Mathematics of Finance – 2

1. A company has to choose between borrowing 100,000 at 3% a quarter in order to modernize now or saving at 2% a quarter in order to modernize in 4 years’ time, at an estimated cost of 1170,00. Throughout this question, use tables whenever possible. Calculate the amount $Y$ which must be saved at the end of each quarter if the company wishes to cover the cost of modernization in 4 years’ time. Give your answer to the nearest $.

2. A motorbike price is $40,000 inclusive of 16% sales tax. The original price should be

3. A sum of $\$30,000$ is invested at a nominal rate of 12\% per annum. Find its value after 3 years if interest is compounded every month. Give your answer to the nearest $.

4. A company has to choose between borrowing 100,000 at 3% a quarter in order to modernize now or saving at 2% a quarter in order to modernize in 4 years’ time, at an estimated cost of 1170,00. Throughout this question, use tables whenever possible. Find the cumulative discount factor appropriate to quarter end payments of $1 per quarter at 3% per quarter over 4 years.

5. An investment rises in value from 12000 to 250,000 over 15 years. Calculate the percentage increase per year, to one d.p.

6. Calculate the present value of an annuity of 2800 per annum, payable at the end of each year for 10 years at a discount rate of 4%. Use tables and give your answer to the nearest $.

7. If a sum of 15,000 is invested at 4.6 percent per annum, find its value after 5 years, to the nearest $.

8. The economic order quantity (EOQ) for a particular stock item is given by the expression $EOQ = \sqrt{\frac{2C_0D}{c_h}}$. If $C_0=2$ per order, $D=1000$ items and $C_h=0.25$ per time, then EOQ (rounded to the nearest whole number) will be

9. If the MP of a laptop is $22,000 and the sales tax imposed is 16%. The total amount that has to pay is

Explanation: $22000+22000*0.16=25520$

10. To pay a certain amount of tax as a value-added tax on the purchase of an item is known as

11. Given the scenario in the spreadsheet below, what Excel formula is required for ROI

12. Given the scenario in the spreadsheet below, what Excel formula is required for NPV

13. The tax charged on all incomes during the financial year from 1st July to 30th June is termed as

14. Rearrange the formula $V=P(1+r)^n$ to make $r$ the subject.

15. An item sells for 4.39 including value-added tax at 17.5%. If the tax were reduced to 16%, the new selling price to the nearest penny will be

16. A company has to choose between borrowing 100,000 at 3% a quarter in order to modernize now or saving at 2% a quarter in order to modernize in 4 years’ time, at an estimated cost of 1170,00. Throughout this question, use tables whenever possible. Calculate the amount $X$ which mush be paid per quarter if the company borrows 100,000 now repayable at the end of each quarter over 4 years. Give your answer correct to the nearest $.

17. The economic order quantity (EOQ) for a particular stock item is given by the expression EOQ = $\sqrt{\frac{2C_0D}{c_h}}$. If for a different stock item, EOQ = 200 items, $C_0=4$ per order and $D=1000$ items, then $C_h$ (in $\$$ per item) will be

18. The salary received after necessary deductions from the gross salary is termed as

19. The price of a tricycle is $2,900 and the sales tax is 16%. The amount of sales tax on 40 such tricycles should be

20. An asset originally worth 80,000 depreciates at 28% per annum. Find its value to the nearest at the end of 3 years.