Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
QUESTION 3 (12 marks) Under what situation does the effective annual interest rate (EAR) differ from the annual percentage rate (APR)? [2 marks] [your answer
QUESTION 3 (12 marks) Under what situation does the effective annual interest rate (EAR) differ from the annual percentage rate (APR)? [2 marks] [your answer here) (b) A company obtained a loan of RM1,000,000 at an interest rate of 15% compounded monthly to purchase four machines for harvesting crops. The loan is expected to be settled in 10 years. What is the effective annual interest rate of the loan? [2 marks] [your answer here) i. li. [2 marks] Calculate the monthly loan payment. [your answer here) iii. [2 marks] What is the loan balance after ninety one (91) payments? [your answer here] iv. Calculate the total amount of principal and interest paid after ninety one (91) payments are made. [4 marks] [your answer here) QUESTION 2 (16 marks) Ali plans to retire 40 years from now. He expects that he shall live 25 years after retiring. Once retire, Ali estimates that he shall need to spend roughly RM60,000 per year to cover his living expenses, with the first retirement fund withdrawn one year after he retires, and yet still have RM180,000 left in the account at the time of his expected death. Ali expects to earn 6% per year on his money after he retires. Required: (a) How much must Ali has in his account so that he enough funds to spend during his retirement period? [4 marks] [your answer here] (b) How much must Ali deposit each year (in equal amount) in an account, starting one year from today, so that he has enough funds for retirement? [2 marks] [your answer here) How much must Ali deposit each year (in equal amount) in an account, starting one year from today, so that he has enough funds for retirement? (Assume fist deposit is made at year 0) [4 marks] (d) [your answer here) (e) Refer to your answer in (a). Rather than deposits an equal amount of money each year (as in b), Ali wants to deposit RM2,000 starting one year from today and increase the amount by RM300 each year. Determine whether the amount he has in his account after 40 years would be enough to support his living expenses during retirement period? [6 marks] [your answer here]
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started