Assist a young man who starts new career to develop knowledge on how the money and time of value of the money working, so he can plan his income, expenses in future. With annual income of RM 40,000 he has passion to buy new model of sport car that will cost of RM 50,000 on the road. However, banks have policy on max of 90% margin of financing maximum of 7 years of loan financiang. With assumption that current hire purchase financing is at 3%, explain to this young man how the whole process took place by explaining the loan amortization and the importance of it. Help him to determine if he can afford to pay for monthly payment of the loan as the bank's allowable credit commitment is at maximum of 40%,

Question

a) Analyze the loan amortization of above scenario by indicating the the total cost and total interest that he have to bare based on loan taken? Explain answer.

b) Can his loan application can be approved? Justify answer.

c) Determine the effect to customer and banking industry if the margin of financing reduced to 80%. Explain answer.