Please Help! 1.You borrow a $328,000 add-on interest loan from the credit union
ID: 2779528 • Letter: P
Question
Please Help!
1.You borrow a $328,000 add-on interest loan from the credit union and will repay in equal installments over 19 years. The nominal rate of interest is 4.5 %. Assuming daily repayment and compounding rate of interest, obtain the annual percentage rate.
a. 9.88%
b. 10.38%
c. 10.88%
d. 11.38%
2.Miss Sun Tzi obtained a level principal and interest on the balance loan of $78,000. The nominal rate of interest is 6% with a term of 5 years and payments scheduled at the end of each month. Compute the 15th payment.
a.1559
b.1579
c.1599
d.1619
Explanation / Answer
2.
15th payment includes principal and interest element.
The loan is repayable monthly for 5 years i.e. 60 instalments
Principal Element = $78,000/60 = $1,300
Interest element for 15th payment shall be calculated on the loan amount pending after 14th repayment.
Loan balance after 14th repayment = $78,000 – ($1,300*14) = $59,800
Interest element = $59,800*0.06/12 = $59,800*0.005 = $299
15th payment = $1,300 + $299 = $1,599