Estimate the loss to the bank - restructure the loan, Mathematics

Your bank has a loan outstanding with a current balance of $1,000,000 that is payable in quarterly equal instalments of $49,924.  This loan has another 6 years to maturity.  The borrower has run into financial problems and has requested a reduction of the quarterly instalments to $40,000.  The cost of money to the bank is 6% (with quarterly compounding).   Estimate the loss to the bank if it agrees to restructure the loan as requested by the client.

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Posted Date: 2/28/2013 4:23:45 AM | Location : United States







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