A loan of 4,000 is to be repaid over 5 years by a level annuity payable monthly
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Question:
A loan of £4,000 is to be repaid over 5 years by a level annuity payable monthly in arrears. The amount of the monthly payment is calculated on the basis of an interest rate of 1% per month effective.
Task : Find the amount of the loan that has been repaid after 30 months.
Answer: The loan outstanding after 30 months is
a)L(1+i)^t-x∑_(s=1)^t(1-i)^s
b)L(1+i)^t-x∑_(s=2)^t(1+i)^s
c)x·a_30]
d)a_30]
Hence a)£1744.12 b)£1644.12 c)£1603.69 d)£1703.69 has been repaid at that point in time.
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