Financial Math Answers

A credit card statement shows an unpaid balance of ₱6,300 on the billing date of September5. Changes and credits to the account are shown below. The finance charge at 2.3% on the average daily balance is entered on the billing date. Find the average daily balance, finance charge and the account balance on the next billing date, which is October 5. Credit Card Transactions: Sept. 10 purchase ₱3,205; Sept. 18 purchase of ₱4,750; Sept. 20 purchase of ₱9,000; and Oct. 1 payment of ₱20,000. Type your answer as: Average Daily Balance = ____________ Finance Charge = __________ Balance owed on October 5 = ____________

Mae purchased a home for ₱4,570,000 and obtained a 20-year loan with an annual interest rate of 8.5%, after paying a down payment of 25%. Find the the amount of interest paid on the loan over the 20 years

A speculator purchases a put option on British Pounds for 0.05$ per unit; the strike price is 1.50$.

A pound option represents 31.250 units

Assume that at the time of the purchase, the spot rate of the pound is 151$ and continually rises to 1.62$ by the expiration date.

1. Compute the highest net profit possible for the speculator based on the information above?

2. Compute the highest profit/loss for the seller of this put option?

Explain the difference between R500 and -R500 on a bank statement

Q2. The force of interest at any time t, (measured in years) is given by

 0.07—0.005t ,0 ≤ t < 5 0.06—0.003t, 5≤ t < 10

δ(t) =

(a) Calculate the accumulated amount at time t = 15 of $100 invested at time

0.03, t > 10 t = 0.



 0.07−0.005t, 0≤t<5 0.06 − 0.003t, 5 ≤ t < 10

δ(t) =

What is the total accumulated in value at any time t (> 0) of investments of $100 at

0.03, t ≥ 10 times 0, 4 and 6?



A sum of 45000 invested will provide payments of 500 each at the end of every 2 months for 7 years find the under lying rate of interest compounded semi annualy

How much was borrowed if a simple interest rate of 7.5% was offered payable in 12 months with interest of ₱105.00?

The force of interest δ(t) is a function of time and, at any time t (measured in years),

is given by the formula:

δ(t) =



0.07 0.005t , 0 t < 5

0.06 0.003t, 5 t < 10

0.03, t > 10

(a) Calculate the accumulated amount at time t = 15 of $100 invested at time

t = 0.

King Corporation Limited (KCL), a producer of electricity, is considering to expand its operation by adding 5 generators. The cost of these generators would be Tk. 100 million. The expected life of the generators is 5 years. The addition of these generators will result in cash inflows of Tk. 50 million per year for 5 years. Cash outflows would be 50% of cash inflows. KCL uses straight line method of depreciation and expects no salvage value from the generators at the end their service lives. IDLC, a leading Non-Bank Financial Institution, offered KCL to lease the generators for 5 years. The lease payments to be made at the beginning of each year would be Tk. 24 million. The annualized risk-free rate of return is 7%. Tax rate for both KCL and IDLC is 30%.

f. Assume now that KCL’s tax rate is 10% while IDLC’s tax rate remained at 30% and IDLC revises its offer to reduce the lease payments to Tk. 22 million a year.