Financial Math Answers

Achieve $5,000 in three years at 2.5% simple interest

Alyce operates a factory that manufactures pencil boxes which she sells to stationery store.

Additional information:

Annual demand is 1 million pencil boxes per year

Setup cost is $5000 per batch

Holding cost is $3 per year for each pencil boxes

Maximum production capacity is 2 million pencil boxes per year

Currently, pencil boxes are manufactured in 10 batches.

1 a) Find the optimum production quantity that Alyce should produce to minimize her costs.

Economic Batch Quantity

= √((2 × 5000× 1,000,000) / (3 x (1-(1,000,000/2,000,000))

= √(10,000,000,000 / 1.5)

= 81,650

   b) Calculate the current annual holding cost and setup cost. 

Batch Quantity = Annual Demand ÷ Number of batches

= 1,000,000 ÷ 10

= 100,000 units

Annual Holding Cost 

= (100,000/2) × 3 × (1-(1,000,000/2,000,000))

= $75,000

Setup Cost

= 10 × 5000

= $50,000

Total Current Cost = ($75,000 + $50,000) = $125,000

  c) Draw a diagram showing stock level for the first batch, assume 1 year has 250 working days 

 You invested $7,500 in a savings account that pays interest of 3.6% compounded monthly. What is the value of your investment after 17 months?

a. $7,365.70   b. $13,682.87    c. $7,891.82    d. $7,541.45    e. None of these

12. A non-interest-bearing promissory note has a face value of $950. Find the proceeds of this note if it is discounted 3½ years before its maturity date at 8% compounded quarterly.

a.  $719.98      b.  $725.67     c. $771.65     d. $657.22         e. None of these

A 24% trade discount is equal to $365. What is the list price (rounded to the nearest dollar)?

a. $453       b. $1,156         c. $993            d. $1,799         e. $1,521

7.      An invoice for $5,000 dated July 25, terms 5/10, net 30 is paid on August 4. What amount must be paid to reduce the debt to $1,000?

a. $1,000     b. $3,800         c. $4,995         d. $4,998         e. $5,000

8.      How much interest is owed on a loan of $11,500 borrowed at 5.5% from March 1, 2020 to August 15, 2020?

a. $11,683.68     b. $318.86      c. $212.34      d. $183.68       e. None of these

9.      How much must be placed in a two-month term deposit earning 4.8% simple interest in order to earn $275 interest?

a. $12,500        b. $5,729.17         c. $23,333.33        d. $34,375.00      e. $53,333.33

10.  In how many months will $2,500 earn $51.04 interest at 3.5% simple interest?

a. 5             b. 7           c. 9          d. 6            e. None of these

Shane will make deposits of $3,190 at the beginning of every month into an account earning 5.35% compounded quarterly, indefinitely. What type of annuity is Shane using?

Alyce operates a factory that manufactures pencil boxes which she sells to stationery store.

Additional information:

Annual demand is 1 million pencil boxes per year

Setup cost is $5000 per batch

Holding cost is $3 per year for each pencil boxes

Maximum production capacity is 2 million pencil boxes per year

Currently, pencil boxes are manufactured in 10 batches.

1a) Find the optimum production quantity that Alyce should produce to minimize her costs.

  b) Calculate the current annual holding cost and setup cost. 

  c) Draw a diagram showing stock level for the first batch, assume 1 year has 250 working

      days 

Melly bought a single storey house in Taman Nasional for RM230,000. She

made a 10% down payment and financed the balance through a bank loan from

Maybank for 30 years.

a) Find her monthly payment R if the interest rate was 7.5% compounded

monthly. How much was the total interest charged?

[6 Marks]

b) Due to COVID-19 pandemic, Melly missed the first three payments. How

much should be paid on the fourth month if she wanted to settle the

outstanding arrears?

[3 Marks]

c) Melly decided to settle the loan in full immediately after paying for 10 years.

How much is the amount that needs to be paid? 

Rania buys an apartment for RM 315,000 with 15 % down payment. She takes a loan from a bank to settle the balance at an interest rate of 4.2 % compounded monthly. She is required to pay equal monthly payments for 25 years to settle the loan.

(a) Calculate the monthly payment. {3 marks}

(b) Calculate the total interest charged. {2 marks}

(c) If Rania fails to make the first four monthly instalments, how much could she pay on the fifth month to settle all the outstanding arrears? {2.5 marks}

(d) After paying for 20 years, Rania decides to settle the loan in full. Calculate the full settlement for Rania. {2.5 marks}

ABC Pvt Ltd proposes to buy a truck that costs ������ 50,000. The company has two alternatives:

Alternative I: Buy from Nice Car Ltd by making a down payment of ������ 15,000 and settling the balance with 60 monthly payments at 10 % per annum flat rate.

Alternative II: Buy from Cheap Car Ltd by making a down payment of ������ 10,000 and settling the balance with 60 monthly payments of ������ 690 each.

Which alternative should the company select? Show it by calculation in detail for both alternatives.

ABC Pvt Ltd proposes to buy a truck that costs 𝑅𝑀 50,000. The company has two alternatives: Alternative I: Buy from Nice Car Ltd by making a down payment of 𝑅𝑀 15,000 and settling the balance with 60 monthly payments at 10 % per annum flat rate. Alternative II: Buy from Cheap Car Ltd by making a down payment of 𝑅𝑀 10,000 and settling the balance with 60 monthly payments of 𝑅𝑀 690 each. Which alternative should the company select? Show it by calculation in detail for both alternatives.