Rx was invested at 8% per annum compounded half-yearly
Practical
12 – possible answers for
each question is underneath
1. In
January 2009 Klara is a third year student, at the end of the year she will
finish all her courses and receive her degree.
January 2010 she will start working at her dad’s firm. Klara decides that she really needs a car now
and made an arrangement with Toyota to buy a new Toyota for $ 125 000 now and
make the first repayment with her first month’s salary. Toyota offers her an interest rate of 15.5%
per annum compounded monthly. The
repayment period will last for 4 and half years. What will the repayment amount
be?
2. Rx was invested at 8% per annum
compounded half-yearly. After.png”> years one quarter of the total accumulated
amount was withdrawn and the rest reinvested at j % per annum compounded
quarterly. After another .png”> years the new account had increased 1.9 times
and stood at R10141. Find the value of j.
3. How
much must be invested today if you want to receive $15000 at the beginning of
every quarter for the next 11 years from a financial institution that offers
9% effective interest per annum
compounded quarterly.
4. Andrew
wants to buy a second hand car for $60000. He has one of two options: /
Option 1: Borrow $60000 from the bank and pay the
loan back monthly over ‘n period of 4 years.
Option 2: Buy the car for a cash amount of $60000
after first saving an amount monthly for 4 years.
Assume
that the interest is 18% per annum compounded monthly for both options. Which option will be more profitable for Andrew?
5. How
long will it take an amount of $ 5 000 to earn $ 150 interest if a rate of 4 %
per annum simple interest is used?
6. Find
the effective rate of interest per annum equivalent to the nominal interest
rate of 9,8 % per annum compounded quarterly.
7. The
UF estimates that they will need $ 450 000 in one and a half years’ time and
another $ 720 000 in two and a half years’ time to cover the expected cost of
providing each registered student with a dairy.
If interest is calculated at 6,4% p.a., compounded semi-annually, how
much must the UF invest today in order to cover the expected future costs?
8. Mr.
Been invest $ 20 000 at his local bank. It was agreed by the respective parties
that the term of this investment will be 4 years and 7 months and that he will
receive a single payment at the end of this term. Initially interest on this
investment was calculated at an effective rate of 13,5% per annum. After 36
months the bank changed their policy concerning the interest rate so that for
the remainder of the term interest has to be calculated at a rate of 13,5% per
annum compounded monthly. What amount of interest
will Mr. Been receive from his investment?
9. You
decide to save $ 225 at the beginning of each month for the next two and a half
years, which you then plan to use as spending money on a vacation after
completing your studies. The account
into which this money is deposited earns interest at a rate of 9% per annum,
compounded monthly. How much would you have in the bank at the end of the term?
10. Consider a trust
fund of $ 85 000. The conditions of the trust stipulate that 7 years from the
date that the trust fund is set up, one payment should be made per annum over a
period of 10 years to the investor. If this trust earns interest at a rate of
8% p.a. compounded annually, what is the amount of the annual payment that the
investor will receive?
Please
indicate the correct answer:
Question 1
1.
What is the
answer of question 1 in practical 12?
3348.98
3056.56
3032.24
3767.25
Question 2
1.
What is the answer
of question 2 in practical 12?
4%
10%
7%
14%
Question 3
1.
What is the
answer of question 3 in practical 12?
445612.03
468548.27
402584.38
431031.59
Question 4
1.
What is the
answer of question 4 in practical 12?
Option 1
Option 2
Question 5
1.
What is the
answer of question 5 in practical 12?
0.87 years
9 months
8 months
0.82 years
Question 6
1.
What is the
answer of question 6 in practical 12?
8.75%
15.57%
10.17%
13.57%
Question 7
1.
What is the
answer of question 7 in practical 12?
1068003.45
1067002.35
1024507.52
1162035.36
Question 8
1.
What is the
answer of question 8 in practical 12?
16168.44
16180.52
15288.44
167626.44
Question 9
1.
