You are the finance manager of your company. Yourcompany is planning for capacity expansion and need to borrowRM850,000 from a local bank. The offered term loan will beamortised in 9 years with a nominal interest rate of 7.2% p.a.compounded monthly. The final payment will be at the end of Year9.
1.Based on your working on an amortisation table, howmuch principal and interest would have your company paid after thefirst four months of payments?
2.If you have a choice, would you prefer to repay theabove loan monthly (assume7.2% per year is compounded monthly) orannually (assume 7.2% per year is compounded annually) based on thetotal interest incurred? What is the main factor that contribute tosuch a difference in interest?
