Loan Schedule Problems

Question (1):
A loan of 30,000 was granted on 1st August 1997. The loan is repayable by an annuity payable monthly in arrears for 15 years. The amount of the monthly repayment increases by 30 after five years and by further 30 after ten years, and was calculated on the basis of a nominal rate of interest of 8% per annum convertible quarterly. (a) Calculate the initial amount of monthly repayment. (b) Calculate the amount of capital which was repaid on 1st September 1997. (c) Calculate the amount of loan which will remain outstanding after the monthly repayment due on 1st August 2005 has been mode. (d) The borrower requests that after the l6t August 2005 payment has been made, future repayments be for a fixed amount payable on each 1 st August, the last repayment being on 1st August 2009. Calculate the amount of the revised annual payment on this basis if the interest rate remains unchanged.

uestion (2):
A bank makes a loan to be repaid by installments paid annually in arrears. The first installment is 20, the second is 19 with the payments reducing by 1 per annum until the end of the 10th year after which there are no further payments. The rate of interest charged by the lender is 6% per annum effective. (a) (b) (c) Calculate the amount of the loan. Calculate the interest and capital components of the first payment Calculate the amount of capital repaid in the installment at the end

of the 8th year.

Question (3):
A in loan of of 80,000 capital is and repayable interest. over The 25 years by level are monthly calculated installments using an arrears repayments

effective rate of interest of 8% per annum. Calculate: (i) (a) The capital repaid in the first monthly installment. (b) The total amount of interest paid during the last six years of the loan. (C) The interest included in the final monthly payment. Explain how your answer to (i)(b) would alter if, under the original terms of the loan, repayments had been made less frequently than monthly.

Question (4):
(a) Calculate the present value, at a rate of interest of 3% per annum effective, of an annuity where 10 is paid at the end of the first year, 12 is paid at the end of the second year, 14 is paid \t the end of the third year and so on, with payments increasing by 2 per annum until the payment

stream ends at the end of 20 years. (b) Calculate the capital outstanding in the above annuity at the end of

the

15th year, after the payment then due has been received. (c) Determine the interest and capital components in the 16th payment

Z uestion (5):
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. (i) Calculate the original amount of the loan. (ii) Construct the schedule of repayment for years eight (after the seventh payment) and nine, showing the outstanding capital at the beginning of the year, and the interest element and the capital repayment in each year. (iii) Immediately after the ninth payment of interest and capital, the interest rate on the outstanding loan is reduced to 7% per annum effective. Calculate the amount of the tenth payment if subsequent payments continue to reduce by 200 each year, and the loan is to be repaid by the original date, i.e. 20 years from commencement.

Question (6):
(a) Calculate the present value, at a rate of interest of 8% p.a. effective, of an annuity where 100 is paid at the end of the first year, 120 is paid at the end of the second year, 140 is paid at the end of the third year, and so on with payments increasing by 20 p.a. until the payment ends at the end of 20 years. (b) Calculate the capital outstanding in the above annuity at the end of the 10th year after the payment then due has been received.

(c) Determine the interest and capital components in the 11th payment.

Question (7):
(a) Calculate the present value of an annuity payable annually in arrears over a term of 20 years such that the payment is 700 in year 1, 800 in year 2, 900 at year 3, and etc. Assume a rate of interest of 6% per annum for the first twelve years and 7% per annum thereafter. (b) Determine the interest and capital components in the 13th payment. (c) Calculate the interest paid in the final 8 payments.

Question (8):
A loan of 30,000 is being repaid by a half-yearly annuity paid in arrears for 20 years. The amount of the loan is calculated at an effective rate of interest of 10% per annum. (i) Calculate the half-yearly payment of the annuity. (ii) (a) Calculate the capital outstanding at the end of the 10th year (after the payment due has been paid). (b) Calculate the capital and interest in the 21st payment. (c) Calculate the capital and interest in the final payment.