BACHELOR OF BUSINESS ADMINISTRATION

MBB 3613 Business Mathematics

Group assignment
Prepared for :
Ms. Emy Azizah Binti Majid

Prepared by :

STUDENT NAME Student ID

Evelyn Tiong BBA22020019

Allison Ch’ng Qian Yee BBA22020011

Ethan Chan Chay Gin BBA22020025

HAM WEI QUAN BBA22020032

QUICK CHECK 3A
1. Find the future value for the following investments
a) RM20,000 at 5% compounded annually for 5 years
P = RM20,000, i = 0.05, n = 5
0.05 5 1
� = 20,000 1 + 1
5
� = 20,000 1 + 0.05
� = 25,525.63
The total amount accrued with compound interest on a principal of RM20,000.00 at a rate
of 5% per year compounded 1 time per year over 5 years is RM25,525.63.

b) RM30,000 at 6% compounded semi-annually for 5 years 6 months

P = RM30,000, i = 0.06, n = 5.5
(2)(5.5)
0.06
� = 30,000 1 +
2
11
� = 30,000 1 + 0.03
� = 41, 527.02
The total amount accrued with compound interest on a principal of RM30,000.00 at a rate
of 6% per year compounded 2 time per year over 5.5 years is RM41,527.02
 3
c) RM11,500 at 8% compounded quarterly for 24years

P=RM11,500, i=0.08, n = 2.75 years

0.08 (4)(2.75)
� = 11500 1 + 4
11
� = 11500 1 + 0.02
� = 14, 298.80
The total amount accrued with compound interest on a principal of RM11,500.00 at a rate
of 8% per year compounded 4 times per year over 2.75 years is RM14,298.80.

1
d)RM120,000 at 5% compounded monthly for 34 years

P = 120,000, i= 0.05, n=3.25 years

(12)(3.25)
0.05
� = 120,000 1 +
12
39
� = 120,000 1 + 0.004166667
� = 141,126.15
The total amount accrued with compound interest on a principal of RM120,000.00 at a rate
of 5% per year compounded 12 times per year over 3.25 years is RM141,126.15.

e) RM120,000 at 9% compounded daily for 270 days

P= RM120,000, i= 0.09, n= 0.75 years
(365)(0.75)
0.09
� = 120,000 1 +
365
273.75
� = 120,000 1 + 0.000246575
� = 128, 378.55

The total amount accrued with compound interest on a principal of RM120,000.00 at a rate
of 9% per year compounded 365 times per year over 0.75 years is RM128,378.55.

f) RM40,000 at 12% compounded every 4 months for 6 years

P= RM40,000, i=0.12, n= 6 years, compounded 3 times in a year (every 4 months)
(3)(6)
0.12
� = 40,000 1 +
3
18
� = 40,000 1 + 0.04
 � = 81, 032.66
The total amount accrued with compound interest on a principal of RM40,000.00 at a rate
of 12% per year compounded every 4 months per year over 6 years is RM81,032.66

g) RM19,999 at 4.5% compounded every 2 months for 2 years

P = RM19,999, i= 0.045, n = 2 years
(2)(6)
0.045
� = 19,999 1 +
6
12
� = 19,999 1 + 0.0075
� = 21, 875.04
The total amount accrued, principal plus interest, with compound interest on a principal of
R,19,999.00 at a rate of 4.5% per year compounded every 2 months over 2 years is
RM21,875.04.

2. RM1000 = P, annual interest rate = 5%

Compute the amount accumulated after 20 years if the interest is:
a) Simple interest
= RM1000 x 0.05 x 20
= RM1000

Accumulated amount
= RM1000 + RM1000
= RM2000
b) Compounded monthly
P = 1000, i=0.05, n= 20 years
(12)(20)
0.05
� = 1000 1 +
12
240
� = 1000 1 + 0.004166667
� = 2, 712.64
The total amount accrued with compound interest on a principal of RM1,000.00 at a rate of
5% per year compounded 12 time per year over 20 years is RM2,712.64
Calculate the difference between the accumulated values in the two cases above.
= RM2,712.64 – RM2000
= RM712.64
3. A sum of money, X is deposited in a savings account at 10% compounded daily on 25 July 2019,
On 13 August 2019, RM600 is withdrawn and the balance as of 31 December 2019 is RM8900.
Calculate the value of X using exact time and 360-day year.

