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How much principal and interest would have company

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You are the finance manager of your company. Your company is planning for capacity expansion and need to borrow RM850,000 from a local bank. The offered term loan will be amortised in 9 years with a nomimal interest rate of 7.2% p.a. compounded monthly. The final payment will be at the end of Year 9.

Question i.) Based on your working on an amortisation table, how much principal and interest would have your company paid after the first four months of payments?

Question ii.) If you have a choice, would you prefer to repay the above loan monthly (assume7.2% per year is compounded monthly) or annually (assume 7.2% per year is compounded annually) based on the total interest incurred? What is the main factor that contribute to such a difference in interest?

Reference no: EM132578267

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