Financial Math Answers

What is the amount of money that Lebo has to invest, at a simple interest rate of 12%

 per year, to earn R5250,00

 interest after three years?

Kenneth decides to put away an amount of R400,00

for 15 years, at the end of every month, towards a retirement annuity that earns interest at 10%

per year, compounded monthly. Determine the present value of the annuity?

You know you will have $500,000 in your account when you retire. You want to be able to take monthly withdrawals from the account for a total of 30 years. Your retirement account earns 8% interest. How much will you be able to withdraw each month?

After retiring, you want to be able to take $1000 every month for a total of 20 years from your retirement account. The account earns 6% interest. How much will you need in your account when you retire?

You want to have $200,000 in your account when you retire in 30 years. Your retirement account earns 8% interest. How much do you need to deposit each month to meet your retirement goal?

A traditional individual retirement account (IRA) is a special type of retirement account in which the money you invest is exempt from income taxes until you withdraw it. If you deposit $100 each month into an IRA earning 6% interest, how much will you have in the account after 20 years?

Hogsmeade village is evaluating the proposal of opening a new shop. Hogsmeade’s required rate of return

is 10%. Should the project be accepted if Hogsmeade wants to make atleast a profit of $6,000 as in today’s

value? Explain why? Which technique have you applied to make decision and why?

The estimated cashflows (in $) from the project are given below: (Round off your values. No need to put

digits after decimal)

Year Zonko’s Joke Shop

0 (30,000)

1 7,500

2 7,500

3 7,500

4 7,500

5 7,500

A man buys a house for $200,000. He makes a $50,000 down payment and agrees to

amortize the rest of the debt with quarterly payments over the next 10 years. If the

interest on the debt is 12%, compounded quarterly, find

(i) Size of the quarterly payments, (4 marks)

(ii) Total amount of the payments, and (4 marks)

(iii) Total amount of interest paid.

2. At the beginning of the year, BIBI Company’s liabilities equal P200,000. During the year, assets increase by P80,000, and at year-end assets equal P460,000. Liabilities decrease P50,000 during the year. What are the beginning and ending amounts of equity?

How much is the beginning capital?

1. At the beginning of the year, total assets amounted to P800,000 while total owner’s equity amounted to P550,000. During the year, assets increased by P50,000 while liabilities increased by P30%. If the owner contributed additional of P18,000 and withdrawn P5,000 during the year, how much is profit or loss earned or incurred by the entity? Indicate whether profit or loss.