Financial Math Answers

the value of a machine depriciation every year by 20% if the present value of the machine be Rs160000 what was its value lastyear.

Clarissa wants to buy a $5995 home entertainment system from the Legends Super Store.
Her purchasing options are as follows:

Option 1
Legends Super Store
Finance Company
• ½ deposit
• 6 months interest free and no repayments for 6 months
THEN pay the FULL balance due.

option 2
• $1250 deposit
• 24 equal monthly repayments of $265 each month.

option 3
• ⅓ deposit
• 18 equal monthly repayments of $390

a) Compare each of the loans in terms of the total monthly repayments, the interest paid and the total amount to be repaid.

Mr Sehwag invests Rs 2000 every year with a company, which pays interest at 10% p.a.
He allows his deposit to accumulate at C.I. Find the amount to the credit of the person
at the end of 5th year.
Question :
1) What is the Time Value of Money concept.
2) What do you mean by present value of money?
3) What is the Future Value of money.
4) What the amount to be credited at the end of 5th year.

Briefly discuss a situation where it may be advisable to combinetwo positions 1. on short-selling one share and 2. holding one put option. Describe what the combined payoff would
resemble.

Option prices exist on a particular day for ABC shares. They all have same expiration date. Strike Price = $40. $50, $55 Call Price = $11, $6. $3 Put Price = $3, $8, $11. A market analyst believes there is an arbitrage opportunity available using the above market prices. She believes that that the following portfolio produces a risk free profit:Long 2 calls and short 2 puts with strike price 55; long 1 call and short 1 put with strike price 40; lend $2; and short 3 calls and long the same number of puts with strike price 50. You may assume a one period time horizon between T0 (current cash flow) and T1 (cash flow on exercise of the options). Remember to record the result of the analysis by indicating whether an opportunity indeed exists. Buy 2 calls and sell 2 puts (strike price = $55) Buy one call and sell one put (strike price =$40) Lend %2 at the market rate of 5% Sell 3 calls and buy 3 puts (strike price = $50) What is the Total? Arbitrage opportunity?

A $36,000 serial bond that has an annual interest rate of 12%, paid semi-annually, will be redeemed in three equal annual instalments of $12,000. The bond is purchased on an interest date, one year prior to the first annual redemption. If an investor wants 18%, compounded monthly, what is the purchase price?

The cost of a car repair bill is £749, including VAT at 17.5%. What is the cost of the bill excluding VAT, in pounds to the nearest penny? (to two decimal places)

3. Assume that the following quantity discount schedule is appropriate:

Order Size Discount(%) Unit Cost
0 to 49 0 $30.00
50 to 99 5 $28.50
100 or more 10 $27.00

If annual demand is 120 units, ordering costs are $20.00 per order, and the annual
Holding rate is 25%, what order quantity would you recommend?