Department of Mathematics and Computer Science

Course: MA112 Quantitative Methods II

Assignment 1, Semester 2, 2018, Due: Friday 10 August 2018 before 12:00 noon

Name:_________________________________ID:______________Group:___________
Instructions: There are six questions for this task. You are required to answer all
questions but four selected questions will be marked. Completed assignment must be
returned to Maths and Computer Science Department main office before 12 noon.
Assignment returned directly to tutor/lecturer or returned after 12 noon will not be marked.

Question 1 [5 Marks]
The price of a new motor car increases in line with inflation. If over the years 2003, 2004,
2005 and 2006 the indices of inflation were 114, 108, 110, and 107.3, and a new 4WD
single cab Ute was priced at K55700 at the beginning of 2003, find the expected price of a
similar new vehicle at the beginning of 2007.

Question 2 [5  5  10 Marks]
K95 is invested into an account at the end of every 4 months for 2 years and 8 months at
15% p.a. compounded every 4 months.
a) Calculate how much you would have in this account at the end of this period?
b) Calculate the present value?

Question 3 [5 Marks]
What lump sum would you need to invest at 7.5% p.a. compounded annually if K250 is
invested into an account at the beginning of each year for a period of 5 years?

Question 4 [5  5  10 Marks]
Brian Bell & Co. is selling micro-oven for K4000 by cash. If this item is purchased on an
installments basis, the method of repayment is to deposit K500 followed by equal semi-
annually repayments of K900 for three years.
a) Calculate the flat rate of interest charged if this item is bought on an installments
basis.
b) Calculate the total amount paid at the end of 3 years if this item is bought on
installments basis.

Question 5 [5  5  5  5  20 Marks]
At a reducing balance interest rate of 15% p.a. compounded monthly, K2 500 is borrowed.
The method of loan repayment is to make equal monthly repayments of K300.
a) How long would it take to completely pay off the loan?
b) Construct a (full) loan repayment schedule.
c) Calculate the amount paid off in the first 5 periods.
d) Calculate the balance of loan owing at the end of the 7 th month.

Question 6 [5  5  10 Marks]
Mr. Bean borrows K9000 to purchase a duplex. He is required to repay the loan in equal
monthly installments over a five-year period, interest being 9.5% p.a. compounded
monthly at a reducing balance loan model.
a) What are his monthly repayments?
b) What termination payment is required to terminate the loan after 2 years?