Question

1. Diana bought a RM5,888 karaoke set on an instalment basis in which she made a RM888 down payment. To settle the balance, she has to pay RM1,000 every month for the principal payment plus interest of 1% per month on any unpaid balance. Construct a repayment schedule to show her monthly payments.

2.A man purchased a car selling for RM12,750 by making instalment payments. If he was charged 4% based on the reducing balance and the total interest paid was RM1,041.25, calculate the number of monthly payments he had made using the Constant Ratio formula.

3.Nasha receives a promissory note dated 10 February 2018 with a simple interest rate of 6.5% per annum. The note will mature on 10 June 2018. After she keeps the note for 70 days, she sells the note to a bank at a discount rate of 7% and receives proceeds of RM4,456.25. Find:

a) The term of the note.

b) The maturity value.

c) The face value.

d) The amount of interest Nasha receives.

Answer 1

1.

Period	Opening balance	principal paid (given)	interest paid (1%*opening balance)	closing balance (opening balance - principal paid)	Total Monthly payment ( principal + interest)
0	$       5,888	$             888	$                    -	$                5,000	$            888
1	$       5,000	$         1,000	$                   50	$                4,000	$        1,050
2	$       4,000	$         1,000	$                   40	$                3,000	$        1,040
3	$       3,000	$         1,000	$                   30	$                2,000	$        1,030
4	$       2,000	$         1,000	$                   20	$                1,000	$        1,020
5	$       1,000	$         1,000	$                   10	$                       -	$        1,010

so here as asked we have prepared the repayment schedule. the interest is calculated on the basis of  unpaid amount , the unpaid amount is the opening balance for that month and the total monthly payment is the sum of principal paid and the interest paid.