1. A small manufacturing firm takes out a business loan with a variable interest rate that...

 

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1. A small manufacturing firm takes out a business loan with a variable interest rate that is initially 5.5% p.a. compounded monthly, and with monthly repayments of $6,511.58 beginning at the end of the first month, to be paid over the next 10 years. (a) How much money has the firm borrowed? Give your answer rounded to the nearest dollar. (b) After 70 months there is an increase in the interest rate to 6% p.a. compounded monthly, which applies for the remainder of the total loan duration of 10 years. i. Calculate the unpaid balance after 70 months. Give your answer rounded to the nearest cent. ii. Calculate the new repayments. Give your answer rounded to the nearest cent. iii. What is the interest component of the 71st payment? Give your answer rounded to the nearest cent. (c) What is the total interest paid by the firm over the 10 years of the loan? Give your answer rounded to the nearest dollar. 1. A small manufacturing firm takes out a business loan with a variable interest rate that is initially 5.5% p.a. compounded monthly, and with monthly repayments of $6,511.58 beginning at the end of the first month, to be paid over the next 10 years. (a) How much money has the firm borrowed? Give your answer rounded to the nearest dollar. (b) After 70 months there is an increase in the interest rate to 6% p.a. compounded monthly, which applies for the remainder of the total loan duration of 10 years. i. Calculate the unpaid balance after 70 months. Give your answer rounded to the nearest cent. ii. Calculate the new repayments. Give your answer rounded to the nearest cent. iii. What is the interest component of the 71st payment? Give your answer rounded to the nearest cent. (c) What is the total interest paid by the firm over the 10 years of the loan? Give your answer rounded to the nearest dollar.

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