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Acknowledgement

First of all, I would like to say thank you to my friends, teachers, ad


parents for giving me their full support in making this project
successful. Not forgotten to my family for providing everything,
such as money, to buy anything that are related to this project and
their pieces of advice, which are the most needed for this project.
Internet, books, computers and all of those act as my source to
complete this project. They also supported me and encouraged me
to complete this task so that I will not procrastinate when doing this
project.
Next I would like to thank my teacher, Mr Cheng Boon Hau for
guiding me and my friends throught this project. We had some
difficulties in doing this task, but he taught us patiently and gave us
guidance throught the journey until we knew what to do. He tried
his best to help we understood what we were supposed to do ith the
project.
Besides that, I would like to thank my friends who were doing the
same project as mine and shared our ideas. They were helpful as
when we joined and discussed together. However this task was done
individually.
Last but not least, I would like to thank any party which involved
either directly or indirect in completing this project work. Thank
you everyone.

Objectives
The aims of carrying out this project work are :
-To apply and adapt a variety of problem-solving strategies to solve
problems.
-To improve thinking skills.
-To promote effective mathematical communication.
-To develop mathematical knowledge through problem solving in a
way that increases students interest and confidence.
-To use the language of mathematical to express mathematical ideas
precisely.
-To provide learning environment that stimulates and enchances
effective learning.
-To develop positive attitudes towards mathematics.

Intoduction
1.General Definition of a Personal Loan
The major characteristics of personal loan is a debt incurred by
an individual consumer rather than a business loan or line of credit
granted to a company or corporation. Mortages are usually the
largest debt that individuals incur in a lifetime although some
educational loans are also quite large. Automobile loans are another
common type of personal loans. Personal loans can be obtained from
banks or finalce companies.
Traditional Versus Subprime Mortages
Traditional mortages are based on a conservative
percentage of a customers income and require substantial
down payment and a good to excellent credit rating.
Payments are based on principle and interest, with
payments toward the principal building equity for the
homeowner.
Subprime mortages typically carry higher interest rates,
which reflect the less favourable credit pfofiles of many but
not all of the consumer who use them to purchase their
homes. Such increases, coupled with a lack of equity against
which strapped homeowners could otherwise borrow
against, often lead to foreclosure and repossession of the
house.

Automobile Loans or Leases


Automobile loans represented a second verycommon type of
personal loan. Like a mortage, where the house serves as
collateral, the automobile serves as collateral for car loan.
Many thrifty car owners keep their paid-off cars and save
on invest the windfalls that represents their former car
notes.
Leasing a car works much like renting an apartment. An
automobile lease never gives the driver ownership of the car,
merely the right to utilize it freely during the term of the
lease.
Other Personal Loans
Personal loans can be obtained for nearly any purpose.
Home remodeling is a common reason for taking a personal
loan. Educational loans are another. Such loans may be
more difficult to obtain unless the borrower can provide
substantial collateral, because there is no inherent valae to
the lender in the item for which the loan is being obtained.
Credit cards represent a very common type of unsecured
loan. In exchange for monthly payments that include
interest and represent profit for the credit cards and
companies.

Part 2
Bank
Total loan
Interest rate

Monthly
payment
Years/months
of loan

ocbc
Rm100,00
0
0.7%mont
h
7.1%year
Rm1709
10years

Cimb abs

maybank

Rm200.000

Rm100.000

1.6%years

6.5%years

Rm1068

Rm1930.56

30years

6years

Part 1 :
(B)1. Interest Rate
The interest rate is the percent charged, or paid, for the use of
money. It is charged when the money is being borrowed and paid
when it is being loaned. The interest rate that the lender charges is a
percent of the total amount loaned. Similarly, the interest rate that
an institution such as a bank pays to hold your money is a percent of
the total amount deposited. Banks then use that money to make
loans. Bank charge borrowers a little higher interest rate that they
pay depositors for that same money so they can get pfofit for
providing these services. Banks want to charge as much interest as
possible on loans, and pay as little as possible on deposits so they can
be more profitable. At the same time, banks are competing with each
other for those same deposits and loans. This competition keeps
interest rates in a similar range.
How Do Interest Rates Work ?
Interest rates are charged not only for loans, but also for mortages,
credit cards and unpaid bills. The interest rate is applied to the total
unpaid portion of your loan or bill. If your interest rate adds more
to your debt than the amount you are paying, your debt actually
increase eventhough you are making payments. Although interest
rates are very competitive, they arent the same. Some types of loans
like credit cards are always assigned higher interest rates because
they are more expensive to manage. Banks also charge higher rates
to people they consider riskier, The higher you score, the lower the
interest you will have to pay.