S = RM8900, P = X
i = 0.10
n = 19 days, 140 days

19 140
0.10 0.10
��8900 = � 1+ − ��600 . 1 +
360 360
19
��8900 0.10
140
= � 1+ − ��600
0.10 360
1+
360
��8560.58 + ��600 = �(1.005290993)
��9160.58 = 1.005290993�
� = 9,112. 3665
� = ��9,112.37

The total amount accrued with compound interest on a principal of RM9,112.37 at a rate of 10%
per year compounded daily (360 day per year) over 0.44 years is RM8,900.00 as of 31 Dec 2019
after RM600 was withdrawn on the 13th of August 2019.

4. RM25,000 is invested for 4 years 9 months. If the investment is offered 12% compounded semi-
annually for the first 2 years and 10% compounded quarterly for the rest of the period.
Find the future value of this investment

For the first 2 years, 3

Amount invested at the end of 4 4years
P = RM25,000 P = RM31, 561.924
i = 0.12 i= 0.10
n = 4.75 – 2 = 2.75 years
n=2 0.10 (4)(2.75)
(2)(2)
� = 31,561.924 1 + 4
0.12 11
� = 25,000 1 + � = 31,561.924 1 + 0.025
2 � = 41,411.98
4
� = 25,000 1 + 0.06
� = 31, 561. 924
The total amount accrued with compound interest on a principal of RM31,561.924 at a rate of 10%
per year compounded 4 times per year over 2.75 years is RM41,411.98

5) RM 65000 is invested for 6 years 9 months . If the investment is offered 5% compounded semi-
annually for the first two years ,6% compounded monthly for the next 18 months and 7%
compounded daily for the rest of the period,find the future value of this investment.
First two years
65000-P (PRINCIPAL)
0.05-i (Interest rate)
4-n (number of interest period)

S=RM65000(1+0.05/2)^(2×2)
=RM65000(1.025)^4
=RM71747.83789

Next 18 months
S=RM71747.83789(1+0.06/12)^(18)
=RM78487.03622

Rest of the period (81-24-18=39)

S=RM78747.03622(1+0.07/360)^(39×30)
=RM98534.9544

6) At the end of every year for three years,RM1000 is invested in an account that offers 8%
compounded annually. Find the account amount at the end of the three years.

RM1000-P
0.08-i
1-n
1-T
2-
RM1000-First year
Second year
S={RM1000(1+0.08/1)^1}+RM1000
=RM2080

Third year
S={RM2080(1+0.08/1)^1}+RM1000
=RM3246.40

7) On 16 April 2016,RM2000 was invested at 5% compounded semi annually.Find the amount

accumulated on 16 October 2019 if the rate was changed to 8% compounded quarterly beginning
16 April 2017.

16 April 2016 - 16 April 2017 (1 year)

S=RM2000(1+0.05/2)^(1×2)
=RM2101.25
16 April 2017 - 16 October 2019 (2 years 6 months)--2.5 years

S=RM2101.25(1+0.08/4)^(2.5×4)
=RM 2561.412025

8) Peter deposited RM1536 on 15 May 2014 into an account that pays 10% compounded
quarterly.Find the interest earned on 15 February 2019.

(15 May 2014-15 February 2019)--4 years 9 months (4.75)

S=RM1536(1+0.1/4)^(4.75)(4)
=RM2455.526685

Interest earned (I)= Future value(S)- Principal(P)

Interest earned (I)
=RM2455.526685-RM1536
=RM919.52665
9) Find the interest earned if RM7500 is invested for 6 years at 6,4% compounded quarterly.

