10% p.a. Assuming that you maintain the same fortnightly payments of $1,000, determine how long does it take you to retire your debt and the size of the final (partial) payment.

[2+5 marks]