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Calculate Loan balances at the end of Year

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Reference no: EM133047572

Question - Consider 10-year Sh. 200,000 loan with an initial interest rate of 10% p.a. payable monthly. The subsequent rates are based on index plus a margin of 2%. The index is expected to be at 11% and 9% in the coming two years. There is a 6% cap on PMT year on year.

Required -

a) Calculate the monthly PMT for years 1, 2 and 3?

b) Calculate Loan balances at the end of Year 1, 2 and 3?

Reference no: EM133047572

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