A loan is repayable by decreasing quarterly instalments made in arrears for 8 years. The payment made at the end of the first quarter year is £2,100 and subsequent payments decrease by £20 each quarter. The instalments were calculated using a nominal rate of interest of 6% per annum convertible quarterly. (a) Calculate the original amount of the loan in whole pounds. (b) Calculate the amount of interest and capital components in the 10th instalment.
A loan is repayable by decreasing quarterly instalments made in arrears for 8 years. The payment made at the end of the first quarter year is £2,100 and subsequent payments decrease by £20 each quarter. The instalments were calculated using a nominal rate of interest of 6% per annum convertible quarterly. (a) Calculate the original amount of the loan in whole pounds. (b) Calculate the amount of interest and capital components in the 10th instalment.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Using formulas, no tables, hint:Applying correct quarterly t.u. and providing detailed formulae and
workout.
Transcribed Image Text:A loan is repayable by decreasing quarterly instalments made in arrears for 8 years.
The payment made at the end of the first quarter year is £2,100 and subsequent
payments decrease by £20 each quarter. The instalments were calculated using a
nominal rate of interest of 6% per annum convertible quarterly.
(a) Calculate the original amount of the loan in whole pounds.
(b) Calculate the amount of interest and capital components in the 10th instalment.
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