You secured a RM40,000 loan from Bank KMP (BKMP) in May 2019 at an interest rate of 6% per year compounded monthly to purchase some equipment needed for your small business. The loan was supposed to paid back in 5 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:  

Take the moratorium without extending the loan period. 

Take the moratorium with extending the loan period. 

The government has allowed for a 6-month moratorium from May 2020. Your business was very much affected by the pandemic, and you have decided to take the moratorium in May 2020 without extending the loan period. 

a) Calculate the monthly installment of the original loan. 

b) Calculate the monthly installment after the moratorium. 

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

d) Assume that the pandemic is under control by 2022 and businesses are back to normal including your own. You plan to make a full settlement on the loan 12 months earlier than its due date. Calculate the balance that needs to be paid to BKMP for the loan to be considered fully settled.