Compute the annual percentage rate (APR) and effective annual return (EAR) on this loan.

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 25PROB
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a) Harris Dhillon have just purchased a new house. To finance the purchase, a bank in the area offer 30-year mortgage loan for RM300,000 purchased price. The monthly payment for this loan will be RM1,500. The monthly interest is 0.5 percent. Compute the annual percentage rate (APR) and effective annual return (EAR) on this loan.

 

b) Dia Rezeki is 32-year-old and is saving for her retirement. She is planning on making contribution to her retirement account. The retirement account will earn o return of 8% a year. If each contribution she makes is RM5,500, compute the amount of money will be in the retirement account 35 year from now.

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