Financial Math Answers

Daniel asks to reschedule the ompensation in three payments, the first payment now, the second payment twice the size of the first payment four years from now, and the third payment three times the size of the first payment nine years from now. The Boxing Fund agrees on condition that the interest rate hanges to 10,95% per year, compounded monthly. The amount to the nearest hundred rand that Daniel an expect to receive four years from now is

1. R864 000.

2. R557 510.

3. R184 800.

4. R369 600.

a) Consider a 20year project with the following portion of cash flows.

Years Cash flows

1-6 years 4,000 p.a.

7-10 years 5,000 p.a.

11-17 years 8,000p.a.

18-20 years 12,000 p.a.

Suppose the cost of capital is 12%. The annuity between years 11-14 is received at the beginning of each period. Calculate the present value of the differential annuity.

Information for XZ Limited for the six months of 2020 (and the sales of January 2021) in respect of product X

(i) units to be sold:

July 2020 : 1,100         November 2020:  2,500

August 2020 : 1,100            December 2020:  2,300

September 2020 : 1,700     January 2021 :    2,000

October 2020 : 1,900

(ii)   will be no work-in-progress at the end of any month

(iii)         Finished units equal to half the sales of the next month will be in stock at the end of every month (including June 2020)

(iv)  Budgeted production and production cost for the year ending 31^st December 2020 are thus:

Production (units)                                                      22,000

Direct materials per unit                                             10

Direct wages per unit                                                 4

(v)  Total factory overheads apportioned to production        88,000

Required:

a)    Production budget for the six months of 2020

b)    Summarized production cost budget for the same period

1.   XYZ limited has project which is expected to yield the following cash flows:

Years

Cash flows

1-4

10,000

5-11

15,000

12-17

20,000

18-Infinity

30,000

The annuity between year 5-9 is received at the beginning of each period. The cost of capital is 12%. Calculate the present value of the differential annuities using the two approaches

Years Cash flows 1-4 10,000 5-11 15,000 12-17 20,000 18-Infinity 30,000 The annuity between year 5-9 is received at the beginning of each period. The cost of capital is 12%. Calculate the present value of the differential annuities using the two approaches

Upendo ltd wishes to take advantage of the new commercial paper now popular. It wishes to issue two debenture papers. Both bear coupons of 12% and the effective yield required on each is 20%. Paper A has a maturity of 10 years and paper B a maturity of 20 years. Both will be paying interest annually and Kshs. 100,000 at maturity. What is the price of each paper? If the effective yield on each paper rises to 24%, what is the price of each paper?