a) The full loan repayment schedule for the two years is as follows:
<h3>Loan Repayment Schedule:</h3>
Period PV PMT Interest FV
1 $3,000.00 $283.68 $60.00 $2,776.32
2 $2,776.32 $283.68 $55.53 $2,548.17
3 $2,548.17 $283.68 $50.96 $2,315.45
4 $2,315.45 $283.68 $46.31 $2,078.08
5 $2,078.08 $283.68 $41.56 $1,835.97
6 $1,835.97 $283.68 $36.72 $1,589.01
Year #1 end
7 $1,589.01 $283.68 $31.78 $1,337.11
8 $1,337.11 $283.68 $26.74 $1,080.17
9 $1,080.17 $283.68 $21.60 $818.10
10 $818.10 $283.68 $16.36 $550.78
11 $550.78 $283.68 $11.02 $278.12
12 $278.12 $283.68 $5.56 $0.00
Year #2 end
b) The balance of the loan at the end of the seventh repayment period is <u>$1,337.11</u>.
c) The total interest paid for this loan is <u>$404.16</u>.
d) If the borrower decides to terminate the loan after the first year, the termination payment should be <u>$1,589.01</u>.
<h3>Data and Calculations:</h3>
N (# of periods) = 12 months (2 x 6)
I/Y (Interest per year) = 12%
PV (Present Value) = K3000
FV (Future Value) = K0
<u>Results</u>:
PMT every two months = $283.68
Sum of all periodic payments = $3,404.16 ($283.68 x 12)
Total Interest = $404.16
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