Question
To finance the expansion of your business, you borrowed RM 120,000 at a 7.8%p.a. nominal rate of interest to be repaid over seven years. The
To finance the expansion of your business, you borrowed RM 120,000 at a 7.8%p.a. nominal rate of interest to be repaid over seven years. The loan is amortised into eighty four equal end-of-month payments.) (Calculate each end-of-month loan payment.) (Based on your working on an amortisation table, how much principal and interest would have your company paid after the first three months of payments?) (How much extra interest in total if you choose a term loan of 10 years?) (Explain why the interest portion of each payment declines with the passage of time.) (An investment pays no income now. However, it is expected to have a cash inflow of RM 500,000 at Year 3. This income will only last for two years. Thereafter, it is expected to generate RM 750,000 perpetually. How much would you be willing to pay to invest today at a required return of 12.5 percent?)
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