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A loan of $100,000 is made today. This loan will be repaid by 10 level repayments,...

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Finance

A loan of $100,000 is made today. This loan will be repaid by 10level repayments, followed by a final smaller repayment, i.e.,there are 11 repayments in total. The first of the level repaymentswill occur exactly 2 years from today, and each subsequentrepayment (including the final smaller repayment) will occurexactly 1 year after the previous repayment. Explicitly, the finalrepayment will occur exactly 12 years from today. If the interestbeing charged on this loan is 8.5% per annum compoundedhalf-yearly, and the final smaller repayment is $300, Calculate theloan outstanding exactly 11 years from today.

Answer & Explanation Solved by verified expert
4.0 Ratings (745 Votes)
We have given the amount of finalrepayment that is 300 So if we find out what is the interest andprincipal amount included in that amount we can find out what isthe loan outstanding at 11 years from    See Answer
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