A debt of N$929,000 is being repaid in equal installments at the beginning of each period for 13 years. The bank charges 7.5% p.a. for the first 8 years, thereafter it reduces the rate to 5% p.a.
(a) (i) What is the amount of installment paid by the borrower in the first period of 8 years, assuming semi-annual compounding? N$Answer
(ii) What is the amount of interest paid in the first installment in this case? N$Answer
(iii) What is the principal repaid in the first installment in this case? N$Answer
(b) How much money is the lending institution expected to receive after the first 8 years while still assuming semi-annual compounding? N$Answer
(c) What is the outstanding debt amount after 8 years of repaying the debt, assuming semi-annual compounding? N$Answer
(d) What is the total amount of interest paid in the remaining 5 years in this case? N$Answer
(e) What is the total amount of money paid to the lending institution after 13 years, while still assuming semi-annual compounding? N$Answer
(f) What is the total interest paid after 13 years? N$Answer