Reference no: EM132642235

On April 1, Year 1, Ismail Berhad purchased a forklift by paying RM 5,000 down and RM 5,000 at the beginning of each of the next 20 calendar quarters. What was the cost of the forklift for financial accounting purposes if the rate of interest agreed upon was 16% compounded quarterly?

Ismail Berhad also wants to accumulate RM 500,000 on December 31, Year 10, to retire some bonds. The company deposits RM 225,000 in a savings account on December 31, Year 1, which will earn interest at 6% compounded annually. Ismail Berhad 's controller asks you to figure out what additional amount is required in the final year to retire bonds.

Ismail Berhad wants to make five equal annual savings account deposits (annuity due) from June 1, 2014, in order to be able to withdraw RM 75,000 (annuity due) at six annual intervals beginning June 1, 2018. The amount on deposit with Maybank will earn 8% per annum until the account is exhausted. The controller asks you to compute the amount of the deposits that will be needed.

On April 1, Year 2016, Ismail Berhad made a deposit of RM 100,000 in a fund and left the fund undisturbed for four years to earn compound interest at a rate which did not change during the four-year period. At the end of the four years, the fund had accumulated to RM 132,088.60. If interest was compounded quarterly, what was the rate of interest earned?

Question I. What was the quarterly interest rate?

Question II. What is the Annual Percentage Rate?

Question III. What is the Effective Annual Rate (EAR)?