Question

In: Finance

(a) Twenty four months ago a sum of RM10,000 was invested. Now the investment is worth RM12,000. If the investment is extended another twenty-four months, it will become RM14,000. Find the simple interest rate that was offered.

(a) Twenty four months ago a sum of RM10,000 was invested. Now the investment is worth RM12,000. If the investment is extended another twenty-four months, it will become RM14,000. Find the simple interest rate that was offered.

(b) Calculate the amount to be paid by Hanna every year on a loan of 8 years that she took today. The bank will charge her 4% interest to be compounded annually on a loan of RM15,000.

Solutions

Expert Solution

Here,

a)

Time Period = 48 Months which means 4 years

Amount of Investment = RM10,000

Worth of Investment after 4 years = RM14,000

 

Using the Formula of Simple Interest

 

 

b)

Time Period = 8 Years

Interest rate = 4% compounded annually

Loan amount = RM15,000

 

Using the Formula of Present Value of Annuity

Part a) Simple Interest Rate that was being offered is 10%.

 

Part b) The Amount to be paid by Hanna every year is RM2,227.92.


Part a) Simple Interest Rate that was being offered is 10%.

 

Part b) The Amount to be paid by Hanna every year is RM2,227.92.

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