FIRST SEMEST

TITTLE:
INDIVIDUAL ASSIGN

SUBJECT:
BWBB 3083 CORPORATE B

LECTURER NA
PROF.SIEW GOH

PREPARED B
DURGATHEVE A/P
IRST SEMESTER SESSION 2021 / 2022 (A211)

TITTLE:
DUAL ASSIGNMENT

SUBJECT:
CORPORATE BANKING

ECTURER NAME:
ROF.SIEW GOH YOEK

PREPARED BY :
.SIVASANMUGAM 269561
QUESTION 1

1. Monthly repayment of each option (amortization table if applicable)

AMOUNT BORROWED AMOUNT BORROWED
PERIOD 60
MONTHLY RATE 0.00666666666667
MMORTAGE PAYMEN #VALUE!
MONTH BEGINNING PAYMENT
1 AMOUNT BORROWED Err:522
2 #VALUE! Err:522
3 #VALUE! Err:522
4 #VALUE! Err:522
5 #VALUE! Err:522
6 #VALUE! Err:522
7 #VALUE! Err:522
8 #VALUE! Err:522
9 #VALUE! Err:522
10 #VALUE! Err:522
11 #VALUE! Err:522
12 #VALUE! Err:522
13 #VALUE! Err:522
14 #VALUE! Err:522
15 #VALUE! Err:522
16 #VALUE! Err:522
17 #VALUE! Err:522
18 #VALUE! Err:522
19 #VALUE! Err:522
20 #VALUE! Err:522
21 #VALUE! Err:522
22 #VALUE! Err:522
23 #VALUE! Err:522
24 #VALUE! Err:522
25 #VALUE! Err:522
26 #VALUE! Err:522
27 #VALUE! Err:522
28 #VALUE! Err:522
29 #VALUE! Err:522
30 #VALUE! Err:522
31 #VALUE! Err:522
32 #VALUE! Err:522
 33 #VALUE! Err:522
34 #VALUE! Err:522
35 #VALUE! Err:522
36 #VALUE! Err:522
37 #VALUE! Err:522
38 #VALUE! Err:522
39 #VALUE! Err:522
40 #VALUE! Err:522
41 #VALUE! Err:522
42 #VALUE! Err:522
43 #VALUE! Err:522
44 #VALUE! Err:522
45 #VALUE! Err:522
46 #VALUE! Err:522
47 #VALUE! Err:522
48 #VALUE! Err:522
49 #VALUE! Err:522
50 #VALUE! Err:522
51 #VALUE! Err:522
52 #VALUE! Err:522
53 #VALUE! Err:522
54 #VALUE! Err:522
55 #VALUE! Err:522
56 #VALUE! Err:522
57 #VALUE! Err:522
58 #VALUE! Err:522
59 #VALUE! Err:522
60 #VALUE! Err:522

TOTAL INTEREST
YEAR 1 29,550.65
YEAR 2 23,925.27
YEAR 3 17,832.99
YEAR 4 11,235.05
YEAR 5 4,089.49
TOTAL INTEREST PAID 86,633.46

ANNUAL PRINCIPAL
YEAR 1 RM 67,776.04
 YEAR 2 RM 73,401.42
YEAR 3 RM 79,493.70
YEAR 4 RM 86,091.64
YEAR 5 RM 93,237.20
TOTAL ANNUAL PRINCIPAL RM 400,000.00

Lease Payment

Annual Lease Payment RM500,000.00

Bargain Purchace Price or RV RM102,400.00
Interest Rate 5%
Number of Lease Payment 5

Lease Obligation RM2,353,208.33

Date Annual Amount Interest Rate

Initial Balance
Beginning Year 1 RM500,000.00 0
Beginning Year 2 RM500,000.00 RM92,660.42
Beginning Year 3 RM500,000.00 RM72,293.44
Beginning Year 4 RM500,000.00 RM50,908.11
Beginning Year 5 RM500,000.00 RM28,453.51
End Year 5 RM102,400.00 RM4,876.19

MONTHLY REPAYMENT
TERM LOAN #VALUE!
LEASING 15972.2222222222

Monthly Rental for Primary lease

Annual Lease RM500,000
Period 3
Interest Rate 0.05

Interest Paid RM75,000.00

Monthly Rental RM15,972.22
Monthly Rental for Secondaty Lease
10% of primary lease
Leasing RM1,597.22
 cable)
AMOUNT BORROWED

INTEREST PRINCIPAL ENDING BALANCE

#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
 #VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
#VALUE! Err:522 #VALUE!
RM 86,633.46 RM 400,000.00
 Principal Lease Obligation
RM2,353,208.33
RM500,000.00 RM1,853,208.33
RM407,339.58 RM1,445,868.75
RM427,706.56 RM1,018,162.19
RM449,091.89 RM569,070.29
RM471,546.49 RM97,523.81
RM97,523.81 RM0.00
QUESTION 2

Residual Value for Term Loan

Initial 1st Year

Capital (400,000)
Initial Allowances (20%) 80000
Annual Allowances (16%) 64000
144000

YEAR CAPITAL ALLOWANCES

0 0
1 Ist Year, initial 20%
2 2nd Year 16%
3 3rd Year 16%
4 4th Year 16%
5 5th Year 16%

