Question
You borrow $ 540,000 to buy a house worth $600,000. The interest rate is 2.4 % pa compounding monthly and the fully amortising loan term
You borrow $540,000 to buy a house worth $600,000.
The interest rate is 2.4% pa compounding monthly and the fully amortising loan term is 30 years. A loan repayment schedule is shown below, with some parts missing in bold.
Loan Repayment Schedule |
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Interest rate of 2.4% pa paid monthly, 30 year term |
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Time | Total payment | Interest component | Principal component | Liability, just after payment |
Month | $/month | $/month | $/month | $ |
0 | 540,000.00 | |||
1 | 2,105.68 | (a) | (b) | ? |
2 | 2,105.68 | 1,077.95 | 1,027.73 | 537,946.58 |
3 | 2,105.68 | 1,075.89 | 1,029.79 | 536,916.79 |
4 | 2,105.68 | 1,073.83 | 1,031.85 | 535,884.94 |
5 | 2,105.68 | 1,071.77 | 1,033.91 | 534,851.03 |
6 | 2,105.68 | 1,069.70 | 1,035.98 | 533,815.05 |
7 | 2,105.68 | 1,067.63 | 1,038.05 | 532,776.99 |
8 | 2,105.68 | 1,065.55 | 1,040.13 | 531,736.86 |
356 | 2,105.68 | 20.93 | 2,084.75 | 8,380.79 |
357 | 2,105.68 | 16.76 | 2,088.92 | 6,291.87 |
358 | 2,105.68 | 12.58 | 2,093.10 | 4,198.77 |
359 | 2,105.68 | 8.40 | 2,097.29 | 2,101.48 |
360 | 2,105.68 | (c) | (d) | (e) |
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Which of the below statements is NOT correct? All answer options are rounded to 2 decimal places as is the table above.
Select one:
a. The interest component at month 1 is $1,080.00.
b. The principal component at month 1 is $1,025.68.
c. The interest component at month 360 is $4.20.
d. The principal component at month 360 is $2,101.48.
e. The amount owing just after the payment at month 360 is $4.20.
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