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