Problem 3 (Required, 25 marks) A bank has offered a discounted loan. .docx

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Problem 3 (Required, 25 marks) A bank has offered a discounted loan. It is given that the loan charges interest at an annual nominal discount rate dm) convertible m-thly (where m is positive integer). Borrower A has entered into n-year discounted loan and borrow \$5000. It is given that the actual amount that borrower receives now is \$4630. Recently, another borrower B has entered into 2n-year discounted loan and borrow \$10000. Questions (a) Calculate the amount of interest charged by the bank in borrower B's loan. (b) Suppose that the borrower B negotiates with the bank and agree that the borrower can pay the interest (together with the principal \$10000) after 2n year. To do so, the bank decides to charge interest at an annual nominal discount rate 2d(m) convertible 2m-thly. Calculate the total repayment amount paid by the borrower after 2n years. (Hint: It is impossible to find the values of all unknowns d(m), m and n. To solve this problem, you just need the value of one unknown (combination of d(m), m and n).) Problem 3 (Required, 25 marks) A bank has offered a
• Fall '19
• Electric charge, 2m, \$10000, \$5000, \$4630

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