Page 92 - DBP5043
P. 92
CALCULATE THE EFFECTIVE COST OF
SHORT TERM LOAN
Simple interest
Example 3
Sharina wishes to borrow RM 20,000 for one year. The bank offers a
simple interest loan at 14% per annum. Calculate the effective annual
interest cost of the loan.
Example 4 - interest less than one year
Sharina wishes to borrow RM 20,000 for 6 month. The bank offers a
simple interest loan at 14% per annum. Calculate the effective annual
interest cost of the loan.
Example 5 - with compensating balance
Sharina wishes to borrow RM 20,000 for one year. The bank offers a
simple interest loan at 14% per annum and requires Sharina to
maintain a compensating balance of 20% of the loan amount.
Calculate the effective annual interest cost of the loan.
Example 6 - interest less than one year & with compensating
balance
Sharina wishes to borrow RM 20,000 for 6 month. The bank offers a
simple interest loan at 14% per annum and requires Sharina to
maintain a compensating balance of 20% of the loan amount.
Calculate the effective annual interest cost of the loan.
