COLLEGE:IPGM KAMPUS TENGKU AMPUAN AFZAN KUALA LIPIS PAHANG NO.

NAME 1 2 MOHAMAD NAZIF BIN ISHAK MUHAMAD ASHRAF BIN MUSTAPHA I/C NO. 92 920203035687

NAME:MOHAMAD NAZIF BIN ISHAK 92 MUHAMAD ASHRAF BIN MUSTAPHA 920203-03-5687 UNIT:PPISMP PAI(SJKC) SEM 1 SHORT COURSEWORK SUBJET:BASIC MATHEMATICS COURSE:PREPARATION COURSE BACHELOR OF EDUCATION PROGRAM(SEMESTER 1) LECTURER NAME:MADAM HJH. HALIMAH BINTI HJ. HALIMI TARIKH HANTAR:26.8.2010

INDEX

INTRODUCTION

INTEREST Interest is a fee paid on borrowed assets. It is the price paid for the use of borrowed money, or, money earned by deposited funds. Assest that are sometimes lent with interest include money, shares, consumer goods through hire purchase, major assets such as aircraft, and even entire factories in finance lease arrangements. The interest is calculated upon the value of the assets in the same manner as upon money. Interest can be thought of as "rent of money". For example, if you want to borrow money from the bank, there is a certain rate you have to pay according to how much you want loaned to you.

Interest is compensation to the lender for forgoing other useful investments that could have been made with the loaned asset. These forgone investments are known as the opportunity cost. Instead of the lender using the assets directly, they are advanced to the borrower. The borrower then enjoys the benefit of using the assets ahead of the effort required to obtain them, while the lender enjoys the benefit of the fee paid by the borrower for the privilege. The amount lent, or the value of the assets lent, is called the principal. This principal value is held by the borrower on credit. Interest is therefore the price of credit, not the price of money as it is commonly believed to be.The percentage of the principal that is paid as a fee (the interest), over a certain period of time, is called the interest rate.

SIMPLE INTEREST Simple interest is calculated only on the principal amount, or on that portion of the principal amount which remains unpaid. The amount of simple interest is calculated according to the following formula:

where r is the period interest rate (I/m), B0 the initial balance and m the number of time periods elapsed. To calculate the period interest rate r, one divides the interest rate I by the number of periods m. For example, imagine that a credit card holder has an outstanding balance of $2500 and that the simple interest rate is 12.99% per annum. The interest added at the end of 3 months would be,

and he would have to pay $2581.19 to pay off the balance at this point. If instead he makes interest-only payments for each of those 3 months at the period rate r, the amount of interest paid would be,

His balance at the end of 3 months would still be $2500. In this case, the time value of money is not factored in. The steady payments have an additional cost that needs to be considered when comparing loans. For example, given a $100 principal: Credit card debt where $1/day is charged: 1/100 = 1%/day = 7%/week = 365%/year. Corporate bond where the first $3 are due after six months, and the second $3 are due at the year's end: (3+3)/100 = 6%/year. Certificate of deposit (GIC) where $6 is paid at the year's end: 6/100 = 6%/year.

There are two complications involved when comparing different simple interest bearing offers.

1. When rates are the same but the periods are different a direct comparison is inaccurate because of the time value of money. Paying $3 every six months costs more than $6 paid at year end so, the 6% bond cannot be 'equated' to the 6% GIC. 2. When interest is due, but not paid, does it remain 'interest payable', like the bond's $3 payment after six months or, will it be added to the balance due? In the latter case it is no longer simple interest, but compound interest. A bank account offering only simple interest and from which money can freely be withdrawn is unlikely, since withdrawing money and immediately depositing it again would be advantageous.

Simple interest is the most basic type of interest. In order to understand how various types of transactions work, it helps to have a complete understanding of simple interest. For example, you may pay interest on a loan, and it is important to understand how interest works. Better yet, your bank may be paying you interest on your deposits and you can maximize your earnings by knowing more about interest.

