An investor borrows 1,000 by taking out an interest-only loan at an effective rate of interest...

 

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An investor borrows £1,000 by taking out an interest-only loan at an effective rate of interest of 6% pa, and invests the money in a project. The loan is to be repaid in full after 2 years (with no early repayment option) and interest on the money borrowed is paid at the end of each month. The project will provide income of £50 at the end of each month for 24 months and the investor can invest spare funds at an interest rate of 5% pa effective. Calculate the accumulated profit at the end of 2 years. An investor borrows £1,000 by taking out an interest-only loan at an effective rate of interest of 6% pa, and invests the money in a project. The loan is to be repaid in full after 2 years (with no early repayment option) and interest on the money borrowed is paid at the end of each month. The project will provide income of £50 at the end of each month for 24 months and the investor can invest spare funds at an interest rate of 5% pa effective. Calculate the accumulated profit at the end of 2 years.

Answer rating: 100% (QA)

Given Inflow of Calculation Cash inflow outflow cash Particulars of Interest End Spare funds o... View the full answer