Question: 17. (a) Prove that: (Da), -- (b) (5 marks) A bank makes a loan to be repaid by Instalments paid annually in arrears. The first

17. (a) Prove that: (Da), -"- (b) (5 marks) A bank

17. (a) Prove that: (Da), -"- (b) (5 marks) A bank makes a loan to be repaid by Instalments paid annually in arrears. The first instalment is 2,000, the second 1,900 with payments reducing by 100 per annum until the end of the 10th year, after which there are no further payments. The rate of interest charged by the bank is 9% per annum effective. (1) Calculate the amount of the loan. (4 marks) (6) Calculate the interest component of the first payment. (1 mark) (I) Calculate the amount of capital repaid in the instalment at the end of the 8th year. (5 marks) (Total 15 marks) 17. (a) Prove that: (Da), -"- (b) (5 marks) A bank makes a loan to be repaid by Instalments paid annually in arrears. The first instalment is 2,000, the second 1,900 with payments reducing by 100 per annum until the end of the 10th year, after which there are no further payments. The rate of interest charged by the bank is 9% per annum effective. (1) Calculate the amount of the loan. (4 marks) (6) Calculate the interest component of the first payment. (1 mark) (I) Calculate the amount of capital repaid in the instalment at the end of the 8th year. (5 marks) (Total 15 marks)

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