Zac takes out a 15-year fully amortising personal loan with an interest rate of 6% p.a. compounded
Question:
Zac takes out a 15-year fully amortising personal loan with an interest rate of 6% p.a. compounded quarterly. The loan is repaid with quarterly payments made at the end of each quarter and the loan outstanding balance after the 20th repayment is $125,646.55. After the 20th repayment the bank increases the interest rate to 7.5% compounded quarterly.
A. Calculate the 20th quarterly payment before the interest rate change. Express your answer to the nearest cent.
B. Calculate the original loan amount that was borrowed from the bank. Express your answer to the nearest cent.
C. How long will it take Zac to repay the loan, if he wants to keep the same quarterly payment after the rate change, and the bank allows him to pay the loan over a longer period? Round up your answer up to the full quarter.
Introduction to Management Accounting
ISBN: 978-0133058789
16th edition
Authors: Charles Horngren, Gary Sundem, Jeff Schatzberg, Dave Burgsta