# Cash and Treasury Management - Assessment 2 - task 7 2016

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• Registered, AAT Student Posts: 42
edited October 2019

I know this is an old post, but thought I would answer it to help others
Loan of £240,000 over 60 months (5 years)

A ) 6% APR with £1,000 admin charges, but it says the monthly repayments are £4,640

4640 x 60 months = £278,400. The loan amount is £240,000 - how much is actually paid 278,400 = £38,400. The difference of £38,400 must be interest. Plus £1000 admin charge,= £39,400

B ) Bank loan of 4% per annum flat rate, £800 admin charge

240,000 x 4% = £9,600 which is the interest payable per year. There are 5 years in 60 months, so 5 x 9600 = £48,000. Plus the £800 admin charge = £48,800

C ) how much is the quaterly repayment for option B

48,800 - admin cost of £800 as this wouldnt be included in the monthly repayments = 48,000
48,000 + loan of 240,000 = 288,000
288,000 / 5 years = 57,600
57,600 / 4 (we are working out quarterly payments) = £14,400

D ) Overdraft of £240,000 with an interest rate of 7% and annual admin of £750. Only £120,000 of the overdraft will be used on average

120,000 x 7% = 8,400
8400 x 5 years = 42,000
Admin fee £750 x 5 years = £3,750
3750 +42000 = £45,750