Mei Lin is putting money aside to purchase a new automobile in four years. She plans to
Question:
Mei Lin is putting money aside to purchase a new automobile in four years. She plans to save RM450 at the end of each month for the next four years. She plans to put the money into a savings account with a monthly interest compounding rate of 2.0 percent. Determine how much money she will have in four years.
b) In ten years, John Hsu hopes to establish a business. He aims to acquire RM200,000 to invest in the firm by that time. To achieve his aim, he wants to put a particular sum today in an investment fund that will pay him 8.0 percent per annum, compounded semi-annually. Calculate how much John will have to invest today to reach his goal.
c) Muthu had just acquired a car loan from a bank. The bank had agreed to lend him RM120,000 in exchange for a 5% down payment on the automobile. Muthu would have to pay monthly installments to repay the debt at a rate of 3.0 percent per annum compounded monthly for 9 years.
i) Compute the amount of his monthly payment.
ii) Calculate Muthu's total interest assuming he keeps the loan till the agreed upon settlement term.
iii) Determine how much interest Muthu would save if he decides to pay off the debt entirely after 6 years.
Fundamentals of Corporate Finance
ISBN: 978-1259024962
6th Canadian edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim