You are the finance manager of your company. Your company is planning for capacity expansion and need to borrow RM850,000 from a local bank. The offered term loan will be amortised in 9 years with a nomimal interest rate of 7.2% p.a. compounded monthly. The final payment will be at the end of Year 9.

1-Based on your working on an amortisation table, how much principal and interest would have your company paid after the first four months of payments?

2-If you have a choice, would you prefer to repay the above loan monthly (assume7.2% per year is compounded monthly) or annually (assume 7.2% per year is compounded annually) based on the total interest incurred? What is the main factor that contribute to such a difference in interest?