You secured a RM20,000 loan from Bank Mekanikal Malaysia (BMM) 18 months ago at an interest rate of 3% per year compounded monthly to purchase some equipment needed for your small business. The loan was supposed to paid back in 3 years. Since the Covid-19 pandemic hit the world, the government has allowed for a moratorium on loans and requested banks to restructure the loan repayments for those who chose to use the moratorium. There were two options:

i. Take the moratorium without extending the loan period.

ii. Take the moratorium with extending the loan period.

The government has allowed for a 6-month moratorium from May 2020 and another 3-month from May 2021. Your business was very much affected by the pandemic, and you have decided to use both options;

(i) take the first moratorium in May 2020 without extending the loan period and (ii) take the second moratorium in May 2021 by extending the loan period

. a) Calculate the monthly installment of the original loan.

b) Calculate the monthly installment after the first moratorium.

c) Calculate the monthly installment after the second moratorium.

d) What is the purpose of the moratorium? Do you think that you have paid more or less after the moratorium?

e) Assume that the pandemic is under control by next year and businesses are back to normal including your own. You plan to make a full settlement on the loan 6 months earlier than its due date. Calculate the balance that needs to be paid to BMM for the loan to be considered fully settled.