(a) Sinar Pujangga Corporation plan to renovate their office which will cost around RM120,000. The firm plan to apply loan to finance. Two loans that are available for the firm are as follows:

- Success Bank offer 8 percent discount interest with 8 percent compensating balance.

- Amanda Bank offer 6 percent loan with 10 percent compensating balance 

Based on the info above, compute Effective Annual Rate (EAR) for each loan and advise which loan that the firm should choose and justify your answer.

(b) Izzati starts her study in one of prestigious college in Kuala Lumpur and received sponsorship on her study. She plans to put aside RM2,000 per year in her saving account that pay 6 percent interest compounded annually. Compute the amount she will have in the account after 5 years. 

(c) Bryan plan to buy a house in 8 years from now. The market price of the house is RM350,000 and he plans to save for down payment of the house which equal to 10 percent of selling price. Calculate the amount that he needs to deposit today in order to accumulate money for the down payment if the bank pay 5 percent interest.

(d) Firanda deposit RM5,000 per year in the account A that pay 3 percent interest for 6 years then he transfer the money to an account B that pay 4 percent interest for 4 years. Calculate the amount of money she will have in account after 10 years.

Answer rating: 100% (QA)

a Success Bank The effective annual rate EAR for the Success Bank loan is calculated as follows EAR ... View the full answer