A loan was issued to be repaid by a level annuity payable annually in arrears for 18 years. The amount of the annual repayment was calculated on the basis of an annual interest rate of 5% for the first 6 years and 4% thereafter. The amount of interest paid in the 4th repayment is 89.66. a. Find the annual repayment. b. Find the amount of capital repayment in the 12th repayment. c. For which repayment would the capital content first exceed the interest content?
A loan was issued to be repaid by a level annuity payable annually in arrears for 18 years. The amount of the annual repayment was calculated on the basis of an annual interest rate of 5% for the first 6 years and 4% thereafter. The amount of interest paid in the 4th repayment is 89.66. a. Find the annual repayment. b. Find the amount of capital repayment in the 12th repayment. c. For which repayment would the capital content first exceed the interest content?
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
Related questions
Question
plz solve all parts within 30-40 mins I'll give you multiple upvote
Transcribed Image Text:A loan was issued to be repaid by a level annuity payable annually in arrears for 18 years. The
amount of the annual repayment was calculated on the basis of an annual interest rate of 5%
for the first 6 years and 4% thereafter. The amount of interest paid in the 4th repayment is
89.66.
a.Find the annual repayment.
b.Find the amount of capital repayment in the 12th repayment.
c.For which repayment would the capital content first exceed the interest content?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education