Ben and Jerry want to buy an apartment in London. They consider taking out an amortizing loan. They’ve made a budget and determined that they’re able to pay an annual installment of no more than £. They want to borrow £ with an annual interest rate of %, with a ten-year repayment period. What will be the first installment on this loan? Can they afford it?
The first installment amounts to £, which is below the limit Ben and Jerry set for themselves. They can afford the amortizing loan.