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Capital and interest components of the final payment

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Reference no: EM131101117

A loan is to be repaid by an annuity payable annually in arrear. The annuity starts at a rate of £300 per annum and increases each year by £30 per annum. The annuity is to be paid for 20 years.

Repayments are calculated using a rate of interest of 7% per annum effective.

Calculate:

(i) The amount of the loan.

(ii) The capital outstanding immediately after the 5th payment has been made.

(iii) The capital and interest components of the final payment.

Reference no: EM131101117

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