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Loans - a question about a past test

0 votes
asked Oct 24, 2016 in BUS 2016H - Financial Mathematics by anonymous
recategorized Mar 1, 2017 by Rowan

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I'm doing a question on loans and I'm busy with Q3c. I see where they get the answer - I just disagree with one part of it. It says (in the first part of the solution to Q3c that the 40th payment = 14000 = 10000+100*40. Surely the 40th payment would be 13900 = 10000 + 100*39 because the increase of 100 per quarter only starts from the second payment?

1 Answer

+1 vote
answered Oct 24, 2016 by Emiel_Zyde (720 points)
selected Oct 26, 2016 by simon_rigby
Best answer

The 40th payment is indeed 13 900. The memo should have said the 41st payment is 14 000, as this is the first payment under the new repayment structure.