MAT112 BUSINESS MATHEMATICS

CHAPTER 6 (INSTALMENT PURCHASED)

1. Ga Een bought a flat television with a 10% down payment. He was charged a 2.1%
interest based on the original balance. If he has to pay RM318.90 per month for 3 years,
find
i) the cash price of the television [RM12,000]
ii) the interest charged on him [RM680.40]
iii) the amount of the outstanding balance just after the 20th payment using Rule of 78
[RM4963.46]
(Q3(c) Oct 2012)

2. A series of magazines was purchased by making a down payment of RM100 and 10

monthly payments of RM121.50. If the interest charged was 1.5% based on the original
balance, find
i) the installment price of the magazines [RM1315]
ii) the cash price of the magazines [RM1300]
iii) the amount of outstanding balance just after the 8 th payment using the Rule of 78.
[RM242.18]
(Q3(b) March 2012)

3. Nazmir wishes to purchase a set of furniture that costs him RM25,000 and he has two
options to consider.
For each option, calculate
i) The interest charged
ii) The periodic payment
Based on the total interest charged, which option should Nazmir select? Why?
(Q4(b), Oct2011)

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 4.Farid bought a plasma television at RM4,500 using a installment payments. He paid 20%
for the down payment and the balance was settled by making 24 monthly installments. If
the interest charged was 4.75% per annum on the original balance, find:
i) The total interest charged
ii) The monthly payment
iii) The installment price
iv) The outstanding balance if he decided to settle the balance immediately after making
the 12th payment using Rule of 78.
(Q1(c) April2011)

5.Ahmad bought a set of sofa and paid RM200 as a down payment. The balance was to be
paid by monthly payments of RM150 for two years. The interest rate was charged 10%
per annum based on the original balance. Find:
i) the amount of the loan. (RM3000)
ii) the cash price.(RM3200)
iii) the amount he has to pay immediately after the 20th payment, if he decides to settle
all the outstanding debts. Use the Rule of 78.(RM580)
(Q1(b) Oct2010)

6. Winnie bought a brand new car that costs RM70000. She paid 10% down payment
followed by monthly payments for 7 years. Using the constant ratio formula, calculate the
monthly payment if the interest rate is 4% on reducing balance. (RM856.25)
(Q3(c) apr2010)

7. Muniandy borrowed RM7000 from a friend. He agreed to pay RM300 monthly for 30
months. Calculate the outstanding principal balance if he decided to settle the balance
immediately after making the 18th payment using the Rule of 78. (RM 3264.52)
(Q3(d) apr2010)

8. A total interest of RM308.33 was charged when Saiful purchased a second hand
motorcycle at the interest rate of 8% based on reducing balance. The cash price of the
motorcycle was RM2,500. Using the constant ratio method, calculate the term of the
loan if Saiful had to pay monthly.(3 years)
(Q3(b) oct2009)

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 9. Salmah bought a teak wood kitchen cabinet by paying RM250 a month for 2 years
without a down payment. The interest charged on the original balance was 6%.
i) Calculate the cash price of the cabinet. (RM5357.14)
ii) Calculate the total interest charged.(RM642.86)
iii) After paying the first 15 payments, Salmah decides to settle all her debt immediately
using the rule of 78. Find the amount to be paid. (RM2153.57)
(Q3(c) oct2009)

10. Linda bought a water treatment filter through an installment plan in which she paid
RM2000 as a down payment. She had to make 24 monthly payments of RM270 each to
settle the balance. If the interest charged was 4% per annum on the original balance,
find the cash price of the filter.(RM8000)
(Q3(b) apr2009)

11. The cash price of an acoustic drum set is RM2,500. On an installment plan, a 10% down
payment is required followed by monthly payments for 2 years. If the interest charged is
8% on the reducing balance, find:
i) the monthly payment using the Constant Ratio formula.(RM101.56)
ii) the total amount a customer will eventually pay for a drum set.(RM2687.50)
iii) the outstanding balance if he/she decides to settle the loan immediately after the 10th
payment. Use the Rule of 78.(RM1356.22)
(Q3(c) apr2009)

12. Roy bought a house by paying RM40000 as down payment and took a loan from a bank
to pay for the balance. The bank charged interest at 6% compounded monthly. Roy has
to pay RM666.13 every month for 10 years to settle the loan.
i) Find the loan amount and the cash price of the house. (loan:RM60000.63, Cash
price: 100000.63)
ii) Find the total interest charged.(RM19934.97)
iii) immediately after the 20th payment, Roy decided to settle the outstanding balance.
How much should this payment be?(RM52746.39)
(Q2(c) oct2008)

