J:tmes Ruse 2 017 2 U T ri:tls

A home loan of $600 000 is borrowed from a bank at a rate of 6% p.a. on the 1st of
January 2017 over I0 years, compounded monthly. Interest is charged at the beginning of
each month (including immediately when the loan was taken), while repayments are made
at the end of every month. Let M be the amount of each monthly instalment.

Let In represent the amount owing after the nth repayment.

1. Show that In = 6oooooc~~~r - 200M[G~~f - 11 3

11. The loan is to be paid back over 10 years. Show that M = 6661.23 2

111. T he bank reduced its interest rates from 6% p . a. to 5% p.a. on the I st of January 1
2022. Find, to the nearest cent, the amount owing just before the rate changes.

1v. Denote your answer in part ii i. as' A' for this question.

If the repayment stays the same and taking into account the rate change, in which 3
year and month can the loan be expected to be paid off?

Hint: Do all your working out in terms of A and M, only substitute your answers
from ii. and iii. at the end.

v. Due to the rate change in part iii, the bank requires the last payment to only pay off 2
the remaining balance as opposed to the usual instalment amount. How much
interest in total will the borrower have paid over the life of the loan?
Sy dney Gr:tmm:u- 2013 2 U T ri:tls

A university student is planning to use a cash account containing $50 000 to help fund
his expenses. The account earns interest at 63 per annum, compound ed monthly. At
the end of each month interest is added to the account balance and then the student
withdraws $1500. Let An be the amount of money remaining in the account at the
end of the nth month, following the student's withdrawal.
(i) Find an expression for A 1 .
(ii) F ind expressions for A2 and A3.
(iii) After how many months will the account have a balance of zero dollars?
Give your answer to the nearest month.
Sy dney Gr:tmm:u- 2007 2 U T ri:tls

Karen borrows $15 000 from the bank. The loan plus interest and charges are to be
repaid at the end of each month in equal monthly instalm ents of $M over 5 years.
is
Interest is charged at 63 p.a. and calculated on t he balance owing at the beginning
of each month. Furthermore, at the end of each month a bank charge of $15 is added
to the account.
Let An be the amount owing after n months.
(i) Write down expressions for A i and A2 and show that the amount owing after [II
three months is given by
A3 = 15000 x 1·0053 - (M - 15)(1+1·005+1·0052 ) .
(ii) Hence write an expression of An.
(iii) Find the monthly instalment, correct to the nearest cent.