What is the effective annual rate on the loan


Problem 1: You have just borrowed RM20,000 to buy a new car. The loan agreement requires for 60 monthly payments of RM444.89 each to begin one month from today. If the interest is compounded monthly, what is the effective annual rate on this loan?

Problem 2: Era Baru Bhd. recently reported net income of RM385,000. The tax rate is 40 percent. The company's interest expense was RM200,000. What would be the company's net income if the company is able to double its operating income (EBIT), assuming that the company's tax rate and interest expense remain unchanged?

Problem 3: Hebat Housing Corporation Bhd. has forecast the following numbers for this coming year:

Sales                       RM1,000,000
Cost of Goods Sold          600,000
Interest Expense             100,000
Net Income                     180,000

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Finance Basics: What is the effective annual rate on the loan
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