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(a) Draw up the loan schedule (b) What payment makes the outstanding balance drop below £1,500? (c) What is the outstanding balance after 4 payments?

(a) Draw up the loan schedule (b) What payment makes the outstanding balance drop below £1,500? (c) What is the outstanding balance after 4 payments?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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5. A loan of £2,000 is to be repaid over 7 years with equal annual payments at the end of each year. The interest rate is 6.5% p.a. effective. (a) Draw up the loan schedule (b) What payment makes the outstanding balance drop below £1,500? (c) What is the outstanding balance after 4 payments? After the first 4 payments the individual needs to borrow another £1,000. It is agreed that the new outstanding balance will be repaid in 4 more years with quarterly installments. The first installment is P and then they increase by £10 per quarter. (d) Find P.
Transcribed Image Text:5. A loan of £2,000 is to be repaid over 7 years with equal annual payments at the end of each year. The interest rate is 6.5% p.a. effective. (a) Draw up the loan schedule (b) What payment makes the outstanding balance drop below £1,500? (c) What is the outstanding balance after 4 payments? After the first 4 payments the individual needs to borrow another £1,000. It is agreed that the new outstanding balance will be repaid in 4 more years with quarterly installments. The first installment is P and then they increase by £10 per quarter. (d) Find P.
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