Question 1
Peter has a housing loan with UOB Bank before the COVID19 pandemic broke out. The details of the loan are as follows:

Principal:           $1,000,000
Interest rate:    4% per annum
Tenure:               25 years

Repayment: Amortization with monthly repayment. The lives of many were affected with jobs lost and businesses declining by the pandemic. Peter
was adversely affected, too, and was unable to service his loan. Many banks, UOB included, showed compassion by allowing homeowners to defer full loan repayments by paying interest only for 18 months as a relief. When this was announced, Peter had just paid the 120th installment of his housing loan.

(a) Compute the monthly repayment before the pandemic broke out?

(b) Compute how much Peter has to pay each month during the relief period?

(c) Compute how much Peter is still owing the bank at the end of the relief period?

(d) Compute the monthly repayment when the loan repayment resumes if he still plans to discharge the loan fully at the end of the 25th year?

(e) Compute how many more months he needs to extend the loan from the original 25 years
if the monthly repayment in part (a) above is maintained when the repayment resumes? Show your workings and also justify your answer intuitively.

Question 2
A firm plans to issue bonds to finance its expansion.
(a) Discuss the agency conflict between the shareholders and the bondholders by relating to any two (2) of such conflicts.

(b) Identify two (2) ways to mitigate such conflicts.