Question: xt four years. How much money, in present value terms, can she withdraw each mon or the next four years? (3 poi Question 7 If

xt four years. How much money, in present value terms, can

xt four years. How much money, in present value terms, can she withdraw each mon or the next four years? (3 poi Question 7 If you don't repay a loan, and a lot of time passes, the debt can grow to unmanageable proportions, as happened to an unfortunate borrower in Melbourne. A grandmother has been forced to put her house up for sale after she ended up owing a massive $83 000 -on a $15 000 loan. Andrea lane, 57, borrowed the money in 2002 to pay for her father's funeral and to buy a new oven for her Clayton home. But she could not meet the cost of the loan and 18 years later, the amount she owed had grown to $83 000 ... Andrea said: 'I borrowed the money when I was grieving for my father. I just signed the papers.! a) Based on original loan of $15 000, calculate the monthly repayments to be repaid over 5 years. Assume an interest rate of 25% p.a. Andrea can afford to pay $600 per month into the loan, and she has been able to negotiate a new interest rate of 8% pa. b) How long would it take Andrea to repay the loan? c) If she cannot afford to increase her current repayments, and is unable to negotiate a better interest rate, recommend a strategy to reduce the total length of time to repay the loan? Based on this strategy, how much interest would she save? (1+2+2=5 5 points) o 3 0 *

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