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Calculate the size of monthly repayment

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Reference no: EM133111854

1) Nina has decided to take out a loan of $200,000 today from Citibank.

  • Loan term: 10 years
  • In the first two years, equal monthly repayments are made. The repayments for the first 2 years are interest-only. (Each interest-only repayment is chosen to be exactly equal to the interest accumulated in that period. So, at the end of two years, the outstanding amount will remain exactly the same as the original loan amount.)
  • For the remaining eight years, equal monthly repayments are made so that the loan is fully paid off at the end of the loan term.
  • The interest charged is 8% p.a., compounded monthly.

- Calculate the size of each monthly repayment during the first 2 years of interest-only.

- Calculate the size of each monthly repayment after the  2-year interest-only period expires.

- Calculate the loan outstanding amount after 4 years (i.e. after the 24th payment).

Reference no: EM133111854

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