Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Investment appraisal
- This topic has 2 replies, 2 voices, and was last updated 3 years ago by John Moffat.
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- August 8, 2020 at 5:04 pm #579661
750000 total payment for a car, 60,000 down payment, 16% yearly interest, 5 year period. What should be equated monthly payment or EMI ?
Please explain, I tried multiple time and ended up confused.
August 8, 2020 at 5:09 pm #579663I will be giving the MA exam at 18 Morning. And I am currently revising. Any question I encounter with, I don’t know the solution or get wrong answer from my working. It demotivates me alot !
August 9, 2020 at 10:34 am #579700I am guessing that you mistyped and the total payment was 75,000 (not 750,000).
In that case the amount remaining after the down payment is 15,000.
There are then 60 monthly payments so to get the amount of each payment we divide by the 60 period annuity factor at the monthly interest rate (which means calculating the annuity factor using the formula given in the exam.
To calculate the monthly interest rate, if we let it be R, then (1 + R)^12 = 1.16.
So the monthly interest rate R = (twelfth root of 1.16) – 1Where are you finding this question, because it is very unlikely for the exam? (You should be using a Revision Kit from one of the ACCA approved publishers – BPP or Kaplan).
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