What is the answer
of question 9 in practical 12?
7594.69
8264.69
9028.96
8678.96
Question 10
1.
What is the
answer of question 10 in practical 12?
19089.75
18987.65
21455.75
20101.74
THE NEXT QUESTIONS IS 20
QUESTIONS. KINDLY INDICATE THE CORRECT
ANSWER ONLY:
Question 1
1.
A new
building will need no maintenance for 3years. Thereafter, $ 8 000 will be
needed at the end of each year for the next 30 years for maintenance. Find the
present value of the maintenance of the building, assuming an interest rate of
10% p.a. compounded annually.
$ 69 650.59
$ 82 956.85
$ 1 140.14
$ 56 660.64
None of the above
Question 2
1.
Miss Lucky
won money in the Lotto and she will receive payments of $ 200 000 per year for
20 years at a rate of 10% compounded annually. What is the present value of the
money that she won?
$ 1 062 546.15
$ 1 702 712.74
$ 1 166 557.50
$ 200 109.64
$ 398 172.60
Question 3
1.
Rental on
a DSTV decoder costs $890 per month, payable in advance. What is the cash
equivalent today of 5 years of rental charges, if the interest rate is 11% per
annum compounded monthly?
$ 41 309.03
$ 71 419.83
$ 39 999.30
$ 70 100.00
None of the above
Question 4
1.
A debt
of $8 000 is to be discharged by a series of equal quarterly
payments over 5 years, the first being made immediately. If the
interest rate is 16% p.a. compounded quarterly, find the value of the quarterly
payments.
$ 640.53
$ 705.34
$ 566.00
$ 350.64
Question 5
1.
Mrs.Mandla
pays an insurance premium of R220 in advance every second month (bimonthly) on
an endowment policy with SunLife. The term of the policy is 15 years. Assume
that an interest rate of 14.6% p.a. with 6 compounding periods (bi-monthly) per
annum. How much would she receive on maturity?
R 64 231.53
R 70 568.34
R 71 347.23
R 68 350.64
Question 6
1.
On his 12th birthday Wallace Gromit’s father decides to
give him a lump sum of R 50 000 to invest wherever he wishes. He promises that
on his 16thbirthday he will receive an additional R20000 lump
sum deposited into a standard money market account paying a fixed interest rate
of 15% p.a. compounded annually. Suppose that he knows for a fact that at the
date of his birthday the latest Ford Focus ST (the orange one) will cost R 157
995 (demo model naturally). What nominal annual interest rate will he have to
get on his first investment, if the first investment (only) is compounded
monthly, to be able to afford the car at his 18th
birthday?
17.49%
17.42%
16.23%
None of the above.
Question 7
1.
Mr. Wu, a
first year student at the UFA has won a sum of money from the National Lottery.
He decides to invest some of this money in order to cover his university fees
for his 4th and 5th year respectively. He estimates that he will need $ 30 000
to cover his fees in his 4th year and $ 24 000 to cover his fees in his 5th
year. Suppose he will withdraw the $ 30 000 and $24000 three and four years
respectively from when he opens the
account. How much must he deposit, if the account earns 13% interest per annum,
compounded semi-annually?
$ 35 061.57
$ 14 409.56
$ 23 437.39
None of the above
Question 8
1.
Harry Henn
pays a fixed amount of $R200 at the beginning of each month for a period of
five years towards a savings plan that earns interest at a rate of 15% per
annum compounded monthly. What amount will he receive from this savings plan?
$17 936.34
$1 550.75
$8 512.00
$1 532.98
$17 714.90
$1 348.48
Question 9
1.
Kevin
borrows R 14 400 at an interest rate of 9% p.a. effective for the first 2 years
and then at 11% p.a. compounded annually for the next two years. What will the
amount of the loan be after the four year period?
R 3 328.39
R 37 432.16
R 6 440.98
R 21 079.56
R 9 921.67
Question 10
1.
