University of the Witwatersrand, Johannesburg

School of Computer Science and Applied Mathematics

Computational Mathematics I (APPM1004)
TEST 4 -2022
16 May 2022

Time allowed - 75 minutes

Total Marks - 48

Instructions to students.

1. All electronic communication devices (phones, tablets, etc.) must be switched

off.
2. You bear full responsibility for completing the computer card correctly.
3. Each multiple choice question (MCQ) has only one correct alternative.
Questions 1-12:
Correct Answer: 4 marks
No Answer: 0 marks
More than one answer: 0 marks
5. Mark your answers on the card next to the number that matches the question number.
6. The computer card may be filled in using pencil only.
7. Do not erase – ask for a new card.
8. No extra time will be given for filling in the computer card.
9. Ensure that your student number has been correctly coded on your card.
10. All the test material must be handed-in at the end of the test

1
DV1 2

Question 1.
R9 625 is invested now at 5,2% pa simple interest. The future value of the investment
(rounded to the nearest cent) seven months from now is equal to:

(a) R9 916, 86

(b) R9 917, 26

(c) R9 916, 25

(d) R9 916, 96

(e) R9 917, 51

Question 2.
If an amount of money was invested at j pa compounded daily and its value doubled after
10,9 years then (rounded to two decimal places):

(a) j = 6, 36% pa compounded daily

(b) j = 6, 22% pa compounded daily

(c) j = 6, 94% pa compounded daily

(d) j = 7, 07% pa compounded daily

(e) j = 6, 03% pa compounded daily

DV1 3

Question 3.
R1 150 was deposited into an account that earns interest at a rate of 9, 4% pa compounded
every three months. After seventeen months an additional x rands was deposited into the
account and the interest rate changed to 12, 9% pa compounded every four months at that
time. If the amount in the account twenty-three months later was equal to R2 818, then
(rounded to the nearest cent):

(a) x = R900, 63

(b) x = R900, 32

(c) x = R900, 44

(d) x = R899, 75

(e) x = R901, 03

Question 4.
A loan is granted now at 8% pa. It was originally agreed that the loan will be repaid by
means of a payment of R6 000 two years from now and a second payment of R4 000 six
years from now. However, if it is decided to rather repay the loan with a payment of R3 000
three years from now, a payment of R7 000 five years from now and a last payment of Rx
seven years from now, then the value of the last payment Rx (rounded to the nearest cent)
is equal to:

(a) R889, 70

(b) R519, 13

(c) R715, 62

(d) R6 921, 75

(e) R5 876, 21
DV1 4

Question 5.
An amount of money was invested at an interest rate of 8, 7% pa compounded quarterly.
Two and a half years later the interest rate changed to 10, 4% pa compounded monthly and
the money was reinvested at that time for a further eighteen months. The equivalent annual
effective interest rate for the entire investment period (rounded to two decimal places) is
equal to:

(a) 10, 24% pa

(b) 11, 17% pa

(c) 9, 70% pa

(d) 8, 12% pa

(e) 8, 90% pa

Question 6.
A man makes regular equal monthly payments into a savings account that earns interest
at a rate of 11, 7% pa. If the amount in the account immediately after he made his 20th
payment was equal to R5 000, then the amount in the account (rounded to the nearest cent)
immediately after he makes his 49th payment is equal to:

(a) R14 101, 74

(b) R11 591, 63

(c) R9 137, 93

(d) R13 199, 23

(e) R10 181, 46

DV1 5

Question 7.
How much money (rounded to the nearest rand) must be deposited into an account now at
4% pa compounded every six months such that regular equal amounts of R20 000 may be
withdrawn from the account every six months in perpetuity starting one year from now?

(a) R882 353

(b) R588 235

(c) R784 314

(d) R686 274

(e) R980 392

Question 8.
Sixty consecutive equal monthly deposits Pt were made into a savings account that earns
interest at 12% pa compounded monthly. Starting one month after the 24th deposit of Pt
was made, an additional five consecutive equal monthly deposits Pt∗ were also made into the
same savings account.
If x is the total amount of money in the savings account immediately after the last deposit
of Pt was made, then which one of the following alternatives is false?