Simple Interest Formula If you want to calculate simple interest, use this formula: I=P r t In other words Interest (I) is calculated by multiplying Principal (p) times the Rate (r) times the number of Time (t) periods. For example, if I invest $100 (the Principal) at a 5% annual rate for 1 year the simple interest calculation is: I=P r t $5 = $100 x 5 % x 1 yr

Simple Interest Limitations Simple interest is a very basic way of looking at interest. In fact, your interest whether youre paying it or earning it is usually calculated using different methods. However, simple interest is a good start that gives us a general idea of what a loan will cost or what an investment will give us. The main limitation that you should keep in mind is that simple interest does not take compounding into account. Calculate Simple Interest 1. Principal X Rate X Time = Interest Amount Principal is the amount upon which interest is being earned, rate is the interest rate in percent or decimal form and time is the time upon which interest is being earned. Example: $100,000(Principal) X 0.08(8% Rate) X 1 Year (Time) = $8000 Interest 2. Principal X {1 + (Rate X Time)} = Total Amount All we're doing here is getting the total amount in hand at the end of the interest bearing period. In this first calculation, it's for one year, at the end of which, we'll have the original $100,000 + Interest. $100,000 X {1 + (.08 X 1)} = $100,000 X 1.08 = $108,000 3. Let's do that again for three years: Here we'll multiply the .08 (8%) rate times 3 years to equal .24. $100,000 X {1 + .24} = $124,000

TYPE

OF INTEREST

THERE ARE TWO TYPE OF INTEREST: SIMPLE INTEREST COMPOUND INTEREST

SIMPLE INTEREST

When you deposit money in a saving account,your deposit is called PRINCIPAL. The bank takes money and invest it. In return,the bank pays you interest based on the interest rate. Simple interest is interest paid only the PRINCIPLE. Simple interest can be calculate using this formula:

I=PRT

I=INTEREST P=PRINCIPLE R=THE INTEREST RATE PER YEAR T=THE TIME IN YEAR

EXAMPLE 1:-

You borrow RM10,000 for 3 years at 5% simple annual interest. What is the interest for 3 years?

INTEREST=PxRxT =10,000 x 0.05 x 3 = 1,500

EXAMPLE 2:-

You boroow RM10,000 for 60 days at 5% simple interest per year(assume a 365 day year). What is your interest for 60 days?

INTEREST=PxRxT = 10,000 x 0.05 x (60/365) = 82.1917

We also can use this formula to calculate:-

THE SIMPLE INTEREST FORMULA:-

FV=PV(1+rt)

Where FV= Future Value (RM) PV= Present Value (RM) r= Interest rate t=Time (Years)

COMPOUND INTEREST Compound interest is very similar to simple interest; however, with time, the difference becomes considerably larger. This difference is because unpaid interest is added to the balance due. Put another way, the borrower is charged interest on previous interest. Assuming that no part of the principal or subsequent interest has been paid, the debt is calculated by the following formulas:

where Icomp is the compound interest, B0 the initial balance, Bn the balance after n periods (where n is not necessarily an integer) and r the period rate. For example, if the credit card holder above chose not to make any payments, the interest would accumulate

So, at the end of 3 months the credit card holder's balance would be $2582.07 and he would now have to pay $82.07 to get it down to the initial balance. Simple interest is approximately the same as compound interest over short periods of time, so frequent payments are the best (least expensive) payment strategy. A problem with compound interest is that the resulting obligation can be difficult to interpret. To simplify this problem, a common convention in economics is to disclose the interest rate as though the term were one year, with annual compounding, yielding the effective interest rate. However, interest rates in lending are often quoted as nominal interest rates (i.e., compounding interest uncorrected for the frequency of compounding). Loans often include various non-interest charges and fees. One example are points on a mortgage loan in the United States. When such fees are present, lenders are regularly required to provide information on the 'true' cost of finance, often expressed as an annual percentage rate (APR). The APR attempts to express the total cost of a loan as an interest rate after including the additional fees and expenses, although details may vary by jurisdiction. In economics, continuous compounding is often used due to its particular mathematical properties.

