Question

Mr. Yamaguchi bought a car for Rp120,000,000. He pays

Rp.20,000,000 at the beginning of the year and the remaining Rp.100,000,000 is paid at each

end of year for 4 years with the same amount of Rp.25,000,000. In

addition to the Rp25,000,000 payment at the end of each year, he must

pay 6% interest per annum on the remaining loan. Make

cash flow in the form of tables and diagrams to represent the scheme.

Answer 1

Loan amount = 120,000,000 - 20,000,000 = 100,000,000

Year	Amount due at the start of the year	Annual equal payment	Interest @ 6% on amount due at start of the year	Amount due at the end of the year
1	100,000,000	25,000,000	6,000,000	75,000,000
2	75,000,000	25,000,000	4,500,000	50,000,000
3	50,000,000	25,000,000	3,000,000	25,000,000
4	25,000,000	25,000,000	1,500,000	-
	Total	100,000,000	15,000,000

(Note that each year he will pay 25,000,000 + the interest amount. Thus amount paid in year 1 = 25,000,000 + 6,000,000 = 31,000,000)

Graph:

In the above graph the first red column is the initial payment of 20,000,000. The next 4 red columns are same in length showing equal payments of 25,000,000 each year from years 1 to 4. The green columns are declining each year showing that the amount of interest paid each year is going down.