Consider a debt that must be repaid over a nine-year period in progressively larger half-yearly installments. As a result, at the end of the first half-year's installment is fixed at £1770, and subsequent payments increase by £50 per half-year. Assuming that the interest rate will be 4.9% per year, convertible every six months, over the duration of the contract, calculate the initial amount of loan that was borrowed, the total amount of loan repaid up until the start of the 3th year and the amount of interest component in the 7th instalment, (No tables, ONLY formulas, please)
Consider a debt that must be repaid over a nine-year period in progressively larger half-yearly installments. As a result, at the end of the first half-year's installment is fixed at £1770, and subsequent payments increase by £50 per half-year. Assuming that the interest rate will be 4.9% per year, convertible every six months, over the duration of the contract, calculate the initial amount of loan that was borrowed, the total amount of loan repaid up until the start of the 3th year and the amount of interest component in the 7th instalment, (No tables, ONLY formulas, please)
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
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Consider a debt that must be repaid over a nine-year period in progressively larger half-yearly installments. As a result, at the end of the first half-year's installment is fixed at £1770, and subsequent payments increase by £50 per half-year. Assuming that the interest rate will be 4.9% per year, convertible every six months, over the duration of the contract, calculate the initial amount of loan that was borrowed, the total amount of loan repaid up until the start of the 3th year and the amount of interest component in the 7th instalment, (No tables, ONLY formulas, please)
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