Suppose
that you invest R 13 000 for 8.25 years into a fund promising the following
returns:
4% p.a. compounded weekly for the first 546 days..gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”>
12% p.a. compounded quarterly for the next 21 months..gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”>
9 % p.a. compounded monthly for the next 5 years..gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”>.gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”>.gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”>
Assuming 52 weeks in a year, what will the value of the fund be at maturity?
R 25 235.60
R 26 643.81
R 25 805.82
R 17 017.40
Question 11
1.
Ms. Norris
decides to save R850 at the beginning of each month for 4.5 years, which she
plans to use as a deposit on her first car. The account into which this money
is deposited earns interest at a rate of 12% per annum, compounded
monthly. How large a deposit will she have saved in four and a half years?
R 64 785.53
R 70 553.34
R 61 999.,67
R 61 074.59
Question 12
1.
If you
wanted to receive R 10 500 per month for the next 10 and a half years from a
financial institution that offers an interest rate of 8% p.a. compounded
monthly, how much would you have to invest today?
R 106 118.56
R 893 157.86
R 131 241.93
None of the above.
Question 13
1.
Suppose R
8 800 were deposited into an account paying interest of: 16%
p.a. compounded quarterly for the first three years; 14.4% p.a. compounded
monthly for the next three years and 13% p.a. effective thereafter. Find the
balance in the account after 40 months.
R 14 088.80
R 14 777.74
R 21 645.74
None of the above
Question 14
1.
Suppose
that R 12 500 is invested in an account paying the following interest rates:
16% p.a. compounded semi-annually fFor the first 18 months.gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”>
14.4% p.a. compounded quarterly for the next 27 months..gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”>
13% p.a. compounded monthly, thereafter….gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”>.gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”> .gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”>.gif” alt=”https://learn.ufs.ac.za/courses/1/M201602265/ppg/respondus/exam_Tutorial_12_2016/image00257334ab9.gif”>
How long (to the nearest month) in total will it take for the fund to
accumulate to at least a value of R 54 678?
131
130
86
18
Question 15
1.
How much
should be invested at the beginning of each month at a rate of 8.4%
per annum compounded monthly in order to accumulate to R 1650 in 2 years?
R 64.53
R 62.94
R 26.21
R 36.64
Question 16
1.
Lauren is
promised to receive R2 000 in two years time and R3 000 in three years time if
she invests her money with Bank A. If the interest rate is 9% p.a. compounded
monthly, what amount must she invest today?
R 693.33
R 3 964.11
R 5 795.41
R 6 551.72
R 26 083.84
Question 17
1.
A bursary
fund pays R2500 at the beginning of each semester for a period of 4 years to
student D. The account from which these payments are made earns interest at 10%
p.a. compounded semi-annually. What amount was needed in the account at the
beginning of the 4-year period to make these payments possible.
R16 965.93
R15 570.75
R18 512.00
R17 532.98
R19 714.90
R10 348.48
Question 18
1.
Consider a
30 year mortgage where the principle amount is R200 000 and the annual interest
rate is compounded monthly at 6%. What will the monthly payment of this
mortgage be?
R 4 206.10
R 39 253.63
R 202 402.43
R 510 143.46
R 1 199.10
Question 19
1.
Mr. B has
been given an opportunity to receive R 20 000 six years from now and another R
30 000 seven years from now. If he can earn 10% p.a. on this investment, where
interest is compounded quarterly, what amount must he invest today to pay for
this opportunity?
R 693.33
R 3 964.11
R 5 795.41
R 6 551.72
R 26 083.84
Question 20
1.
Suppose
you finance your car with a loan of $ 120 000 at a yearly interest rate of 9%
compounded monthly for four years. How much will your monthly payments on the
loan be?
$ 2 986.21
$ 2 057.23
$ 12 552.66
$ 19 942.76
$ 3 805.44