Financial Math Answers

An amount of R5 500 is invested for a period of 4 years in a savings account. For the first year, the investment grows at a simple interest rate of 11% p.a. and then at a rate of 12,5% p.a. compounded quarterly for the rest of the period. Determine the value of the investment at the end of the 4 years.

Show that the total interest paid on the amortization of a loan with leveled monthly payments K for n years at an interest rate of i% per annum is equal

Explain the following terms with appropriate examples: (a) Equity forwards. (b) Currency forwards.

Sam is looking to buy his first flat, and has R15 000 in cash savings which he will use as a deposit. He has viewed a flat which is on the market for R250 000, and he would like to work out how much the monthly repayments would be. He will be taking out a 30 year mortgage with monthly repayments. The annual interest rate is 11%.

Kmax Ltd is paying a dividend of sh 12.00 per share currently. The dividend that the company can pay in the subsequent years is expected to decline at the rate of 4% every year in perpetuity. The capitalization rate of the company is 15%. Calculate the intrinsic value of the company’s ordinary share. 

Moshe will need R145 000 in three year's time, to open bakery. He immediately start to make monthly deposit into an account earning 11.05% interest per year, compounded monthly. Moshe's monthly deposit is

. Find the number of years it would take for R748,00

to increase by 72% if it is invested at an interest rate of 7,9% per annum, compounded semi-annually

Questions 6 and 7 relate to the following situation: Bonita intends to open a small fabric shop and borrows the money for it from her aunt Magda. Bonita feels that she will only be able to start repaying her debt after three years. Bonita will then pay aunt Magda R105 000 per year for five years. Money is worth 19,5% per year.

Mike wants to buy a scooter that costs 10000, but he cannot afford to buy it cash. He opts for the hire purchase agreement, which requires a 13% deposit and 24 equal monthly instalments at an interest rate of 15% per annum, compounded monthly. How much will his deposit be?

Calculate the total amount that he still must pay after the deposit.

Calculate the monthly instalments

Moshe will need R145 000 in three years’ time, to open a bakery. He immediately starts to make monthly deposits into an account earning 11,05% interest per year, compounded monthly. Moshe’s monthly deposit i