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Q5 (a) (b) You want to borrow RM24,000 to settle the tax outstanding. Your friend offers you a loan, and he claims that he will only charge you 10% interest. He calculates that the total interest of the loan will be RM24,000 x 10% = RM2,400, so he deducts this amount from the loan, gives you RM21,600, and tells you to repay RM24,000 in one year. Calculate the real interest rate charged on loan. You have decided to endow your favourite university with a scholarship. It is expected to cost RM6,000 per year to attend the university into perpetuity. You expect to give the university the endowment in 10 years and will accumulate it by making equal annual (end-of-year) deposits into an account. The rate of interest is expected to be 10% for all future time periods. (i) Calculate the endowment amount. (ii) Compute the annual end of the year deposit for the next 10 years to accumulate the required amount.

Q5 (a) (b) You want to borrow RM24,000 to settle the tax outstanding. Your friend offers you a loan, and he claims that he will only charge you 10% interest. He calculates that the total interest of the loan will be RM24,000 x 10% = RM2,400, so he deducts this amount from the loan, gives you RM21,600, and tells you to repay RM24,000 in one year. Calculate the real interest rate charged on loan. You have decided to endow your favourite university with a scholarship. It is expected to cost RM6,000 per year to attend the university into perpetuity. You expect to give the university the endowment in 10 years and will accumulate it by making equal annual (end-of-year) deposits into an account. The rate of interest is expected to be 10% for all future time periods. (i) Calculate the endowment amount. (ii) Compute the annual end of the year deposit for the next 10 years to accumulate the required amount.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Q5 3 (b) You want to borrow RM24,000 to settle the tax outstanding. Your friend offers you a loan, and he claims that he will only charge you 10% interest. He calculates that the total interest of the loan will be RM24,000 x 10% = RM2,400, so he deducts this amount from the loan, gives you RM21,600, and tells you to repay RM24,000 in one year. Calculate the real interest rate charged on loan. You have decided to endow your favourite university with a scholarship. It is expected to cost RM6,000 per year to attend the university into perpetuity. You expect to give the university the endowment in 10 years and will accumulate it by making equal annual (end-of-year) deposits into an account. The rate of interest is expected to be 10% for all future time periods. (i) Calculate the endowment amount. (ii) Compute the annual end of the year deposit for the next 10 years to accumulate the required amount.
Transcribed Image Text:Q5 3 (b) You want to borrow RM24,000 to settle the tax outstanding. Your friend offers you a loan, and he claims that he will only charge you 10% interest. He calculates that the total interest of the loan will be RM24,000 x 10% = RM2,400, so he deducts this amount from the loan, gives you RM21,600, and tells you to repay RM24,000 in one year. Calculate the real interest rate charged on loan. You have decided to endow your favourite university with a scholarship. It is expected to cost RM6,000 per year to attend the university into perpetuity. You expect to give the university the endowment in 10 years and will accumulate it by making equal annual (end-of-year) deposits into an account. The rate of interest is expected to be 10% for all future time periods. (i) Calculate the endowment amount. (ii) Compute the annual end of the year deposit for the next 10 years to accumulate the required amount.
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