Reference no: EM132894546

On 15th April 2005, Amit borrowed $200,000 to be repaid eighteen months later by single payment of $240,000

Amit repaid the loan early on 17th July 2005.

(i) Find the sum paid by Amit to terminate the contract assuming that the interest is reduced proportionately for early settlement based on simple interest

(ii) Find the annual rate of interest implied in the original contract assuming compound interest.

1. Ratidzo took a loan of $2,500,000 from a bank to build his mansion. the loan is to be repaid by regular annual repayments in arrears for 8 years and calculated on the basis of an interest rate of 20% per annum

(i) calculate the level annual repayments

(ii) construct an amortization schedule for this loan

(iii) use the amortization schedule to answer the following questions:

1. the capital repayment and interest paid at the end of seventh year
2. After which repayment the outstanding loan will be first less than K1,200,000
3. For which repayment, the capital content will first exceed the interest content.