How it works/Example :
The formula to find an interest rate of loan isInterest Rate=(Total Repayment Amount-Amount Borrowed)
Lets assume ABC Company is considering building a new $60
million factory. If a bank agrees to lend ABC the $60 million dollars
but requires ABC to pay back $65 million at the end of the year, we
can calculate that ABC will pay back $65 million repaid $65 million
principal to borrow the money. This translates to: 0 million)
Interest Rate= ($6 million) / ($6 = 10% interest
Interest is often compounded, meaning that the interest earned on a
savings account for example, is considered part of the principal
after a predetermined period of time. Interest is then earned on the
larger principal balance during the next period and compounded,
the more interest is earned (or paid) on an investment.
Why it Matters:
Interest rates are one of the economys single strongest influences.
They facilitate the formation of capital and have a profound effect
on everything from individual investment decisions to job creation,
monetary policy and corporate profits.
In a free market economy, the laws of supply and demand generally
set interest rates. The demand for borrowing is inversely related to

interest rates, meaning that hight interest discourage companies and


individuals from borrowing and low interest rates encourage
borrowing. However, demand for funds also stems from the
productivity of the investments undertaken with the borrowed
capital. For example ABC Company might be willing to pay a higher
interest rate as long as the new factorys return on investment (ROI)
exceeds the cost of the funds. However, companies have to work
harder to generate hight return in a high- ir 605 environment.
Borrowing can only occur when another person or company agrees
to forego current consumption and lend the money to the borrower.
However, the interest rate must be high enough to convince
theselenders to lend. This is why the supply of loan able funds
increases when interest rates ris

Further Exploration
Years of loan= 20
Interest rate= 1.65%
Total loan = 200 000 + ( 1.65% x 200 000 x 20)
= 266 000
Monthly payment= 266 000 (12x 20)
= RM 1108.33
Years of loan = 15
Interest rate= 1.65%
Total loan= 200 000 + (1.65% x 200 000 x 15)
= 249 500
Monthly payment = 249 500 (12 x 15)
= RM 1386.11
Total save = 266 000 249 500
= RM 16 500

Basedon the above calculation, if Encik Aziz choosed the 15 years


loan, the total amount of payment he needs to do RM249 500 and
the monthly payment is slightly higher cost, which is RM 1386,11.
However, if this is compared to the 20 years loan, the total amount of
payment he needs to do is RM 266 000 and the monthly payment is
RM 1108.33. By taking the loan of 15 years. Encik Aziz could save
RM 16 500 which is such a large amount of the money. Although he
needs to pay higher for the monthly payment. It is still better than
the 20 years loan. Futhermore, he just needs to pay the bank in 15
years time and he can save even more money.

REFLECTION
While I was conducting this project, there was a lot of information
that I have found. This project encourages the student to work
together and share their knowledge, It also encourages student to
gather information from the internet, improve thinking skills and
promote effective mathematical communication. Not only that, I had
learned some moral values that I can practice. This project had
taught me to be responsible on the works that are given to me ato be
completed. This project also had made me felt more confidence to do
works and not to give easily when we could not find the solution for
the question. I also learned to be more discipline on time, which I
was given 3 weeks to complete this project and hand in to my
teacher just in time. I also enjoy doing this project as I need to spend
my time with friends to complete this project and it had tightens our
friendship.

CONTENT
NO
1
2
3
4
5
6
7
8
9
10
11

TITLE
ACKNOWLEDGEMENT
OBJECTIVES
INTRODUCTION
PART 1 (A)
PART 1(B)
PART 2
PART 3
FURTHER EXPLORATION
CONCLUSION
REFLECTION
REFERENCE

PAGES
1
2
3-5
6
7-10
11-12
13
14-15
16-17
18
19-31

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