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BUSI1003 – Business Mathematics

Winter 2020

Assignment 5

UNIT 9 & 10

Due Date:

Sunday March 15, 2020 11:59 PM

Rules:

· The answered assignment should be in an MS word file format.

· The assignment should be submitted electronically by the above due date.

· No hard copies of the assignment will be accepted.

· Ensure that your COMPLETE final answer is clearly written in the box provided.

· Ensure that your process is clearly shown and logical. Unclear or vague workout will result in deduction of marks

4 decimal places for workout process and answers except for answers in dollars. Answers in dollars must be in 2 decimal places. All decimal places require in-class discussed rounding procedure

Instructor: Shimaa ElSherif Student Name:_______________ Student No:______________ Assignment 5

Question #:_______1_______(5 Marks)

FINAL ANSWER:

Calculate the accumulated value after ten years of payments of $2000.00 made at the end of each month if interest is 4% compounded semi-annually.

Assignment 5

Question #:_______2_______(5 Marks)

FINAL ANSWER:

What is the principal from which $279.00 can be withdrawn at the end of each month for 17.5 years if interest is 5.44% compounded quarterly?

Assignment 5

Question #:_______3_______(10 Marks)

FINAL ANSWER:

For her daughter’s university education, Carla Hackl has invested an inheritance in a fund paying 9.2% compounded quarterly. If ordinary annuity payments of $5750.00 per month are to be made out of the fund for 6 years and the annuity begins 7.75 years from now, how much was the inheritance?

Assignment 5

Question #:_____4_________(10 Marks)

FINAL ANSWER:

Calculate the amount of money that must be deposited at the end of every three months into an account paying 6% compounded monthly to accumulate to $15 500.00 in ten years?

Assignment 5

Question #:_______5_______(10 Marks)

FINAL ANSWER:

Sabrina deposits 5300.00 into a savings account at the end of each month for five years. If the accumulated value of the deposits is $20 000.00 and interest is compounded semi-annually, calculate the nominal rate of interest

Assignment 5

Question #:_______6_______(10 Marks)

FINAL ANSWER:

Hector makes payments of $2500.00 into an RRSP at the beginning of every six months starting today for 33 years. If the interest rate is 8% compounded semi-annually, calculate the accumulated value.

Assignment 5

Question #:_______7_______(10 Marks)

FINAL ANSWER:

Beverley intends to retire in 7.25 years and would like to receive $2700.00 every month for 12.25 years starting on the date of her retirement. How much must she deposit in an account today if interest is 11.36% compounded annually?

Assignment 5

Question #:_______8_______(10 Marks)

FINAL ANSWER:

What monthly lease payment due in advance should be charged for a tract of land valued at $135 000 if the agreed interest is 8.15% compounded semi-annually?

Assignment 5

Question #:_____9_________(10 Marks)

FINAL ANSWER: a)

b)

A contractor’s price for a new building was $85 500.00. Stampede Inc., the buyers of the building, paid $14 000.00 down and financed the balance by making equal payments at the end of every six months for 15 years. Interest is 12% compounded semi-annually.

a) What is the size of the semi-annual payment?

b) How much will Stampede Inc. owe after 6 years?

Assignment 5

Question #:_____9 continued_________(10 Marks)

FINAL ANSWER: C)

d)

c) What is the total cost of the building for Stampede Inc.?

d) What is the total interest included in the payments?

Assignment 5

Question #:_____10_________(10 Marks) Instructor: Shimaa ElSherif Student

FINAL ANSWER: a)
b)

Tom receives pension payments of $6000.00 at the end of every six months from a retirement fund of $90 000.00. The fund earns 8.00% compounded semi-annually.

a) How many payments will Tom receive?

b) What is the size of the final pension payment?

Assignment 5

Question #:_____11_________(10 Marks)

FINAL ANSWER: a)
b)

15) Duguid and Partners bought a property valued at $87 300.00 for $17 000.00 down and a mortgage amortized over 17 years. The firm makes equal payments due at the end of every three months. Interest on the mortgage is 6.85% compounded annually and the mortgage is renewable after five years.

a) What is the size of each quarterly payment?

b) What is the outstanding principal at the end of the five-year term?

