Financial Math Answers

A woman deposits consecutive equal half yearly amounts of R3400 into a savings account starting 6 months from now and ending 5 and a half years from now. The savings account offers an interest rate of 6.5%p.a. What is the future value of the savings account immediately after the last deposit was made?

A woman wishes to deposit a lump sum into a savings account now from which she can withdraw regular amounts to pay for her maintenance of her motor car. She will need to withdraw regular half yearly amounts from the savings account starting with a withdrawal of R1500 18 months from now and with a last withdrawal 5 years from now. To keep up with inflation the withdrawals will need to increase at a rate of 6% p.a each half year starting from the second withdrawal onwards. If the savings account earns interest at a rate of 6.8 p.a compounded daily then the amount that must be in the savings account is equal?

R130000 is deposited into an account now that pays an interest rate at 10.5%p.a so that an amount of money can be withdrawen from the account every 6 months in perpetuity starting one year from now. If it is decided to increase the value of the withdrawals from the second withdrawal onwards at a rate of 5%p.a then the value of the first withdrawal made one year from now is equal to?

A company is considering buying either machine A or machine B for its business.The cost of machine A is GHS90,000 and that for machine B GHS105,000. Both machines have a salvage value of zero at the end of their respective economic life (5 years for machine A and 4 years for machine B). Cash inflow from machine A is as follows; GHS20000, GHS22500, GHS31000, GHS40500 and GHS46000 for year 1,2,3,4 and 5, respectively. Cash inflow from machine B is GHS30,000 in year 1, GHS49,000 in year 2, GHS50,500 in year 3 and GHS35,000 in year 4. Machine A will require servicing in year 2 and 3, which will cost the company GHS6500 per each of the service years. Machine B will require servicing in year 2 and 3, which will cost the company GHS7000 per year for each of the servicing years. Based on the Annual Worth criteria and interest rate of 15%, which machine would you recommend to the company and at what Annual Worth?

2) An economist believes there is a linear relationship between the market price p of a particular
commodity and the number of suppliers are willing to bring to the market place. Two sample
observations indicate that when the price equals $15 per unit, the weekly supply equals 30,000
units and when the price is $20 per unit the weekly supply is 48000 units.
i) If price p is plotted on the horizontal axis and the quantity supplied q is on vertical axis. Graph the
linear equation.
ii) Identify and interpret the meanings of slope p and q intercepts.
iii) Predict the weekly supply if the market price equals $35 per unit.

Suppose a bank’s liquidity division estimates that it holds $19 million in hot money deposits against which it will hold an 80 percent liquidity reserve, $54 million in vulnerable funds against which it plans to hold a 25 percent reserve and $112 million in stable or core funds against which it will hold a 5 percent liquidity reserve. The bank expects its loans to grow 8 percent annually; its loans currently stand at $117 million, but have recently reached $132 million. If reserve requirements on liabilities currently stand at 3 percent, what is this depository institution’s total liquidity requirement?

The marginal revenue function of a good is

A man deposits an amount of Rx into an investment account paying 8,76% p.a. compounded quarterly. Thirty years later he withdraws R50000 from the accumulated amount in the account and immediately invests the remainder in a retirement annuity which earns 9% p.a. The retirement annuity will provide him with a regular monthly income of R25000 for the next fifteen years starting one month after the investment is made. The original amount Rx (to the nearest rand) is equal to

Medico Limited intends investing in a project during March 2021. The project is expected to cost R2 500 000 with a five-year useful life, and no residual value. The annual volume of production for the project is estimated at 150 000 units, which can be sold for cash at R12 per unit. Depreciation is expected to be R500 000 per year. Annual cash operating costs are as follows:
Variable costs R225 000
Fixed costs R750 000
The cost of capital is 15%
REQUIRED
Use the information provided above to calculate the following:
2.1 Net Present Value.
2.2 Accounting Rate of Return on average investment (answer expressed to two decimal
places)
2.3 Internal Rate of Return, if the net cash flows are R720 000 per year for five years
(answer expressed to two decimal places)

R 100 000 is deposited into an account now that pays interest at a rate of 8% p.a. so that an amount of money can be withdrawn from the account every six months in perpetuity starting one year from now. If it is decided to increase the value of the withdrawals, from the second withdrawal onwards, at a rate of 6% p.a., then the value of the first withdrawal (rounded to the nearest cent) made one year from now is equal to