Question 3

Calculate all the questions given using appropriate formulas.

You bought a car for RM 30,000 and will borrow RM 30,000 from the bank for 4 years. The interest charge is 7% per annum. Using simple interest calculation: How much interest do you have to pay to the bank? (2 marks) What is the total payment for your car? (1 mark)

(b) You bought a house for RM 300,000 and will borrow RM 300,000 from the bank for 4 years. The interest charge is 7% per annum. Using compounding interest calculates: How much interest do you have to pay to the bank? (2 marks) What is the total payment for your car? (2 marks)

(c) You invested RM 600 into a local banks investment product at 7% rate. What would your investment be worth in 6 years? (2 marks) What would your investment be worth in 5 years? (2 marks) What do you learn from the two different answers (i) and (ii)? (2 marks)

(d) What will be the present value of RM 600 to be received 9 years today? If the discount rate is 5% ? (2 marks) If the discount rate is 4%? (2 marks) What do you learn from the two different answers (i) and (ii)? (2 marks)

You deposited RM 600 in the bank every year at 9%. What would your savings be worth at the end of 4 years? (2 marks) 5 years (2 marks) What do you learn from the two different answers (i) and (ii)? (2 marks)

[Total: 25 marks]