P=7500
i=0.064
n=6 years
t =4

S= RM7500(1+0.064/4)^(6)(4)
=RM10977.6721

Interest earned
I= RM10977.6721-RM7500
=RM 3477.6721

10) Find the interest earned for an investment if the accumulated amount at the end of 6 years is
RM2412.66 and the interest rate given is 8% compounded quarterly.

RM2412.66-S
0.08- i
6-n
4-t

RM2412.66=P(1+0.08/4)^(6)(4)
RM2412.66÷{(1+0.08/4)^(6)(4)}=P
RM1500.002565=P

Interest earned (I)

=RM2412.66-RM1500.002565
=RM912.657435
11) Aris saved RM25000 at 8% compounded monthly. Two years later, he withdrew RM14000
from the savings. Find the amount left in the account.

RM25000-P
0.08-i
2 -n
12-t
RM14000-Withdrew

S={RM25000(1+0.08/12)^24}-RM14000
=RM29322.19829-RM14000
=RM15322.19829

12) RM X was deposited in a savings account at 4,0% interest compounded monthly. 40 months
later,RM4200 was withdrawn from the account and the balance was RM4212.39. Find the value of
X.

P -?
i -0.04
n -40
t -12

RM4212.39+ RM4200 = X(1+0.04/12)^40

{RM8412.39÷(1+0.04/12)^40}= X
RM7363.931898= X

13) 2 years ago, Siew Kit deposited RM Y in a savings account that paid interest at 5.2%
compounded quarterly.Today,another RM4000 is deposited into the same account. If the
accumulated amount in the account three years from now is RM17618.20,find the value of Y.

P=RMY
i =0.052
n =2
t =4
(3 YEARS FROM NOW AMOUNT ACCUMULATED)-RM17618.20

RM17618.20 = {P(1+0.052/4)^(2)(4)}+RM4000
{RM17618.20/(1+0.052/4)^(2)(4)}=P+RM4000
RM 15088.5738= P+RM4000
RM 15088.5738-RM4000=P
RM11088.5738=P

RM11088.5738=Y(1+0.052/4)^8
{RM11088.5738 ÷ (1+0.052/4)^8}=Y
RM10000.00296=Y

Quick Check 3B
1) Find the effective rate that is equivalent to:
If interest is compounded yearly, then n = 1; if semi-annually, then n = 2; quarterly, then n = 4;
monthly, then n = 12; weekly, then n = 52; daily, then n = 365; and so forth, regardless of the
number of years involved.

1
a) 42 % compounded semi-annually

K= 4.5% M=2

�
1 + r = (1 + � )m - 1

4.5%
r=(1+ 2
)2 - 1

= 4.55%
b) 16% compounded quarterly

K= 16% M=4

�
1 + r = (1 + � )m - 1

16%
r=(1+ 4
)4- 1

= 16.99%

c) 15% compounded monthly

K= 15% M=12

�
1 + r = (1 + � )m - 1

15%
r=(1+ 12
)12- 1

= 16.08%

d) 8% compounded weekly

K= 8% M=12

�
1 + r = (1 + � )m - 1

8%
r=(1+ 12
)12- 1

= 8.32%

e) 12% compounded daily

K= 12% M=360

�
1 + r = (1 + � )m - 1

12%
r=(1+ 360
)360- 1

= 12.75%

2) Find the nominal rate, compounded monthly, that is equivalent to:

