BUS 130: You have Recently Purchased a 5-room Resale HDB Flat in Bishan: Foundational Mathematics for Business Assignment, MU, Singapore

Question 1

You have recently purchased a 5-room resale HDB flat in Bishan at a transaction price of $700,000. The combined balance of CPF Ordinary Account for both you and your spouse is $200,000. You intend to use this CPF balance for the upfront payment, and use a bank loan for the remaining $500, 000 with monthly instalment for the next 20 years of tenureship. With so many loan packages offered by different banks in the market, you prefer to adopt a more ‘conservative’ approach in your future assessment and decided to take up a fixed-rate package of 2.0% p.a. compounded monthly.

Construct a loan amortization schedule, showing the first and last 6 months of a payment schedule.

You have an existing housing loan with an outstanding amount of $500, 000. You would like to refinance this loan for a term of 20 years. Make a study of the offers from DBS and OCBC (consider both fixed and floating rates). Show clearly how you would compare the offers and decide on the best package.

Question 2

A firm is planning to introduce a new product and has called for bids for the construction of the plant to manufacture the product. The cash flows predicted for the two bids under consideration are given below:

Using the net present value (NPV) approach, with an interest rate of 7% p.a., which plant should the company choose?

Question 3

(A). For a loan of $55,000, with an annual interest rate of 5% p.a. compounded monthly, and monthly repayments of $1,100. Find the number of payments required to repay the loan. How many years is this?

(B). CompuSystems was supposed to pay a manufacturer $19,000 on a date 4 months ago. CompuSystems is proposing to pay $10,000 today and the balance in 5 months when it will receive payment on a major sale to the government. Assuring that the manufacturer requires 18% per year compounded monthly on overdue accounts. What should the second payment be?

Question 4

Briefly describe the Global Financial Crises in 2008 and discuss in what ways asymmetry information played a role in the crises. Keep your answer within 350 words.