a.Ms. Fui Pin isplanning to buy a new car 7 years from now. For this purpose, she will deposit RM10,500 at the beginning of each year for the first 4 years in the savings account of a commercial bank. Her investment in the savings account will earn a return of 9% compounded annually. How much will Ms. Fui Pin have after 7 years to buy the car?(5 marks)

b.Mr. Imanborrowed RM15,000 at 14 percent annual rate of interest to be repaid over three years. The loan is amortized by three equal annual end-of-year payments.

i.Calculate the annual end-of-year loan payment.(1 mark)

ii.Prepare loan amortization schedule, showing the interest and principal breakdown of each of the three loan payments.(4 marks)

c.Mr. Kabirinherited the family mini market business and has decided to sell it to a potential local buyer. For this purpose, he got two offers as stated below:

Offer 1:Mr. Kabir willreceiveRM8,000 at the end of each year forever.

Offer 2:Mr. Kabir willreceiveRM50,000 at the end of year 1, RM65,000 at the end of year 2, and RM12,000 at the end of each year from year 3 to year 10.

The current market rate of interest forMr. Kabiris 6% compounded annually.

Calculate the present value of Offer 1 and Offer 2. Which offer shouldMr. Kabir choose to sell his mini market business?(5 marks)

Answer rating: 100% (QA)

a To find out how much Ms Fui Pin will have after 7 years to buy the car we can use the future value ... View the full answer