1
a) 54% effective

1
r = 5 4 % M=12

�
1 + r = (1 + � )m

�
1.0525 = (1 + 12 )12

�
1.05251/12 = 1 + 12

K= 0.0042731 x 12 = 0.0513
= 5.13%

b) 12% effective

r = 12% M=12

�
1 + r = (1 + � )m

�
1.12 = (1 + 12 )12
 �
1.121/12 = 1 + 12

K= 0.0094888 x 12 = 0.11387
= 11.39%

1
c) 82% compounded semi-annually

1
K=8 2% M=2

�
1 + r = (1 + � )m - 1

8.5%
r=(1+ 2
)2- 1

= 8.68%

�
1 + r = (1 + � )m

�
1.0868 = (1 + 12 )12

�
1.08681/12 = 1 + 12

K= 0.06961 x 12 = 0.0835 = 8.35%

d) 10% compounded quarterly

K=10% M=4

�
1 + r = (1 + � )m - 1
 10%
r=(1+ 4
)4- 1

= 10.38%

�
1 + r = (1 + � )m

�
1.1038 = (1 + 12 )12

�
1.10381/12 = 1 + 12

K= 0.0826 x 12 = 0.0992 = 9.92%

e) 6% daily

K=6% M=360

�
1 + r = (1 + � )m - 1

6%
r = ( 1 + 360 )360- 1

= 6.18%

�
1 + r = (1 + � )m

�
1.0618 = (1 + 12 )12

�
1.06181/12 = 1 + 12

K= 0.0618 x 12 = 0.0601 = 6.01%

3) Which yields more interest, 5% compounded monthly or 5.2% compounded annually?

5% monthly / every month

K=5% M=1

�
1 + r = (1 + � )m - 1

5%
r=(1+ 12
)12- 1

= 0.511 = 5.11%
The interest for 5.2% compounded annually is higher

4) Find the effective rate that is equivalent to 6% compounded monthly

K=6% M=12

�
1 + r = (1 + � )m - 1

6%
r=(1+ 12
)12- 1

= 0.0617 = 6.17% effective rate

5) Find the nominal rate, compounded semi-annually, that is equivalent to 6% effective rate

r = 6% M=2

�
1 + r = (1 + � )m

�
1.06 = (1 + 2 )2
 �
1.061/2 = 1 + 2

0.0296 x 2 =0.0591 = 5.91% effective rate

6) Find the annual effective rate that is equivalent to 8.2% compounded daily ( assuming 360 days
in a year )

K=8.2% M=360

�
1 + r = (1 + � )m - 1

8.2%
r=(1+ 360
)360- 1

= 0.085 = 8.5%

7) Chow Fah deposited RM1,000 in a savings account at 3% monthly. Find the number of months
required if she wanted the amount in the account to become RM1,498.54

S=P(1+I)n
1,498.54 = 1,000(1+0.03/12 )^n
1498.54=1000(1.0025)^n
n (log 1.0025)=log(1498.54/1000)
n (log 1.0025)=0.175668339
n=0.17566839/(log 1.0025)
=161.998681
=162 (round off)

8. Find the nominal rate compounded every two months which is equivalent to 10% compounded
semi-annually

K=10% M=2
 �
1 + r = (1 + � )m - 1

10%
r=(1+ 2
)2- 1

= 0.1025 = 10.25%

�
1 + r = (1 + � )m

�
1.1025 = (1 + 6 )6

�
1.10251/6 = 1 + 6

K= 0.016396 x 6 = 0.0984 = 9.84%

9. Given two interest rates

(a) 9% compounded monthly and
(b) 9.5% compounded every four months, which of the two interest rates provides a better return.

a ) K=9% M=12

�
1 + r = (1 + � )m - 1

9%
r=(1+ 12
)12- 1

= 0.0938 = 9.38%

b ) K=9.5% M=3

�
1 + r = (1 + � )m - 1
 9.5%
r=(1+ 3
)3- 1

= 0.098 = 9.8%
9.5% compounded every 4 months return is higher

10.A bank offers two interests rates for fixed deposits as follows:
Offer A: 5% compounded every two months
Offer B: 4.9% compounded monthly

a) Find the effective rate of each offer

b) Determine which offer provides a better return

a )K=5% M=6

�
1 + r = (1 + � )m - 1

5%
r=(1+ 6
)6- 1

= 0.05105 = 5.105%

K=4.9% M=12

�
1 + r = (1 + � )m - 1

4.9%
r=(1+ 12
)12- 1

= 0.05011 = 5.011%

b ) Offer A has higher interest rates = higher return

Quick Check 3C
1. Find the sum to be invested now at 6% compounded monthly so as to accumulate RM8,888 in
three years.
−�
� = � 1 + � S = RM8,888 I =
6%

