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B) After completing your BET degree, your parents suggest you to start M.Sc. degree program....

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Accounting

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B) After completing your BET degree, your parents suggest you to start M.Sc. degree program. Though your parents have some savings, you will be in short of LKR 350,000. Among different alternative sources of funding, your parents prefer to borrow a bank loan. You have inquired about the interest rates from a bank, and a special loan scheme is available for higher education at the interest rate of 10 percent per year. Your parents concern on their ability to repay the loan. Assume that you are to repay the loan within 4 years by 4 annual instalments. Required: i. Calculate the annual instalment payment. (04 Marks) ii. Prepare an amortization schedule for this loan by clearly indicating the principal and interest components in each instalment. (06 Marks) (Total: 20 Marks)

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