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?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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