6% −36
�0 = 8888 1 + 12
−36
�0 = 8888 1.005
P0 = RM7,427.21

2. Mary saves RM5,000 now at 6% compounded semi-annually and intends to withdraw all the
amount at the end of five year. If she withdraws RM2,000 after three year, find the amount in
the account at the end of five year.
�
�=� 1+� S = RM5,000 I = 6%

Amount for the third year Amount for the fifth year
6% 6 6% 4
� = 5000 1 + 2
� = 3970.26 1 + 2
6 4
� − 2000 = 5000 1.03 � = 3970.26 1.03
S = RM5,970.26 – RM2,000 S = RM4,468.56
S= RM3,970.26
3. A computer is estimated to cost RM4,000 in two years’ time. If Jennifer wishes to buy this
computer in two years’ time, how much must she save now in an account that pays 12%
compounded every four months?
−�
� = � 1 + � P = RM4,000 I = 12%

12% −6
�0 = 4000 1 + 3
−6
�0 = 4000 1.04
�0 = RM3,161.26

4. A debt of RM8,000 will mature in four years’ time. Find:

a) The present value of this debt
b) The value of this debt at the end of two year, and
c) The value of this debt at the end of five year, assuming money is worth 9% compounded
quarterly.

−�
� = � 1 + � P = RM8,000 I = 9%
9% −16 9% −8
a). �0 = 8000 1 + 4
b). �2 = 8000 1 + 4
−16 −8
�0 = 8000 1.0225 �2 = 8000 1.0225
P0 = RM5,603.73 P2 = RM6,695.51
�
c). � = � 1 + �
9% 4
� = 8000 1 + 4
4
� = 8000 1 + 1.0225
S = RM8,744.67
5. Five year ago, Paul had saved RM10,000 in an account that pays 6% compounded monthly.
Now, he intends to add another RMX into the account. Find the value of X if the account will
amount to RM30,000 in 10 years’ time.

P= RM10,000 I= 6% S= RM30,000
Amount for the fifth year The value of X
6% 60 6% −120
� = 10000 1 + 12
� = 30000 1 + 12
60 −120
� = 10000 1.005 � = 30000 1.005
� = ��13,488.50 � = ��16,488.98
� = ��16,488.98 − ��13,488.50
� = ��3,000.48

6. A debt of RM30,000 is due in two years and another of RM40,000 in five years. If the debtor
wants to settle these two debts by making a single payment after three year, what is this single
payment, assuming money is worth 8% compounded annually?

−� �
� = � 1 + � �=� 1+�
1 −2
The Payment of RMX = 30000 1 + 8% + 40000 1 + 8%
1 −2
= 30000 1.08 + 40000 1.08
= 32400 + 34293.55
= RM66,693.55

7. A debt of RM5,000 mature in two year and another of RM10,000 in five years. If the debtor
wants to settle his debt by making two equal payments, one now and another in three years’
time, find these payments, assuming money is worth 5% compounded monthly.
 −�
� = � 1 + �
5% −36 5% −24 5% −60
� 1 + 12
+ � = 5000 1 + 12
+ 10000 1 + 12

0.05 −36
� 1 +
12
+ 1 = 4525.13 + 7792.05

X = RM6,618.67

8. Harold has two debts: RM5,000 due in two years and another RM3,000 due in four years. If
Harold wishes to settle the two debts 3 ½ years from now, find this single payment if money is
worth 8% compounded quarterly.

� −�
�=� 1+� � = � 1 + �
8% 6 8% −2
� = 5000 1 + 4
+ 3000 1 + 4

� = 5630.81 + 2883.51
� = RM8,514.32

9.Three year ago, Adam deposited RMY in an account that paid interest at 4.2% compounded semi-
annually. Today, another RM6,000 is deposited into the same account. If the accumulated amount
in the account four years from now is RM33,839.39, find the value of Y.
Amount of the third year Value of Y
−� −�
�3 = � 1 + � � = � 1 + �
4.2% −8 4.2% −6
� − 6000 = 33839.39 1 + 2
� = 22656.07 1 + 2

� = 28656.07 − 6000 � = RM20,000

� = RM22,656.07