q4

find a , b , c , d , e

Question 4 a) Puan Sakinah has been awarded a bonus for her outstanding work. Her employer offers him a choice of a lump-sum of RM4,800 today, or an annuity of RM1,250 a year for the next five years. Which option should Puan Sakinah choose if her opportunity cost is 9 percent? (5 marks) b) Mr. Remy has been awarded a bonus for his outstanding work. His employer offers him a choice of a lump-sum of RM5,000 today, or an annuity of RM1.250 a year for the next five years. Which option should Mr. Remy choose if his opportunity cost is 9 percent? (5 marks) Continued... c) Assuming that you intend to give your daughter RM45,900 in 5 years from your savings in Tabung Haji Provident Funds. Find the present value of that RM45,900 that your daughter will be received at the end of 5 years if the discount rate is 8% compounded annually. (5 marks) ZS 5/9 ELENIO 4 PRINCIPLES OF FINANCE MARCH 20L d) Kaya Raya Bank wants to earn effective interest rate (EAR) of 15% per year. In order to suit different potential borrowers' needs, the bank offers two options. The first calculate interest on monthly while the second calculation interest on weakly compounding basis. What annual percentage rate (APR) is the bank required to report for the two options? (6 marks) c) Explain the effect of compounding interest more frequently than annually have on (i) future value and (ii) effective annual rate (EAR). (4 marks) (TOTAL: 25 MARKS)