Question: Question 2 A loan note is issued for P1,000,000. The loan note is redeemable at P1,250,000. The term of the loan is five years and

Question 2

A loan note is issued for P1,000,000. The loan note is redeemable at P1,250,000. The term of the loan is five years and interest is paid at 5.9% pa. The effective rate of interest is 10%.

Show how the value of the loan note changes over its life.

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