A young couple borrow $5,000 on the 1st September, agreeing to repay it as well as...

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Finance

A young couple borrow $5,000 on the 1st September, agreeing torepay it as well as the interest charged over 36 months with 36equal repayments, at the interest rate of 3%. No interest ischarged for their 3 interest-free months, but their first repaymentis required on the 1st of October.
a) Show all mathematical workings and formulas to calculate therepayment required to repay the loan and interest.
b) Calculate the individual monthly repayments required for all36 months, displaying them in a table with headings: "Month","Amount Owing", "Interest" and "Repayment". Show that thiscalculation method yields the same result as part a).

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3.9 Ratings (527 Votes)

Assume Equal Monthly Repayments X First three months are interest Free Hence Principal Balance after 3 months 1st December50003X Number of balance instalments 36333 Interest rate per month 31202500025 Capital Recovery Factor CAFAPiNi1iN1iN1 Nnumber of Payments 33 iInterest Rate 02500025 CAFAP02533 000251002533100253310031608 Amount of Monthly Equal Repayment X003160850003X See Answer

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