Compound Interest Use this online calculator if you are borrowing money or you are lending money. This calculator enables you to determine how much interest will be paid or accumulated. See also: Free Amortization Schedule calculator

Top of Form

Bottom of Form Step 1: Enter the Principal (the amount of money borrowed or to be lent). Step 2: Enter the Rate (The annual percentage of interest)

COMPOUND INTEREST

Principal Rate Years Amount Interest

Months 1 = .08 2 = .17 3 = .25 4 = .33 5 = .42 6 = .50 7 = .58 8 = .67 9 = .75 10 = .83 11 = .92

Clear

Step 3: Enter the length of time in years the money will be borrowed or lent for. Example: Denise wants to borrow $5000.00 to purchase a used car. She wants to be able find out how much the car will cost her if she borrows the $5000.00 at an interest rate of 8% for 4 years. Thus, she will enter $5000.00 in the column for Principal. She will enter 8 in the column for rate and 4 in the column for years. She will then click calculate. The amount she is actually paying for her $5000.00 is $6802.44. The total amount of interest she will be charged for borrowing the $5000.00 is $1802.44.

Compound Interest When you borrow money from a bank, you pay interest. Interest is really a fee charged for borrowing the money, it is a percentage charged on the principle amount for a period of a year - usually. If you want to know how much interest you will earn on your investment or if you want to know how much you will pay above the cost of the principal amount on a loan or mortgage, you will need to understand how compound interest works. * Compound interest is paid on the original principal and on the accumulated past interest. Formula: P is the principal (the initial amount you borrow or deposit)

r is the annual rate of interest (percentage) n is the number of years the amount is deposited or borrowed for. A is the amount of money accumulated after n years, including interest. When the interest is compounded once a year: A = P(1 + r)n However, if you borrow for 5 years the formula will look like: A = P(1 + r)5 This formula applies to both money invested and money borrowed. Frequent Compounding of Interest: What if interest is paid more frequently? Here are a few examples of the formula: Annually = P (1 + r) = (annual compounding) Quarterly = P (1 + r/4)4 = (quarterly compounding) Monthly = P (1 + r/12)12 = (monthly compounding)

PART C: REFLECTION First of all, I would like to thank Allah S.W.T for blessing and helping me to complete this tasks. Secondly, I want to thank my family because always give support to complete this task.. Next, I would like to thank my lecturer for his help and patience. Lastly, to my friends in this institut and other friends from another institut for their support and all of the advices that given by them through many sources. This task has helped me to know myself better. It has taught me skills that I will take with me to my future courses. I will know how to collect research in many ways. By doing this tasks, I have learnt about Fibonacci sequence and how the numbers were created and be related with nature creations found in earth such as the rabbits, tree and pineapple. The assignment given also help me to learn and understand more about two types of interest which are simple interest and compound interest.I learnt how to use the formula to calculate compound interest, total instalment price, finance charge and so on. This knowledge will help me in the future. Sometimes,i realised that we cant do works alone.To complete this assignment i also cooperate with my friends.Everone of us will help each other out if a co-worker has a problem. Also, working in teams is important in many jobs. The team project helped me to learn how to be a part of a team. For example, while we were solving the problems in Attachment 1, all of my group members give their ideas and views. I

found that it is important to work in group to solve problems. This is where my critical thinking skills came in handy.

Learning new information is something that most people do each day, but may not even notice. So I decide to follow these principals, be good and kind to yourself and others, care for yourself, your work and for others and always try to make a positive difference. It is as simple as that. It is always based on those guidelines that I try to function as well as I can. In closing, I would like to add that I have really enjoyed the experience of completing this task. Thank you.

