Question

A loan of $1,000,000 is made today. The interest being charged on this loan is 6% p.a. The borrower will make 30 level repayments followed by a final smaller repayment (i.e., there are 31 repayments in total.). The first of the level repayments will occur today, and each subsequent repayment (including the final smaller repayment) will occur exactly 1 year after the previous repayment. Explicitly, the final repayment will occur exactly 30 years from today.

(a) Calculate the size of the level repayments, if the final smaller repayment is $15,000. Round your results to two decimal places.

(b) Calculate the amount of the final smaller repayment, if the the size of the level repayments is $68,000. Round your results to two decimal places.

(c) Calculate the loan outstanding exactly 20 years from today (after the repayment being made on that day), if the size of the level repayments is $68,200 and the final smaller repayment is $28,216.78. Round your results to two decimal places.

Answer 1