Create a cash flow diagram of the loan transactions

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Reference no: EM131562534

A loan repayment plan is scheduled to be made as uniform payments of $1,670/year each for 10 years. The first repayment is expected to take place on May 1 st in the year 2018. Subsequent repayments will take place on May 1 st in the years 2019, 2020, … ,till 2027. The loan will be taken as a lump sum of value $15,000 on May 1 st this year.

a] Create a cash flow diagram of the loan transactions, borrowing and expected repayments.

b] If the principal of the loan needed is to be repaid in full using the given repayment schedule in, what is the interest rate which the lender (the bank) is charging in this case?

c] If the interest rate offered by the bank was changed shortly before signing the agreement to 2.0%. Given the previous repayment schedule ($1,670 1700 per year for 10 years) remaining the same, calculate the amount paid against the principal as well as the amount paid as interest for each year. Please present your answer in table format showing calculation steps.

Reference no: EM131562534

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