PART D:

Part B

PART B (Budget Proposal And Loan Schemes). Task 1: INFORMATION ABOUT THE PERSONAL LOAN SCHEMES

Bank Simpanan National. CIMB Bank . Bank Rakyat .

BANK SIMPANAN NATIONAL

Year Interest Rate Loan Amount RM5000 Rm432

1-2 3.5%

3-5 4.49%

Rm223

Rm158

Rm102

Interest rate of 4.49% for 5 years loan amount needed : Rm5000 4.49100 x 5000 = Rm 224.50 Rm 224.50 x 5 = Rm 1122.50 112.50+500060 = Rm 102.00 CIMB ISLAMIC BANK Year Month Interest rate Loan Amount Rm 5000 Rm444 Rm 234 Rm 164 Rm129 Rm 108 1 12 2 24 3 36 0.46% 4 48 5 60

Interest rate 0.46% Permonth Loan needed : Rm 5000 0.46100 x 5000 = Rm 23.00 Rm 23.00 x 60 = Rm 1380 1380+500060 = Rm 108.00

BANK RAKYAT Year Month Interest rate Loan Amount Rm 5000 Rm438 Rm 230 Rm 161 Rm128 Rm 107 1 12 4.9% 2 24 5.1% 3 36 5.1% 4 48 5.5% 5 60 5.5%

Interest rate of 5.5% of 5years.

Loan needed : Rm 5000 5.5100 x 5000 = Rm 275.00 Rm 275.00 x 5 =Rm 1375 1375+500060 = Rm 106.25 = Rm 107.

Comparing And Contarasting Between Personal Loan Schems Name Of Bank Catagories Financing Amount Bank BSN Rm 5000 (5 times monthly incomes) Profit Rate 4.79% a year till 5 years 5.10% a year till 10 years. Averange Of Age Payment Capasity Subject to total deducations not exceeding 60% (goverment) or 50% (private). By biro angkasa which deducation income is not more than 60% from the monthly income. Monthly deducation exceeding 60% of gross monthly income. 21 58 years old 18 58 years old CIMB Islamic Bank Rm 5000 (5 times monthly income) 0.46% month Bank Rakyat Rm 5000 (up to 5 times monthly income) 5.5% a year till 5 years 5.70% a year till 10 years 18 58 years old

Task 2 : Planning On the Personal Budget . Personal Budget Amount Food And Drinks Education Rm 100 Rm 45

Saving Others Total Amount

Rm 100 Rm 75 = Rm 320

Personal Budget For a Month Formula : Annual Budget = Monthly Budget x 12 320 x 12 = Rm 3840 Food And Drinks = Rm 100320 x 100 = 31.25% Education = Rm 45320 x 100 = 14.06% Saving = Rm 100320 x 100 = 31.25% Others = Rm 75320 x 100 = 23.44%

Annua l Expenses Base on the monthly expenses , we spent the allowence money Rm 430 for food and drinks that Rm 100 . The percentage of food and drinks from the pie chart is 31.25% , besides that , we also spent our money for saving Rm 100 so , the percentage is also 31.25% . As a trainer teacher , we need to buy many refrence book and learns sources . So that we must spent money for our education payment at least Rm 45 , so the percentage is 14.06% . Lastly the others 23.44% is our personal budget such as our brodband bil , ticket us or train payment , clothes and etc we spant about RM 75.

Decision Choosing A Personal Loan

Loan: From our searching , we had made our last decision to choose Bank Rakyat as the best to do personal loan .

Decision : There are many benifits of being the loaner in Bank Rakyat . First , it is suitable for our purpose buying a laptop and printer for our personal using that is not false in islam but for our convenience and security . The interest of Bank rakyat of 5.5% for 5 years . The payment For 1 month just Rm107.00 . Moreover with the money in hand that we can pay the loan with our allowance . Beside , the requirement and qualitification is not very hard to us use this loan .