Assignment 5

Question #:_____11 continued_________(10 Marks)

c) What is the cost of the mortgage for the first five years?

d) If the mortgage is renewed for a further five years at 7.17% compounded semi-annually, what will be the size of each quarterly payment?

FINAL ANSWER: c)

d)

BUSI 1003: Math for Business – Assignment/Project Submission form
ROUND to 2 Decimal places for all answers with units of money

WWW.YORKVILLEU.CA

BUSI1003 – Business Mathematics

Winter 2020

Final Project

Due Date:

Friday March 13, 2020 11:59 PM

NAME:____________________

STUDENT ID:_______________

Rules:

· The answered assignment should be in an MS word file format.

· The assignment should be submitted electronically by the above due date.

· No hard copies of the assignment will be accepted.

· Ensure that your COMPLETE final answer is clearly written in the box provided.

· Ensure that your process is clearly shown and logical. Unclear or vague workout will result in deduction of marks

4 decimal places for workout process and answers except for answers in dollars. Answers in dollars must be in 2 decimal places. All decimal places require in-class discussed rounding procedure

Individual Project (10%):

Total: 40 marks

Instructions

Please show your work in order to earn part marks.

Answers must have correct units.

Accuracy should be to the nearest dollar, percentages to the nearest 0.1%, and decimal equivalents to the nearest 0.0001.

The assignment should be submitted in document format.

Each of your final answers should be in statement form with correct notation.

Case Study – Planning Ahead

Precision Machining Corporation has been growing steadily over the past decade. Demand for the company’s products continues to rise, so management has decided to expand the production facility; $2 800 000 has been set aside for this over the next four years.

Management has developed two different plans for expanding over the next four years: Plan A and Plan B. Plan A would require equal amounts of $750 000, one year from now, two years from now, three years from now, and four years from now. Plan B would require $300 000 now, $700 000 one year from now, $900 000 two years from now, and $975 000 four years from now.

The company has decided to fund the expansion with only the $2 800 000 and any interest it can earn on it. Before deciding which plan to use, the company asks its treasurer to predict the rates of interest it can earn on the $2 800 000. The treasurer expects that Precision Machining Corporation can invest the $2 800 000 and earn interest at a rate of 4.5% p.a. compounded semi-annually during Year 1, 5.0% p.a. compounded semi-annually during Years 2 and 3, and 5.5% p.a. compounded semi-annually during Year 4. The company can withdraw part of the money from this investment at any time without penalty.

Question #:_______1_______(10 Marks)

FINAL ANSWER: a)

b)

a. Could Precision Machining Corporation meet the cash requirement of Plan A by investing the $2 800 000 as described above? (Use “now” as the focal date.)

b. What is the exact difference between the cash required and the cash available from the investment?

Question #:_______2_______(10 Marks)

FINAL ANSWER: a)
b)

c.

Could Precision Machining Corporation meet the cash requirement of Plan B by investing the $2 800 000 as described above? (Use “now” as the focal date.)

d. What is the exact difference between the cash required and the cash available from the investment?

Question #:_______3_______(10 Marks)

FINAL ANSWER: a)
b)

a. Suppose Plan A was changed so that it required equal amounts of $750 000 now, one year from now, two years from now, and four years from now. Could Precision Machining Corporation meet the cash requirements of the new Plan A by investing the $2 800 000 as described above? (Use “now ” as the focal date.)

b. What is the difference between the cash required and the cash available from the investment?

Question #:_______4_______(10 Marks)

FINAL ANSWER: a)
b)

c)

Suppose the treasurer found another way to invest the $2 800 000 that earned interest at a rate of 4.9% compounded quarterly for the next five years.

a. Could the company meet the cash requirements of the original Plan A with this new investment? (Show all your calculations.)

b. Could the company meet the cash requirements of Plan B with this new investment? (Show all your calculations.)

c.

If the company could meet the cash requirements of both plans, which plan would the treasurer recommend? In other words, which plan would have the lower present value?