KBAT Problems
KBAT Problem: Comparing Two Savings Plans
A KBAT-style consumer-maths problem where you compare two savings options and justify the better one, using only the formulae the exam provides.
Set up both plans
One plan offers simple interest, the other compound. Using the given financial formulae, compute the final amount for each over the same period.
The maths is routine; the KBAT part is comparing and deciding.
Decide and justify
State which plan gives more, by how much, and note any assumption (such as no early withdrawal). A full-mark KBAT answer always ends with a clear, justified conclusion in words.
This is general information, not financial advice.
Understand the problem
A saver puts RM 5,000 away for 3 years. Plan A pays simple interest at 4% per year.
Plan B pays compound interest at 3.8% per year, compounded annually. Which returns more?
The trap is assuming the higher rate wins, you must actually compute both and compare. This is general information, not financial advice.
Plan and solve
- Plan A uses simple interest, I = Prt = 5000 × 0.04 × 3 = RM 600, so the final amount is 5000 + 600 = RM 5,600.
- Plan B uses compound interest, A = P(1 + r)ⁿ = 5000 × (1.038)³.
- Compute the power: 1.038² = 1.077444, then × 1.038 = 1.118387, so A = 5000 × 1.118387 = RM 5,591.93.
- Compare: RM 5,600 versus RM 5,591.93. Plan A returns RM 8.07 more over 3 years, so choose Plan A, assuming no early withdrawal.
Check and a variant
Check the compound growth year by year: 5000 → 5190 → 5387.22 → 5591.93, which matches. A variant the examiner could add: extend both plans to 5 years.
Simple then gives 5000 × 1.20 = RM 6,000, while compound gives 5000 × 1.038⁵ ≈ RM 6,025.00, so the compound plan overtakes. The lesson is that the winner depends on the period, which is exactly the KBAT reasoning being tested.
Frequently asked questions
Which interest formulae does SPM actually give in the exam?
The consumer-maths formulae you need, including simple and compound interest, appear on the formula sheet in Paper 2, so you do not memorise them. The marks are for choosing the right one, substituting cleanly, and comparing.
Learn to read the sheet quickly so you are not hunting for a formula under time pressure.
Does compound interest always beat simple interest?
No. Over a short period a higher simple rate can win, as this problem shows for 3 years.
Compound growth accelerates over time and usually overtakes later. That is why KBAT questions ask you to compute and compare rather than guess.
Never assume the answer from the words alone; the numbers decide.
Should I round the money at each step or only at the end?
Keep the full figures through the working and round only the final amount to two decimal places, since it is money. Rounding early can shift the last cents and change a close comparison.
Write the final answer as RM to two decimals, and show the unrounded line just before it so the marker sees your accuracy.