Financial Math Answers

the ratio of interest between the compound and simple interest for two years on a sum of money to that after three years on the same sum, at the same rate of interest, is 11: 37. What will be the rate of interest?

Ruth has decided to drop her collision insurance because her car is getting old. Her total annual premium is $916, of which $170.60 covers collision insurance

There are 3 caravans each costing $58,000. The first caravan models reducing balance depreciation at a rate of 4.9% p.a. The second, flat rate depreciation at a rate of 4.3% p.a. Lastly, the third model’s unit cost depreciation at a rate of $1.50/km, where you hope to travel up to 1,700 km/year. Investigate under which circumstances you would choose each of these plans. Would your conclusions change if you were to travel much less or much more than 1,700km/year?

The down payment on a home us %20 of its selling price. What is the down payment on a home that sells for $120,000.00?

A stock that currently trades for $40 per share is expected to pay a year-end dividend of $2 per share. The dividend is expected to grow at a constant rate over time. The stock has a beta of 1.2, the risk-free rate is 5 percent, and the market risk premium is 5 percent. What is the stock’s expected price seven years from today?

Prepare the income statement for the month ended 31 August 2020 using the absorption costing method.
Given Estimated production 5000 units
Estimated sales 4500 units
Variable manufacturing R550
Fixed manufacturing over heads R 300 000
Fixed costs R150 000
Variable Cost per watch Sold R100
Selling price per watch R900

Prepare the income statement for the month ended 31 August 2020 using the absorption costing method.
Given Estimated production 5000 units
Estimated sales 4500 units
Variable manufacturing R550
Fixed manufacturing over heads R 300 000
Fixed costs R150 000
Variable Cost per watch Sold R100
Selling price per watch R900

The following information is available to determine the budget requirements of Medico Limited for
January 2021:
1. Projected sales of Product Med for January and February 2021:
January February
15 000 units at R30 each 12 000 units at R32 each

2. The policy of Medico Limited is to maintain a closing inventory equal to 40% of the budgeted sales
of the following month.
3. Two (2) labour hours are required to produce one unit of Product Med and the rate per hour is
R10.
4. Overheads are projected at a rate of R3 per direct labour hour.
5. The estimated total production costs per unit (including the costs above) are R40 for January 2021
and R38 for December 2020.
REQUIRED
Use the information provided above to prepare the following budgets for January 2021:
1.1 Sales Budget (units and Rands)
1.2 Production Budget (units)
1.3 Direct Labour Budget (Rands)
1.4 Overheads Budget (Rands)
1.5 Cost of Sales Budget(Rands)

Suppose you held a diversified portfolio consisting of 10 different common stocks, investing $500 in each stock. The portfolio’s beta is 1.9. Now suppose you decided to sell one of the stocks in your portfolio with a beta of 0.8 for $500 and use the proceeds to buy another stock with a beta of 1.25. What would your portfolio’s new beta be?

RMC issued perpetual preferred stock with a 20% annual dividend. The stock currently yields 4%, and its par value is $100. Suppose interest rates rise and pull the preferred stock’s yield up to 10%. How much would its market value change?