(a) x (1, 01)−22 = Pt s60e1% (1, 01)−22 + Pt∗ a5e1% (1, 01)14

(b) x (1, 01)−15 = Pt s60e1% (1, 01)−15 + Pt∗ s5e1% (1, 01)16

(c) x (1, 01)−12 = Pt a60e1% (1, 01)48 + Pt∗ a5e1% (1, 01)24

(d) x (1, 01)−8 = Pt s60e1% (1, 01)−8 + Pt∗ a5e1% (1, 01)27

(e) x (1, 01)−10 = Pt a60e1% (1, 01)50 + Pt∗ s5e1% (1, 01)21
DV1 6

Question 9.
A woman deposits R250 000 into an account now that pays interest at a rate of 8,5% pa.
Fifteen years from now the woman will use the accumulated amount in the account to
purchase a growing perpetuity that will earn interest at a rate of 12% pa compounded half-
yearly. The growing perpetuity will pay the woman an amount of money every six months
starting six months after she purchases the growing perpetuity. If the value of the first
payment from the growing perpetuity is Pt and the value of these payments increase from
the second payment onwards at a rate of 9% pa, then which one of the following alternatives
is true?

(a) Pt = 10 328, 292 . . . rands

(b) Pt = 11 061, 180 . . . rands

(c) Pt = 11 441, 196 . . . rands

(d) Pt = 12 431, 952 . . . rands

(e) Pt = 13 572, 920 . . . rands

Question 10.
Starting one month from now and ending seven years from now, regular monthly deposits
will be made into an account that earns interest at 8,2% pa compounded half-yearly. In
order to account for inflation the value of the deposits will increase by 15% pa compounded
monthly from the second deposit onwards. If the value of this annuity at the time of the last
deposit is equal to R345 000, then the second deposit is equal to:

(a) R1 862, 79

(b) R1 851, 58

(c) R2 477, 29

(d) R2 312, 71

(e) R3 232, 09
DV1 7

Question 11.
To be able to retire on his sixtieth birthday, a twenty-nine year old man will make
consecutive equal deposits Pt every three months into a savings account starting on his
thirtieth birthday. Money in the savings account will earn interest at a rate of 10, 8% pa
compounded monthly.
Immediately after making his last deposit on his sixtieth birthday, the man will use all the
money in his savings account at that time to purchase a retirement annuity.
If the retirement annuity will earn interest at a rate of 9, 5% pa compounded monthly and
the retirement annuity will pay the man R7 750 every month starting one month after his
sixtieth birthday for fifteen years only, then Pt (rounded to the nearest cent) is equal to:

(a) R814, 01 (b) R813, 61 (c) R813, 73

(d) R814, 13 (e) R814, 37

Question 12.
A women needs R250 000 four years from now. She will start to save for this amount
one month from now by depositing regular equal monthly amounts into a savings account
that earns 6% pa compounded daily. Owing to a cash flow crisis she withdraws R8 000
immediately after her 20th deposit was made. Furthermore, she does not make her next
three deposits. If she resumes deposits four months after the withdrawal, then the new
regular equal monthly deposits (rounded to the nearest cent), that she must make in order
to achieve her goal of R250 000 at the end of the four year period, are equal to:

(a) R5 560, 52

(b) R5 760, 58

(c) R5 807, 00

(d) R6 015, 93

(e) R6 123, 47
DV1 8

FINANCIAL MATHEMATICS FORMULAE

Simple Interest Compound Interest

Fv = Pv (1 + in) Fv = Pv (1 + i)n

Continuous Compounding Equivalent Effective Rates

Fv = Pv ejn (1 + in )n = (1 + im )m
ej = (1 + im )m

Annuities

Pv of n equal payments Fv of n equal payments

1 − (1 + i)−n (1 + i)n − 1
   
Pv = Pt an|i = Pt Fv = Pt sn|i = Pt
i i

Growing Annuities

Pv of n equal payments Fv of n equal payments

1 − (1 + i)−n (1 + r)n (1 + i)n − (1 + r)n

   
Pv = Pt F v = Pt
i−r i−r

Perpetuities

Pv of equal payments Pv of growing payments

Pt
Pv = Pt
i Pv =
i−r