CHAPTER 5: ANNUITY

BUSINESS MATHEMATICS(MAT112)

1. Amri bought a car by making a down payment of RM10 000 and had to settle monthly payments of RM828.70 for 84 months. i) If money was worth 3.75% compounded monthly, find the cash price of the car. (RM 71 140.50 ) ii) If Amri did not pay the first 10 repayments, how much should he pay on the 11th month to settle the arrears? (RM 9 259.48) 2. Johan saves RM250 every three months for 7 years into an account that pays 3% compounded quarterly. i) How much does Johann have at the end of 7 year period? (RM 7 757.06) ii) How much is the interest eamed? (RM 757.06) iii) After 7 years, no more deposit was made. Find the amount of the account at the end of another 5 years period. (RM 9 007.38) 3. Three years ago Rozman invested RM11 827.40 in a savings account at 8% compounded quarterly. He used all the amount in the account to pay a deposit for a degree program at a private university. i) Find the deposit amount that Rozman paid for the degree program. (RM 15 000) ii) Upon entering the university Rozman secured a loan at RM65.000 at 3% compounded monthly. He agreed to pay back the loan by monthly installment for 10 years. Find the monthly installment. (RM 627.64) 4. Amri took a loan that charged interest of 7% compounded quarterly to buy a single storey terrace house. He paid the down payment of RM25 000 and needs to repay the loan in 30 years time with monthly payment RM1.020. Find i) the cash price of the house. (RM 76 017.43) ii) the total interest charged. (RM 71 382.57) iii) the outstanding balance if Amri decided to settle the loan immediately after the 100th payment. (RM 17 087.94) 5. Citari took a personal loan of RM10 000 and paid equal monthly payments for five years at an interest rate of 6% compounded monthly. i) Find the monthly payment. (RM 193.33) ii) If Citari fails to pay the first five monthly payments, find the amount she has to pay on the sixth payment in order to settle the outstanding arrears. (RM 1 174.58) iii) Find the outstanding principal balance if she decided to settle the loan immediately after the 50th payment. (RM 1 881.18) 6. Muthu borrowed RM50 000 from a bank for 7 years at 12% compounded monthly. i) Find the monthly payment. (RM 882.64) ii) If he has not paid his first 3 monthly payments, how much should he pay on the 4th payment to settle all the outstanding arrears? (RM 3 583.87) iii) Immediately after paying the 24th monthly payment, he wants to

Prepared by: Ms. Tammie C.Saibin

CHAPTER 5: ANNUITY

BUSINESS MATHEMATICS(MAT112)

settle the balance of the debt with a single payment. How much should this payment be? (RM 39 679.12) 7. Roy bought a house by paying RM40 000 as down payment and took a loan from a bank to pay for the balance. The bank charged interest at 6% compounded monthly. Roy has to pay RM666.13 every month for 10 years to settle the loan. i) Find the loan amount and the cash price of the house. (RM 60 000; RM 100 000) ii) Find the total interest charged. (RM 19 935.60) iii) Immediately after the 20th payment, Roy decided to settle the outstanding balance. How much should this payment be? (RM 52 319.61) 8. Mr. Jim bought a high-speed motorcycle at RM45 000. He paid 10% down payment and the balance was financed by Bank AM at an interest rate of 6% compounded monthly. The term of the loan is 10 years. Find i) the monthly payment for the loan (RM 449.63) ii) the total interest charged (RM 13 455.60) iii) If Mr. Jim fails to pay the first 3 monthly payments, find the amount he has to pay on the 4th payment in order to settle the outstanding arrears. (RM 1 812.05) 9. Hashimi bought a house and paid a down payment of RM30,000. He took a loan that charged interest of 6% compounded monthly. Hashimi repaid the loan in 25 years' time with monthly payment of RM980. Find i) the cash price of the house (RM 182 102.73) ii) the total interest charged (RM 141 897.27) iii) the outstanding balance if Hashimi decided to settle the loan (RM 43 259.93) immediately after the 250th payment. 10. In order to start a business, Azmi borrowed RM50,000 from a bank that charges interest at 9% compounded monthly. The loan will be repaid by monthly installment for 5 years. i) Find the monthly payment. (RM 1 037.92) ii) Calculate the total interest paid for the loan. (RM 12 275.07) iii) If Azmi fails to pay the first 3 monthly payments, how much should he pay on the 4th payment in order to keep his payments up-to-date? (RM 4 198.62)

Prepared by: Ms. Tammie C.Saibin