Question

QUESTION 3 You took a loan in the amount of RM29,746.39. You were told that you have to make end-of year annual repayments as per the schedule below Annual Repayment Year 1 RM? RM? 2 RM? 3 RM1,500 RM2,000 5 6 RM3,500 7 RM5,000 8 RM7,500 RM7,500 RM12,000 10 If the annual rate of interest is 4.5% (annual compounding), calculate the missing cash flows (annual repayment for years 1, 2 and 3). The annual repayment for years 1, 2 and 3 is the same amount. (7 marks) Activate Windows Go to Settings to activate Wind ows.

Answer 1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

2 Loan Amount Annual interest rate 29,746.39 4.50% Year Annual Repayment 2 X 4 PVF(4.50%) 0.9569378 0.9157300 0.8762966 0.8385613 0.8024510 0.7678957 0.7348285 0.7031851 0.6729044 0.6439277 1,500.00 2,000.00 3,500.00 5,000.00 7,500.00 ,500.00 12,000.00 7 9 7 10 Value of "X" (Repayment in year 1 to 3) 900.00

Cell reference -

H Loan Amount Annual interest rate 29746.39 0.045 Year Annual Repayment PVF(4.50%) =1/(1+$I$3)^H6 =1/(1+$I$3)^H7 =1/(1+$1$3)^H8 =1/(1+$I$3)^H9 =1/(1+$I$3)^H10 =1/(1+$I$3)^H11 =1/(1+$I$3)^H12 =1/(1+$I$3)^H13 =1/(1+$1$3)^H14 =1/(1+$I$3)^H15 1500 2000 3500 5000 7500 7500 12000 12 17 Value of "X" (Repayment in year 1 to 3) =(12-SUMPRODUCT(19:115,39:J15))/SUM(16:18)

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.