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Homework Help: MBA Executive : Banking & Finance

Posted by sushma on Saturday, April 9, 2011 at 1:11pm.

The Hypothetical Finance Ltd has structured a hire-purchase deal. The required to make a down payment of 20 per cent of the investment cost. The hire-term is four years with quarterly payment in advance. The flat rate of interest is 13 per cent. The finance company would charge a front- ended documentation and service fee and allow rebate for prompt payment @ 0.5 per cent and 1 per cent of investment outlay respectively.
Assuming after paying 24th installment, a hirer wishes the purchase option, what is the interest rebate according to (i) actuarial method, (ii) rule of 78 method and, (iii) SLM?

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