Consider a 100,000 bank loan at 10 per cent per year, repayable in equal annual instalments over
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Consider a £100,000 bank loan at 10 per cent per year, repayable in equal annual instalments over five years. The annual repayment can be found by dividing the amount of the loan by the cumulative present value factor for five years at 10 per cent:
Annual repayment = 100,000/3.791= £26,378.26
Transcribed Image Text:
Table 5.2 Interest elements of loan repayments Year 1 2 3 45 5 Opening balance (£) 100,000 83,621.74 65,605.65 45,787.96 23,988.50 Add 10% interest (£) 10,000 8,362.17 6,560.57 4,578.79 2,398.85 Less repayment (£) 26,378.26 26,378.26 26,378.26 26,378.26 26,378.26 Closing balance (£) 83,621.74 65,605.65 45,787.96 23,988.50 9.09 The interest elements of the annual repayments are calculated in Table 5.2. The capital elements are the difference between the interest elements and the annual repayments. The small residual difference is due to rounding of the cumulative present value factor. Activ
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The table youve provided shows the amortization schedule of a 100000 loan at a 10 percent annual interest rate which is repaid in equal annual install...View the full answer
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Related Book For
Corporate Finance Principles And Practice
ISBN: 9781292450940
9th Edition
Authors: Denzil Watson, Antony Head
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