Question 3Making changes to the loan: a.) Predict and comment how each of the following affect the regular payment and total interest paid over the life of the loan:?Changing the principal borrowed to 1000?changing the interest rate to 9%?changing the term of the loan to 6 months?changing the term of the loan to 24 months.b.) Suppose Darren doubles his monthly payment. WIll the time taken to repay theloan decrease by half? Explain

In a loan, the principal borrowed plus interest must be repaid. So, part of each loan payment is interest and the rest reduces the principal. For example: Payment 1: . We know that he has to pay $45.84 each month. If we just examined the first month, we know that there it is the first of 12 payments. . We know that an annuity is a series of compound interest predicaments added together, so if we are examining an individual row, we are using compound interest. . A = 45.84, i = 0.015, n = 12, P = ? 45. 84 = P(1 + 0. 015 ) 12 45.84 (1+0.015 ) 12. = P P = $38. 34 . We see that only $38.34 is going towards the principal, the rest, $7.50 is interest. Select one other payment on the repayment schedule. Repeat these calculations for them to show how you get the money going towards principal and to interest Question 2 (4 points) Analysing the repayment schedule: a. Why do you think the interest is paid before the principal is reduced? b. As the outstanding balance decreases, the interest paid decreases and the principal repaid increases. Explain why this happens c. Has the principal of the loan been reduced by one half, after half (6) the payments? Explain d. Find the total interest paid over the life of the loan (Sum the interest paid column). How does the total interest paid compare to the original principal of the loan