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 13. A diamond ring that is listed at RM2000 cash can be purchased on an installment basis
by making a 20% down payment. The balance has to be repaid through 18 monthly
payments. The buyer has three options to repay the balance.
Option Interest charged
A RM300
B 8% per annum based on original balance
C 10% per annum based on reducing balance
i) Find the installment price for each option.(A: RM2300, B:RM2192, C: RM2126.67)
ii) Calculate the monthly installment for option C.(RM95.93)
iii) For option C, find the outstanding balance if a customer decides to settle the loan
just after the 8th payment.(RM918.56)
(Q3(b) oct2008)

14. Hashimi bought a house and paid a down payment of RM30000. He took a loan that
charged interest of 6% compounded monthly. Hashimi repaid the loan in 25 years' time
with monthly payment of RM980. Find
i) the cash price of the house. (RM182102.73)
ii) the total interest charged.(RM141897.27)
iii) the outstanding balance if Hashimi decided to settle the loan immediately after the
250th payment.(RM44992.93)
(Q2(c) apr2008)

15. Shanaz repaid her loan of RM10,000 through monthly installment for 3 years. The
interest rate charged is 10%. Using the constant ratio formula, find
i) the total interest charged.(RM1541.67)
ii) the installment price.(RM115412.67)
(Q3(b) apr2008)

16. Sheena bought a computer notebook at RM1700 through an installment plan. She paid a
RM500 down payment and the balance was settled by making 12 monthly installments.
If the interest rate charged was 7.5% per annum on the original balance, calculate:
i) the total interest charged.(RM90)
ii) the monthly payment.(RM107.50)

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 iii) the outstanding principal balance if she decided to settle the balance immediately
after making the 5th payment using the Rule of 78.(RM720.19)
(Q3(c) apr2008)

17. Salina purchased a home theatre at RM5000 through an installment plan. She made of a
monthly payment of RM250 for 2.5 years. Using the Rule of 78, calculate the
outstanding balance immediately after the 25th payment.(RM1169.35)
(Q3(b) oct2007)
18. Encik Ismail bought a few acres of land for farming purposes. The cost of the land is
RM65000 and the installment plan chosen requires 10% for the down payment followed
by monthly payment for 5 years. The interest charged is 5.5% on reducing balance.
Find:
i) the total amount borrowed (RM58500)
ii) the total amount of interest using the constant ratio formula (RM8177.81)
iii) the total monthly payment and the installment price of the land.(RM66677.81,
RM73177.81)
(Q3(c) oct2007)
19. Zain borrowed a certain amount of money from Bank Menang to purchase a car. He has
to repay RM880 monthly for 5 years.
i) How much did he borrow if the bank charged interest at 7.5 % per annum on the
original balance? (RM38400)
ii) Calculate the amount of interest Zain has to pay to the bank. (RM14400)
iii) If Zain made a 40% down payment, find the cost price of the car. (RM64000)
(Q3(b) apr2007)

20. The cash price of a speed boat is RM60000. Under an installment plan, a buyer may pay
a 30% down payment followed by monthly payments for 5 years. If the interest is 6% on
the reducing balance, calculate:

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 i) the amount of interest using the constant ratio formula. (RM6405)
ii) the monthly payment. (RM806.75)
iii) the installment price of the speed boat. (RM66405)
(Q3(c) apr2007)

21. En Siraj is interested in buying a used van for his business operation needs. He
approached a company that offered him with two different options, Option A and Option
B. The cash price of the van is RM 56800. Particulars about the options are given below:
OPTION A OPTION B

Down payment RM6800 RM4800

Interest rate
3.5% based on the original 3% based on the reducing
balance balance

Period of loan
3 years 3 years

ii) Calculate the monthly installment to the company if he chooses Option A.

(RM1534.72)
iii) Calculate En. Siraj's monthly payment if he chooses Option B.(RM1511.25)
iv) Based on the installment price, which is the better option to him?(installment price A :
RM62050, Installment B : RM59205.hence, B is better.)
(Q3(a) oct2006)

22. Azman bought a new Canon digital camera through an installment scheme with interest
rate of 8% on the reducing balance by the Constant Ratio formula. The monthly payment
is RM 424.50 to be settled in 24 months. If Azman pays a down payment of RM 400,
calculate the cash price of the digital camera. (RM9804.31)
(Q3(b) oct2006)

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