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Compute the monthly instalment of the car loan

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Problem - Kenneth is also thinking of buying a car costing $120,000 (including COE) as he is already spending about $1,000 a month on taxi, Grab and Gojek. He reckons that he probably needs to just top up a bit more to pay for the monthly instalment. Moreover, he said the interest rate for car loan is very cheap. He is offered a simple flat rate of 2.3% for a loan of $84,000 for a period of 7 years.

Required -

(i) Compute the monthly instalment of the car loan.

(ii) Compute the effective annual interest rate (EAR) of the car loan.

(iii) Discuss what other operating costs of car ownership that he should consider before buying a car.

Reference no: EM133032860

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