Exactly 5 years ago, a loan was taken out that was to be repaid by level annual instalments made inarrears over a 15-year contract. Given that the instalments (of capital and interest) were set to£883 per annum based on a 8% p.a. effective interest rate on the borrowing, calculate the following:(i)The initial amount of loan taken out on this contract.(ii)The amount of loan outstanding immediately after the instalment now due is paid.It is agreed that, immediately after the instalment now due, the rate of interest chargedon the outstanding loan is reduced to 5.5% p.a. effective. Consequently, the same annualinstalments will be payable for a revised remaining term and also with an amended finalpayment. Thus, find the following:(a) The revised remaining term of the loan outstanding in whole years.(b) The amount of the amended final payment.(c) The interest component of the amended final payment.

A loan is borrowed money that must be repaid with interest over a specified period, commonly…

Exactly 5 years ago, a loan was taken out that was to be repaid by level annual instalments made in arrears over a 15-year contract. Given that the instalments (of capital and interest) were set to £883 per annum based on a 8% p.a. effective interest rate on the borrowing, calculate the following: (i) The initial amount of loan taken out on this contract. (ii) The amount of loan outstanding immediately after the instalment now due is paid. (iii) It is agreed that, immediately after the instalment now due, the rate of interest charged on the outstanding loan is reduced to 5.5% p.a. effective. Consequently, the same annual instalments will be payable for a revised remaining term and also with an amended final

Exactly 5 years ago, a loan was taken out that was to be repaid by level annual instalments made in arrears over a 15-year contract. Given that the instalments (of capital and interest) were set to £883 per annum based on a 8% p.a. effective interest rate on the borrowing, calculate the following: (i) The initial amount of loan taken out on this contract. (ii) The amount of loan outstanding immediately after the instalment now due is paid. (iii) It is agreed that, immediately after the instalment now due, the rate of interest charged on the outstanding loan is reduced to 5.5% p.a. effective. Consequently, the same annual instalments will be payable for a revised remaining term and also with an amended final

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 30P

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