A loan of RM200,000, paid annually, is made for a term of 30 years at an effective interest rate of 4.5%. The lender allows only annual year-end interest payments made until at the end of 30 years. In order to pay the loan of RM200,000 at the end of 30 years, the borrower will make a payment of R at the end of first year, and will increase his payments of R arithmetically for the subsequent years, into a sinking fund earning 6% interest rate per year. (a) Develop a sales illustration of this loan scheme which consists of the following:- Part 1: parameters of input (loan, loan interest rate, loan period, rate of investment return). (1) Part 2:- output - table schedule which consists of sinking fund deposit, total sinking fund deposit, sinking fund interest, principal repayment in sinking fund and outstanding balance of the loan.
A loan of RM200,000, paid annually, is made for a term of 30 years at an effective interest rate of 4.5%. The lender allows only annual year-end interest payments made until at the end of 30 years. In order to pay the loan of RM200,000 at the end of 30 years, the borrower will make a payment of R at the end of first year, and will increase his payments of R arithmetically for the subsequent years, into a sinking fund earning 6% interest rate per year. (a) Develop a sales illustration of this loan scheme which consists of the following:- Part 1: parameters of input (loan, loan interest rate, loan period, rate of investment return). (1) Part 2:- output - table schedule which consists of sinking fund deposit, total sinking fund deposit, sinking fund interest, principal repayment in sinking fund and outstanding balance of the loan.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:A loan of RM200,000, paid annually, is made for a term of 30 years at an effective interest
rate of 4.5%. The lender allows only annual year-end interest payments made until at the end
of 30 years. In order to pay the loan of RM200,000 at the end of 30 years, the borrower will
make a payment of R at the end of first year, and will increase his payments of R arithmetically
for the subsequent years, into a sinking fund earning 6% interest rate per year.
(a) Develop a sales illustration of this loan scheme which consists of the following:-
Part 1: parameters of input (loan, loan interest rate, loan period, rate of
investment return).
(1)
Part 2:- output - table schedule which consists of sinking fund deposit, total
sinking fund deposit, sinking fund interest, principal repayment in sinking fund
and outstanding balance of the loan.
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
Unlock instant AI solutions
Tap the button
to generate a solution
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education