CHAPTER 8

1. This formula R = A-i/1-(1+1)^-n are used in

• to find monthly payment

• to find the fixed periodic payments

• to find the original balance

• to find the loan amount

Which one is the right formula to find the monthly payment?

• a) original balance + total interest/Number of payment

• b) down payment + total interest/Number of payment

• c) original balance - total interest/Number of payment

• d) down payment - total interest/Number of payment

A loan of RM 18,000 is taken with a total interest of RM 6,000 to be paid over 24 months. What is the monthly payment?

• a) RM 2,000

• b) RM 1,000

• c) RM 12,000

• d) RM 6,000

If the cash price of an item is RM 5,000 and the buyer makes a down payment of RM 1,500, the original balance to be financed is RM 3,000.

• TRUE

• FALSE

If the original balance of a loan is RM 10,000, the annual interest rate is 5%, and the loan period is 2 years, the total interest is RM 1,000.

• TRUE

• FALSE

in an installment purchase agreement, the interest charged on the outstanding balance is typically calculated using a simple interest formula rather than compound interest

• TRUE

• FALSE