Mr. Yusof borrowed RM 10,000 from the XYZ bank to buy a small fishing boat. The bank agreed to allow him to postpone his monthly installment (including the interest) for the first six months after the procurement of the boat. At the end of months 7, he is required to pay his monthly installment every month for 48 months at an interest of 12% per year compounded every month. After 28 months, he suffered a loss and seek helps from a District Fisherman Association to lower down the monthly installment. His difficulties caught the attention of the association and the association agreed to cover all of Mr. Yusofs loan with XYZ bank. Mr Yusof is required to pay back the association by RM 150 per month for 36 months. (i) Calculate the monthly installment needs to be paid to XYZ bank? (ii) Calculate the balance of Mr Yusofs loan paid by the association to XYZ bank? (iii) Calculate how much is the effective interest rate per month that is being charged by the association to Mr. Yusofs loan?

answer (i) Payment to XYZ bank, A = RM 279.50 per month (ii) The balance of the loan = RM 5,043.74 (iii) ie = 0.3756%