A loan is repayable by a decreasing annuity payable annually in arrears for 20 years. The repayment at the end of the first year is $6 000 and subsequent repayments reduce by $200 each year. The repayments were calculated using a rate of interest of 9% per annum effective. Calculate the original amount of the loan.

Q: A loan is repayable by decreasing annuity annually in arrears for 20 years. The repayment at the end…

A: N = Number of payments = 20 First year repayment = 6000 Interest rate = 9% p.a. Decrease in…

Q: Compute the compound amount and the interest on a loan of $10,600 compounded annually for six years…

A: Given: Loan = $10,600 Interest rate = 8% Years = 6

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A: Final payment:The "final payment" represents the concluding installment in a series of financial…

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Q: Compute the compound amount and the interest on a loan of $10,500 compounded annually for four years…

A: The computation of compound amount is as follows:Hence, the compound amount of loan is $16910.355.

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A: Interest payment for the 3rd year = $1080 ($30000-$6000-$6000)*6% = $1080

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Q: An amount of $13,000 is borrowed from the bank at an annual interest rate of 14%. a. Calculate the…

A: Amount borrowed - $ 13,000 Annual interest rate - 14% Loan period - 4 years

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Q: A loan is repaid by making payments of $2000 at the end of every six months for 12 years. If…

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Q: An annuity with a cash value of $15,500 earns 7 % compounded semi-annually. End-of-period…

A:

Q: A loan is being repaid with 20 payments of 1500 at the end of each year. Interest is calculated at…

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Q: A 13 -year loan for $1,500,000 is to be amortized by equal monthly payments. If the APR is at 7.53%,…

A: Loan amount = $ 1,500,000Number of years of loan = 13APR= 7.53%

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Q: Calculate the effective annual rate on each of the following loans: 1. $5,000 loan for 2 years,…

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Q: An annuity providing a rate of return of 6.4% compounded monthly was purchased for $61,000. The…

A: An Annuity is a payment made regularly for a fixed period of time at a fixed interest rate. This is…

Q: A loan of $ 8500 is to be repaid in 39 equal monthly installments with the first one paid seven…

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Q: The effective rate of interest is 4% per annum. Calculate the value at the start of the payment…

A: Value of the annuity at the start of the payment stream with advance annual payment is calculated as…

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.