Residual Value for Leasing Loan

Initial 1st Year

Capital (500,000)
Initial Allowances (20%) 100000
Annual Primary Allowances (16%) 80000
180000

YEAR CAPITAL ALLOWANCES

0 0
1 Ist Year, initial 20%
2 2nd Year 16%
3 3rd Year 16%
4 4th Year 16%
5 5th Year 16%
RESIDUAL VALUE
Sales proceed received by lessor and lessee at end of secondary lease period

RESIDUAL VALUE PERCENTAGE

LESSEE 90%
LESSOR 10%
ANNUAL CAPITAL TAX wdv
400,000
144,000 256,000
64,000 192,000
64,000 128000
64,000 64000
64,000 0

ANNUAL CAPITAL TAX wdv

500,000
180,000 320,000
80,000 240,000
80,000 160000
80,000 80000
80,000 0
0
nd of secondary lease period

AMOUNT of RV
0
0
QUESTION 3
QUESTION 4

4. Calculate the ratio to ascertain the company eligibility for the financing. (20m)

i) Current Ratio

Formula :- Current Assets

Current Liabilities

2019 (RM)
Current Assets 3,418,000
Current Liabilities 3,307,000
Current Ratio 1.03356516480194

ii) Gearing Ratio

Formula :- Total Debt

Total Assets

2019 (RM) 2020 (RM

Cuurent Liabilitie 3,307,000 Cuurent Liabilities
Fixed Assets 432,000 Fixed Assets
Current Assets 3,418,000 Current Assets
Total Assets 3850000 Total Assets
Gearing Ratio 0.858961038961 Gearing Ratio

iii) Earnings Before Interest and Taxes (EBIT)

Formula :- Net Income + Taxes + Interest × 100

Total Sales

2019
= (1112000 - 992000) + (-96000) + 7× 100
6681000

= 99000 × 100
6681000
 = 1.481814099686

iv) Debt Service Ratio

Formula :- Earning before interest, taxes, Depreciation and Amortisation (EBITDA)

Interest + Principal

2020
= 91000 + 66000 + 54000
64000 + 67776.04 + 29550.65

=
 2020 (RM)
Current Assets 2,163,000
Current Liabilities 2,130,000
Current Ratio 1.015492957746

2020 (RM)
Cuurent Liabilities 2,130,000
Fixed Assets 236,000
Current Assets 2,163,000
Total Assets 2399000
Gearing Ratio 0.887869946

2020
= (621000 - 530000) + 66000 + 6 × 100
2997000

= 221000 × 100
2997000
 = 7.374040707

sation (EBITDA)
QUESTION 5

5. Discuss each option from aspects of documentation costs, taxation benefits, accounting treatment (q

1)The cost of documentation is low on leasing compared to a long-term mortgage, which is the best most expensi
When compared to the met cash flow, a term mortgage can store more cash than leasing. They may need to store
Obtaining a loan needs extensive documentation and formality, particularly in determining the creditworthiness o
since it requires repayment. Leasing an asset is a simpler system because it requires establishing the lessee's need
the rent payment.

2) In terms of tax benefits. When a consumer purchases an asset with a mortgage, the interesr on the loan can be
of element fee of the primary as nicely). As a result of the asset's depreciation (which decrease each year because
the consumer can only claim rents that are consistent over the course of the renting period.

3) Leases are classified as either capital rentals or operating rents in terms of accounting treatment.The balance st
Capital leases appear on the balance sheet, and the current cose of lease payments appears on both sides. When
in the financial statements. When it comes to loan financing, the asset is on the asset side, and a loan liability is on
nefits, accounting treatment (qualitative aspect)

e, which is the best most expensive because it requires a mortgage settlement.

n leasing. They may need to store coins for commercial purpose as a company.
termining the creditworthiness of the applicant. The cost of a term loan is high
res establishing the lessee's need for the asset as well as his of her ability to pay

e, the interesr on the loan can be declared (which decreases each year because
hich decrease each year because of written down fee impact). As with rent financing,

ounting treatment.The balance statement no longer includes operating rentals.

nts appears on both sides. When a lease is signed, the asset price is not included
sset side, and a loan liability is on the liability side.
QUESTION 6

6. Interpret your results and recommend the best financing option for the company, from both the qua

According to the quntitative aspect, Chemtrade Sdn Bhd may be approved for a term loan because the cost of (Te
RM 191,793.04. In terms of quality, the paperwork fees for a term of loan are higher than those for leasing. The m
to the full extent allowed by law, however there is no such deduction for a term loan. Aside from that, under leas
company's financial sheet. Because the machinery belongs to the lessor rather than the lessee, it is recorded unde
a result, the corporation is advised to pick term loan in the quantitative component, while leasing is advised in the
e company, from both the quantitative and qualitative aspect

erm loan because the cost of (Term loan-Leasing) is greater than zero, i.e
her than those for leasing. The monthly rental for leasing is tax deductible
loan. Aside from that, under leasing, the machinery is not listed below the
an the lessee, it is recorded under the balance sheet in the evaluation. As
nt, while leasing is advised in the qualitative componant.