A 2021 advertisement in the NST seeks offers on a 2001 Mini Cooper that had been stored  undriven in a climate controlled environment for 20 years. If the original owner paid RM10,000  for this car in 2001, determine the price that he could receive in 2021 to obtain a 10% annual  return on his investment. 

(2 marks) 

ii) Mrs Tinsdale has just retired after 25 years with the toys company. Her total pension funds  have an accumulated value of RM220,000 and her life expectancy is 15 more years. She  assumes that she can earn a 12% return on her assets. Find her yearly annuity for the next 15  years.  

(2 marks) 

iii) Jian will receive RM8,500 a year for the next 15 years from his trust fund. If an 11% interest  rate is applied, find the current value of the future payments. 

(2 marks) 

iv) Jackson needs RM28,974 at the end of 10 years and his only investment outlet is an 8%  long term certificate of deposit (compounded annually). With the certificate of deposit, he makes  an initial investment today. 

Required: 

a) Compute the single payment that could be made to achieve this objective. b) Compute the amount that he could pay at the end of each year annually for 10 years to  achieve this same objective. 

(4 marks) 

QUESTION 1 (b) 

Joony wants to buy new mixing machine to cater the increase in demand of his products. The  cost of the new machine is RM25, 000 and he pays deposit of 20% from the cost price. The  balance of will be repaid within 4 years period and requires payments of twice a year. The  interest is charged at 16% per annum.  

Required: 

Determine 

a) the amount of his loan repayment  

b) the amount of principal paid at the end of second year. 

Answer rating: 100% (QA)

To address your questions 1 The price that the original owner could receive in 2021 to obtain a 10 annual return on his investment can be calculated using the compound interest formula The original in... View the full answer