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A loan of £ 10,000 is repayable by a level annuity payable half-yearly in arrear for three years and calculated on the basis of an interest rate of 10% per annum effective
A loan of £ 10,000 is repayable by a level annuity payable half-yearly in arrear for three years and calculated on the basis of an interest rate of 10% per annum effective. Construct the lender's schedule showing the subdivision of each payment into capital and interest and the loan outstanding after each repayment
Expert Solution
ANSWER
| amount | 10000 | ||||
| interest | 10.00% | ||||
| periodicity | half yearly | ||||
| time | 3 | ||||
| effective rate of interest | 0.05 | ||||
| total no. of payments | 6 | ||||
| installment | £1,876.36 | =PMT(rate,nper,pv,0) | interest | =IPMT(rate,per,nper,pv,0) | |
| no. of payments | principal | installments | interest | principal prepayment | closing balance |
| 1 | £10,000.00 | £1,876.36 | £500.00 | £1,376.36 | £8,623.64 |
| 2 | £8,623.64 | £1,876.36 | £426.49 | £1,449.87 | £7,173.78 |
| 3 | £7,173.78 | £1,876.36 | £349.31 | £1,527.05 | £5,646.73 |
| 4 | £5,646.73 | £1,876.36 | £268.26 | £1,608.09 | £4,038.63 |
| 5 | £4,038.63 | £1,876.36 | £183.17 | £1,693.19 | £2,345.45 |
| 6 | £2,345.45 | £1,876.36 | £93.82 | £1,782.54 | £562.91 |
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