William has a reducing balance loan on which he owes $5590. He makes monthly repayments of $110. The loan company charges interest at 24% per annum, compounded monthly. The spreadsheet shows some of the information for the next two months of the loan. --- 4 WORK AREA LINES (style=lined) --- --- 3 WORK AREA LINES (style=lined) --- a. b. \(\text{The interest charged exceeds the amount that is repaid.}\) \(\text{Interest charges will gradually increase with the monthly repayment staying the same \(\Rightarrow\) loan will never be repaid.}\) a. \(\text{Calculations:}\) \(\text {Cell E2 }= 5590+111.80-110=\$ 5591.80\) \(\text{Cell B3 }=\text{ Cell E2}\) \(\text{Cell C3}=5591.80 \times 0.02 = \$111.84 \ \text{(monthly r/i = 2%)}\) \(\text{Cell E3}=5591.80+111.84-110 = \$5593.64\) b. \(\text{The interest charged exceeds the amount that is repaid.}\) \(\text{Interest charges will gradually increase with the monthly repayment staying the same \(\Rightarrow\) loan will never be repaid.}\)
Financial Maths, STD2 F4 2022 HSC 36
Frankie borrows $200 000 from a bank. The loan is to be repaid over 23 years at a rate of 7.2% per annum, compounded monthly. The repayments have been set at $1485 per month.
The interest charged and the balance owing for the first three months of the loan are shown in the spreadsheet below.
- What are the values of `A` and `B`? (2 marks)
- After 50 months of repaying the loan, Frankie decides to make a lump sum payment of $ 40 000 and to continue making the monthly repayments of $1485. The loan will then be fully repaid after a further 146 monthly repayments.
- How much less will Frankie pay overall by making the lump sum payment? (3 marks)
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Marge borrowed $19 000 to buy a used car. Interest on the loan was charged at 4.8% pa at the end of each month. She made a repayment of $436 at the end of every month. The table below sets out her monthly repayment schedule for the first four months of the loan.
- Some values in the table are missing. Write down the values for `A` and `B`. (2 marks)
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- Calculate the value of `X`. (2 marks)
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- Marge repaid this loan over four years.
What is the total amount that Marge repaid? (1 mark)
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Ying borrowed $250 000 to buy a house. The interest rate and monthly repayment for her loan are shown in the spreadsheet.
What is the total interest charged for the first four months of this loan?
- $6364.32
- $6366.11
- $6369.67
- $6376.25
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Margaret borrowed $300 000 to buy an apartment. The interest rate is 6% per annum, compounded monthly. The repayments were set by the bank at $2200 per month for 20 years.
The loan balance sheet shows the interest charged and the balance owing for the first month.
- What is the total amount that is to be paid for this loan over the 20 years? (1 mark)
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- Find the values of `A` and `B`. (2 marks)
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