a)loan of £16,000 is repaid by annual payments of £1,500 each at the end of the year.  How long does it take to repay the loan on the basis of an interest rate of 4% p.a.?     b)Suppose the payment at t=14 is increased to repay the loan (a balloon payment). What is the value of the payment at t=14? Enter an answer correct to 2 decimal places   c)Alternatively, the loan may be repaid via a payment at t=15�=15 (a drop payment). What is the value of the payment at t=15? Enter an answer correct to 2 decimal places

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Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.