help with b and c (b) Dr Musonda is struggling to repay his loan of K600,000 with payments of K12,800made monthly in arrears for 5 years.After exactly one year, a loan company offers to "help" Dr Musonda by restructur-ing his loan with new monthly payments of K9,000 made in arrears.(i) Assuming the company charges the same APR as Dr Musonda's original loan,calculate the term of the new loan.(ii) Calculate how much more interest in total Dr Musonda will pay on his restruc-tured loan than on his original loan.(c) A businessman wishes to borrow an amount of K4 million for a term of 3 years.The agreed rate of interest is 10% per annum effective for the first 2 years, and 6%per annum effective for the final year.Repayments on the loan are made annually in arrears.The amount of the level annual repayment is K1,590,328.58.(i) Draw up the loan schedule for the full three-year period.(ii) Calculate what percentage of the loan has been repaid by the end of year 2.(iii) Explain how this percentage figure would alter if the rate of interest had insteadbeen 6% for the first two years and 10% for the final year.

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Dr Musonda is struggling to repay his loan of K600,000 with payments of K12,800 made monthly in arrears for 5 years. After exactly one year, a loan company offers to "help" Dr Musonda by restructur- ing his loan with new monthly payments of K9,000 made in arrears. (i) Assuming the company charges the same APR as Dr Musonda's original loan, calculate the term of the new loan. (ii) Calculate how much more interest in total Dr Musonda will pay on his restruc- tured loan than on his original loan.

Dr Musonda is struggling to repay his loan of K600,000 with payments of K12,800 made monthly in arrears for 5 years. After exactly one year, a loan company offers to "help" Dr Musonda by restructur- ing his loan with new monthly payments of K9,000 made in arrears. (i) Assuming the company charges the same APR as Dr Musonda's original loan, calculate the term of the new loan. (ii) Calculate how much more interest in total Dr Musonda will pay on his restruc- tured loan than on his original loan.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

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Dr Musonda is struggling to repay his loan of K600,000 with payments of K12,800made monthly in arrears for 5 years.After exactly one year, a loan company offers to “help” Dr Musonda by restructuring his loan with new monthly payments of K9,000 made in arrears.(i) Assuming the company charges the same APR as Dr Musonda’s original loan,calculate the term of the new loan.(ii) Calculate how much more interest in total Dr Musonda will pay on his restructured loan than on his original loan.
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