Basic Mathematics

(Short Coursework)
(a) Suggest the best loan amount for Mr Rashid. Give
three good reasons for your suggestion.

The best loan amount for Mr Rashid is RM25 000
3 Reasons :
(i) Loan interest rate is never rigid and it changes
with market trends and changes in economy. If
suddenly the interest rate changes to be higher
than 8% per year, the total amount of principle and
interest after 10 years can still be covered up by Mr
Rashid.
(ii) According to the information provided by International
Cablemaker Federal, there will be increase of raw
materials price every year. The extra RM 3, 000.00 is
reserved for happening of this reason.

(iii) This amount is more affordable for Mr Rashid
to complete his loan payment in the ten years
time. It is logic to say that Mr Rashid comes from
middle class social status because he needs to
take loan to renovate his house. This implies
that it is hard for Mr Rashid to complete his loan
if he loans for a bigger amount.

b. How much will Mr.Rashid have paid on his
mortgage at the end of his 10 years if he paid
on the flat scale?
I= PRT
100
= 25000 x 8 x10
100
= RM 20000
Therefore,
RM 20000 + RM 25000 = RM 45000

c. How much more than the mortgage amount
will he paid based on the above calculation?

RM 45000 RM 25000 = RM 20000

The amount of mortgage will Mr. Rashid paid
is RM 20000.

d. Suggest a suitable amount of its monthly
installment on sliding scale scheme and state
the reason for the amount paid.
-RM25000 at 8% for 10 year(s)
-Monthly payment : RM304
(Refer to pg. 4 8)
e. Show how Mr. Rashid can complete the
portion of his monthly payment that is used
for paying interest and principal in the first
two months for this sliding scale scheme.

First Month:
I = PRT
100
= 25000 x 8 x 1/12
100
= RM 166.67
Principal = RM 304.00 RM 166.67
= RM 137.33

Second Month:
I = 24826.67 x 8 x 1/12
100
= RM 165.67
Principal = RM 304.00 RM165.67
= RM 138.25

The End