COEB 442 Assignment 1

Name:__________________________________________ Section: ___________________

A fast-food chain company is planning to purchase five mini trucks worth RM35,000 each to cope
with the increase demand for food delivery in Bangi area. The company will be making a 10%
down payment and will borrow the remaining cost from SMB Bank at an interest rate of 12%
compounded monthly. The loan will be paid for a period of 9 years.

(i) Calculate the effective interest rate of the loan

(ii) What is the amount of monthly installment payment the company has to pay?

(iii) Calculate the amount of principle and interest the company has to pay after its 10th payment

(iv) What is the lump sum amount that Delicious Meal has to pay if the company decided to pay
off the loan after the 60 payments?