Question

Example 2.20

Answer 1

The period of days (value of x) for which Faizal promised to pay the bank RM 2,000 after getting 7% discounted present value of RM 1,930 is 180 days.

The value of x is the period of days (number of days) that the loan from the bank will last before Faizal, who received RM 1,930 discounted at 7%, would repay the bank the principal and interest of RM 2,000.

This implies that Faizal is paying an interest of RM 70 (RM 2,000 - RM 1,930), since he borrowed RM 1,930 and will repay RM 2,000.

Data and Calculations:

Present value of loan received = RM 1,930

Discount rate per year = 7%

Future value of the loan to be repaid to the bank = RM 2,000

Interest expense for one year based on 7% = RM 140 (RM 2,000 x 7%)

Interest expense for 180 days or 6 months = RM 70 (RM 2,000 - RM 1,930) or (RM 2,000 x 7%) x 180/360

Interest expense that equals RM 70 will be half of a year or 180 days (RM 140 * 180/360)

Thus, the period of days (x) that will lapse for Faizal to repay the bank is 180 days or half of a year (6 months).

Learn more about time period of a loan here: brainly.com/question/19118285