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The Honda Civic Hybrid is a variation of the Honda Civic with a hybrid electric powertrain. Honda introduced the Civic Hybrid in Japan in December

The Honda Civic Hybrid is a variation of the Honda Civic with a hybrid electric powertrain. Honda introduced the Civic Hybrid in Japan in December 2001. In the United States, it was the first hybrid automobile to be certified as an Advanced Technology Partial Zero-Emissions Vehicle (AT PZEV) from the California Air Resources Board.

The Civic Hybrid uses an Integrated Motor Assist

hybrid system similar to that of the Honda Insight.

Early models from 2001 to 2005 used a 5-speed

manual transmission, whereas later models

feature a continuously variable automatic

transmission. The Civic Hybrid was only

marketed in sedan configurations until 2013,

when Honda introduced a hatchback version.

In February 2009, Honda reported that since 2001

they had sold more than 255,000 Civic Hybrids,

including more than 190,000 units sold in North

America. For a time, the Civic Hybrid was the

second best-selling hybrid electric car in the U.S.

Honda Malaysia offers finance packages to its new car purchasers. The new car market is highly competitive, and Honda Malaysia management think that they could boost sales of the Honda Civic hybrid if they offer finance at an annual interest rate of 3%, compounded monthly. However, Honda Malaysia pays its bank 4.5% per annum, compounded monthly, for the funds required. Therefore, the price of the Honda hybrid needs to be carefully determined to compensate for this discrepancy in interest rates.

A buyer bought a Honda civic hybrid 1.5L at the end of 2009 at a price of RM 116 311.50. The buyer paid a down payment of RM 6300 and the remainder was financed at 3% per annum compounded monthly. He started paying his first installment in January 2010.

b) Given that Honda Malaysias cost of capital is 4.5% per annum compounded monthly, what is the amount loan they took from the bank for this customer? What can you conclude? (5M)

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