Question: Problem 2 (8 points) Mr. B borrows an amount L from the bank today and agrees to repay the loan by m monthly payments (of

Problem 2 (8 points) Mr. B borrows an amount L from

Problem 2 (8 points) Mr. B borrows an amount L from the bank today and agrees to repay the loan by m monthly payments (of amount X each) plus 1 balloon payment (smallest balloon payment) made one month after the mth payment. The first repayment is made one month after today. You are given that - The loan charges compound interest at an annual effective interest rate i=21.7% - The interest-due in 10th payment is 1030.847. - The principal repaid in 20th payment is 1848.1581. Using prospective method, calculate the outstanding balance at 15th payment date. ((1)Hint: What quantity do you need to calculate the balloon payment?)

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