Ali has a debt of RM X due in 5 years and four times RM X...

 

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Ali has a debt of RM X due in 5 years and four times RM X due in 10 years from now, where RM 5000 < X < RM 9000. Ali wants to pay in advance whenever he has extra money. Ali's payment scenarios are as in TABLE Q1. Scenario 1 TABLE Q1: List of payment scenarios. Repayment of half of RM X in 2 years, a payment of twice of RM X in 7 years and the final payment at the end of 9 years. The interest rate offered is 7% annually. Scenario 2 Repayment of RM 1000 now, half of RM X in 3 years and the final payment at the end of 8 years. The interest rate offered is 6% quarterly. Scenario 3 Repayment of 90% from RM X in 4 years and the final payment at the end of 8 years. The interest rate offered is 8% semi-annually. By showing the appropriate diagram for equation of value and making the correct assumption for the value of X, calculate the final payment based on the three scenarios given. Identify the best option that will result in minimal repayment for Ali. Justify your answer. Ali has a debt of RM X due in 5 years and four times RM X due in 10 years from now, where RM 5000 < X < RM 9000. Ali wants to pay in advance whenever he has extra money. Ali's payment scenarios are as in TABLE Q1. Scenario 1 TABLE Q1: List of payment scenarios. Repayment of half of RM X in 2 years, a payment of twice of RM X in 7 years and the final payment at the end of 9 years. The interest rate offered is 7% annually. Scenario 2 Repayment of RM 1000 now, half of RM X in 3 years and the final payment at the end of 8 years. The interest rate offered is 6% quarterly. Scenario 3 Repayment of 90% from RM X in 4 years and the final payment at the end of 8 years. The interest rate offered is 8% semi-annually. By showing the appropriate diagram for equation of value and making the correct assumption for the value of X, calculate the final payment based on the three scenarios given. Identify the best option that will result in minimal repayment for Ali. Justify your answer.

Answer rating: 100% (QA)

Answer Ali has two debt 1 RMX due in 5 year ii RM 4x due in to year Re... View the full answer