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QUESTION / SOALAN 1a)

What

is meant by time value of money?(2 marks)b)

Draw

a cash flow diagram to show how much money a person should be willing to pay

now that will yield RM400 per year for 5 years starting next year if the

interest rate is 10% per year. (Note: DO NOT solve the problem)(4 marks)c)

How do you obtain a nominal interest rate

(r)?(4 marks)a) (Total/Jumlah:10)

QUESTION / SOALAN 3A bank credit card carries an interest rate

of 2% per month on the unpaid balance.a)

Calculate

the effective rate per semi-annual period.(5 marks)b)If the interest rate

is stated as 5% per quarter find the effective rates per semi-annual and

annual periods.(5 marks)

(10 marks/markah)QUESTION/ SOALAN 4A company expects to realize a revenue of RM100000

during the first year starting now from the sale of a new product. Sales are

expected to decrease gradually with uniform gradient due to competition to a

level of RM 47500 on the eighth year from now.

i)

Draw

the cash-flow diagram following the end-of-period convention.(5 marks)

ii)

If

the revenue is invested at a rate of 10 % what will be the compound amount

eight years from now?(5 marks)

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