Case I There is loan of 6,00,000 @ 8% for 5 years and repaid in monthly installments so the monthly installments would be Rs. 12,165 so total outflow of fund at the end of 5th year is Rs. 7,30,000. Case II Similarly we invested in FD of Rs. 6,00,000 @ 6% for 5 year so at the maturity we will receiveRead more
Case I
There is loan of 6,00,000 @ 8% for 5 years and repaid in monthly installments so the monthly installments would be Rs. 12,165 so total outflow of fund at the end of 5th year is Rs. 7,30,000.
Case II
Similarly we invested in FD of Rs. 6,00,000 @ 6% for 5 year so at the maturity we will received cash flow of Rs. 8,02,950.
So under case I & II the interest rate remain the same but the principal amount in Case I reducing constantly & in case II the Invested amount increasing constantly so this may be the possibility.
Correct me if i am missing something (Ignore Taxation)
Arbitrage Possibility
12165 monthly instalments × 60 instalments so 7,30,000 rounded off so total outflow till end of 5th year
12165 monthly instalments × 60 instalments so 7,30,000 rounded off so total outflow till end of 5th year
See lessArbitrage Possibility
Case I There is loan of 6,00,000 @ 8% for 5 years and repaid in monthly installments so the monthly installments would be Rs. 12,165 so total outflow of fund at the end of 5th year is Rs. 7,30,000. Case II Similarly we invested in FD of Rs. 6,00,000 @ 6% for 5 year so at the maturity we will receiveRead more
Case I
There is loan of 6,00,000 @ 8% for 5 years and repaid in monthly installments so the monthly installments would be Rs. 12,165 so total outflow of fund at the end of 5th year is Rs. 7,30,000.
Case II
Similarly we invested in FD of Rs. 6,00,000 @ 6% for 5 year so at the maturity we will received cash flow of Rs. 8,02,950.
So under case I & II the interest rate remain the same but the principal amount in Case I reducing constantly & in case II the Invested amount increasing constantly so this may be the possibility.
Correct me if i am missing something (Ignore Taxation)
See less