UNIVERSITY OF TECHNOLOGY, JAMAICA

SCHOOL OF MATHEMATICS & STATISTICS

COLLEGE MATHEMATICS 1A (MAT1044)

TOPIC: FINANCIAL MATHEMATICS

1. Find the future value of

(i) $60000 at the end of 5 years at an interest rate of 9% compounded annually
(ii) $25000 at the end of 8 years at an interest rate of 6% compounded semi-annually

2. Find the present value of

(i) $25000 in 5 years at an interest rate of 8%, compounded annually
(ii) $50000 in 6 years at an interest rate of 10%, compounded semi-annually
(iii) $15000 in 4 years at an interest rate of 12%, compounded monthly

3. Determine the initial deposit required for a one year investment at 10%, compounded
annually, to have a future value of $11000.

4. $6000 was deposited in a bank account and the balance 3 years later was $9500, with
interest compounded annually. Assuming that there were no other deposits or
withdrawals or taxes, determine the annual rate of interest.

5. An investor deposits $50000 in a bank account of Jan 1, 2000 and another $60000 one year
later. Interest is compounded at 10% annually. What will be the balance in the account 3
years after the initial investment? Assume no other transactions.

6. An investor invests $50000 at 12% per annum. Find the accumulated value after eight
years if interest is compounded:
(i) Annually
(ii) Quarterly
(iii) Monthly

7. Find the annual interest rate necessary for $150000 to accumulate to $450000 in 15 years.

8. After 4 years, what principal value will accrue to $8745 at 15% compounded annually?

9. In order to accumulate $200000 over a ten year period, how much would an investor need
to deposit at the beginning of each year if the interest rate is 8% per annum, compounded
annually.
10. Find the future value of
(i) A four year ordinary annuity of $10000 per year where the interest rate is 10% p.a.
(ii) A five year annuity due of $6000 per year where the annual interest rate is 8.5%

11. Find the present value of

(i) A ten year annuity due of $2000 per year where the interest rate is 12.5% p.a.
(ii) A perpetuity of $120000 per year where the interest rate is 11.5% p.a.

12. A personal loan of $100000 with interest rate 12% compounded monthly is amortised by
equal monthly payments over a five year period. Calculate the regular monthly payment.

13. A car loan of $2000000 with an annual interest rate of 13.2%, compounded monthly, is
amortised by equal monthly payments over ten years. Calculate the regular monthly payment.

14. A manufacturer borrows $1500000 towards the purchase of machinery. The period of the loan
is six months at 18% p.a.
(i) Compute the monthly payments necessary to amortise the loan.
(ii) Construct an amortisation schedule

PAST QUESTION:

Final Examination: Semester 2, Academic Year 2015/16

Question 3

(a) Given , compute .

(b) Solve the equation .

(c) Sankofa gets a loan from the bank to start a car wash business. The interest rate charged is
18% per annum compounded monthly and the loan is amortized by equal monthly payments of
$6,348.40 over 5 years.

(i) How much money did Sankofa borrow?

(ii) How much interest did Sankofa pay on the loan? [3 + 4 + 5 + 3 marks]

January 2017