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Chapter 1: Interest, Annuity and Depreciation

STPM 2013/Q1
A company costing RM60 000 has a useful life of 8 years and the scrap value is estimated to
be RM6400. Using the reducing balance method of depreciation, calculate the annual rate of
Hence, calculate the book value and the accumulated depreciation at the end of six years. [4]
STPM 2013/Q7
A company purchased an equipment at a price of RM368 000 and makes a down payment of
10% of the purchase price. The company amortises the balance with 360 monthly payments
at an annual interest rate of 4.5% which is compounded monthly.
(a) Calculate
i) The monthly repayment,


ii) The total interest payable.


(b) If the company does not settle the first six monthly payments, determine the total amount
payable on the seventh month. Assume no extra charge on late payment.
(c) If the monthly payment is RM1996.40, calculate the number of monthly payments
required to amortise the loan.

STPM 2013(U)/Q1
Investor M places a fixed deposit of RM5000 in a bank, earning a simple interest of 15% per
annum. Investor N places the same amount of fixed deposit which enables N to earn an
annual interest of 12% compounded every four months.
Determine whether investor M or N earns more interest at the end of
(a) Two years,
(b) Five years.
STPM 2014/Q1
A company is offered two alternative method to repay a loan in three years. In the first
method, the company has to pay RM200 000 at the end of the third year. In the second
method, the company has to pay RM x, RM 2x and RM 3x at the end of the half year, at the
end of one and a half years and at the end of the third year, respectively. The annual interest
rate is 8% compounded semi-annually.
(a) Find the present value of payment in the first method.


(b) Determine the value of x.


STPM 2014(U)/Q1

find the difference in the book values correct to the nearest hundred ringgit. The book value of another car of the same model aged eight years is RM50 000. a second hand car dealers uses reducing balance depreciation method. However.A car owner wants to sell his car which was purchased at RM150 000 four years ago. [7] . The car owner estimates the value of his car by using the flat rate depreciation method. Assuming that both cars have the same prchased price.