Compute the initially agreed installment

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Question - A firm is advanced a Shs 5 million= loan by a bank to be repaid in equal monthly installments over five years at a rate of interest of 18% per annum. After the 24th installment, the rate of interest is adjusted to 20% per annum and the monthly installment size recomputed such that the loan is fully repaid in the remaining duration of the initially agreed term. After the 36th installment, the rate of interest is lowered by 3% per annum but the monthly installment size is not adjusted, until from the end of the 49th month when it is increased by Shs 29,330.

Required -

(i) Compute the initially agreed installment and the one after the interest rate adjustment to 20% per annum.

(ii) At the end of which month would the loan be fully repaid?

(iii) What is the total interest that the firm pays on the loan during its term?

Reference no: EM132547052

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