Financial Math Answers

When his son was three years old, Vuyisanani made a deposit of R16 200,00 in the bank. The investment

grew at a simple interest rate and when Vuyisanani’s son was 22 years old, the value of the investment was

R46 980,00. Had the interest been 1,25% less, how much interest would he have lost?

Zelda borrowed R5 760,00 from a bank for 21 months. For the discount loan she only received R4 752,00.

Answer the following questions:

(i) Find the yearly discount rate, d.

(ii) Determine the equivalent yearly simple interest rate, i.

Give the answers as percentages and round them to two decimal places.

Abongile, the manager of a construction company is renovating a home and has expenses of R200 000,00

now and another R41 812,00 in six months’ time. As he finds it difficult to find the cash now, he proposes

to settle all the debt after six months with a single payment. The debt is subject to an interest rate of 9,5%

per annum, compounded quarterly. What is the value of the payment that will settle his debt at the end of

month six?

Bongeka purchased a new refrigerator and were expected to pay R1 684,00 five months ago and another

R1 323,00 in eight months’ time. She could not make the payment five months ago, but after receiving a

bonus at work, she rescheduled to repay the loan in two equal payments, the first due in two months and the

second due in five months’ time. The payment at month five will settle the debt, therefore, the settlement

date is month five. The debts and payments are subject to the same interest rate of 11,4% per annum,

compounded monthly.

@ 11,4% per year, compounded monthly

The value of each of the payments, rounded to the nearest rand, is equal to

Selina produces 100,000 net income per year for 5 years period. The investment has expected selling price of 1,000,000 at the end of the 5 years. The investor requires 11% return in the year on the investment.Estimate the possible offer price by the investor.

It’s time for Ronda to start repaying her student loans, which are amortized over the next 10 years. Her first month’s payment due is $396. How much should she expect to pay next month

Prince wants to open a Hair Salon and asks his uncle Lerumo if he will lend him the money. He also indicates that he will only be able to start paying him back after five years, at which time he will then pay R35 000 at the end of every four months, for four years. Uncle Lerumo agrees, on condition that his money must earn 12,2% interest per year, compounded every four months.

The present value of Prince's debt when he starts paying back uncle Lerumo after 5 years will be

1. The chairman is trying to forecast the number of tourists who would be visiting the city of Adama in the

coming year. Some students from Royal College have examined the problem as part of course project. They

estimated the current year’s volume as 110,000 tourists. They have also projected that the volume in the

next year will be 120,000 and the volume in the future will continues to grow at the same rate. Determine

equation of a line which relates the number of tourists, P, to year’s t as measured from this current year?