A loan of £4,000 is to be repaid over 5 years by a level annuity payable monthly in arrears. The amount of the monthly payment is calculated on the basis of an interest rate of 1% per month effective. Task : Find the amount of the loan that has been repaid after 30 months. Answer: The loan outstanding after 30 months is a)L(1+i)^t-x∑_(s=1)^t(1-i)^s b)L(1+i)^t-x∑_(s=2)^t(1+i)^s c)x·a_30] d)a_30] Hence  a)£1744.12   b)£1644.12  c)£1603.69   d)£1703.69  has been repaid at that point in time. They are multiple-choice questions

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
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A loan of £4,000 is to be repaid over 5 years by a level annuity payable monthly in arrears. The amount of the monthly payment is calculated on the basis of an interest rate of 1% per month effective.

Task : Find the amount of the loan that has been repaid after 30 months.

Answer: The loan outstanding after 30 months is

a)L(1+i)^t-x∑_(s=1)^t(1-i)^s

b)L(1+i)^t-x∑_(s=2)^t(1+i)^s

c)x·a_30]

d)a_30]

Hence  a)£1744.12   b)£1644.12  c)£1603.69   d)£1703.69  has been repaid at that point in time.

They are multiple-choice questions

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