FACULTY OF SCIENCE

DEPARTMENT OF MATHEMATICS AND APPLIED MATHEMATICS

MODULE: MATHEMATICSFOR FINANCE AND BUSINESS 1B– MATDCB1

CAMPUS: APK/SWC

ASSESSMENT: SEMESTER TEST 1

DATE: 02 SEPTEMBER 2019

ASSESSORS: MS M JUGA
MR T MOHUBEDU
MR MSW POTGIETER

INTERNAL MODERATOR: DR J MBA

55
DURATION: 2 HOURS

INITIALS AND SURNAME: ________________________________________________________

STUDENT NUMBER: ________________________________________________________

CONTACT NUMBER: ________________________________________________________

NUMBER OF PAGES: 9(INCLUDING COVER PAGE)

INSTRUCTIONS:
 ANSWER ALL THE QUESTIONS IN PEN.
 ALL GRAPHS MUST BE DRAWN IN PEN.
 NO PENCIL OR TIPEX ALLOWED.
 SHOW ALL THE NECESSARY CALCULATIONS CLEARLY.
 IF FORMULAS ARE USED THEY MUST BE STATED AS MARKS ARE GIVEN TO THEM.
 ONLY SCIENTIFIC CALCULATORS ARE ALLOWED.
 IF NECESSARY, ROUND OFF TO TWO DECIMAL PLACES.
 THE QUESTIONS CAN BE ANSWERED IN ANY ORDER.
Mathematics for Finance and Business 1B– MATDCB1 – Semester Test 1 – 2019
-2-

QUESTION 1 [10]

1.1 Sandile decides to purchase a business, the present owner putting it up for sale
for R 5,000,000.00. Sandile has saved R 1,500,000.00 and will take out a loan
on the difference. The loan has to be repaid over the next 15 years with
payments at the end of each month. Interest is 3% per year, compounded
monthly. Determine the required monthly payment. [3]

1.4 Determine the finance charge for the loan contemplated in Question 1.1. [1]

1.3 A loan of R 3,200.00 is repaid in 5 quarterly payments of R683.84. The interest

rate is set at 9% per year, compounded quarterly. Draw up an amortisation
schedule for the situation. [5]
Principle Payment at the
Interest for Principle
Period Outstanding at End of the
the Period Repaid at End
Beginning Quarter

5
Total -----

1.4 Determine the finance charge for the loan contemplated in Question 1.3. [1]
Mathematics for Finance and Business 1B– MATDCB1 – Semester Test 1 – 2019
-3-

Question 2 [12]

2.1 Determine the number of weeks required to grow an investment of R 5,000.00

to R 9,000.00. You can assume an interest rate of 15% per year, compounded
weekly. [3]

2.2 Determine the required effective rate to double an investment in 13 years. [3]

2.3 An investment grew to R 9,000.00 subjected to an interest rate on 7.2% per

year compounded continuously. If it took 9 years to realise this growth
determine the original investment amount. [3]

2.4 Determine the present value of a perpetuity that pays R 9,000.00 every year.
Interest is set at 3.9% per year, compounded annually. [3]
Mathematics for Finance and Business 1B– MATDCB1 – Semester Test 1 – 2019
-4-

Question 3 [5]

3.1 State the equation used to convert a nominal interest rate to an effective rate.
[1]

3.2 Home Properties & Co. wants to make an investment and they approach
different Banks which give them the below options. Find the Effective rate of
each of the rates offered by the different Banks: (Fill in the table)
BANK Option Effective rate

A 9.23% per year, compounded weekly. [1]

B 9.19% per year, compounded daily. [1]

C 9.15 % per year, compounded continuously. [1]

3.3 Which Bank offers the best option for Home Properties & Co? _______ [1]

Question 4 [8]

A debt of R300.00 due in 3 years, R1,000.00 due in 9 years and R5,000.00 due in 7
years is to be repaid by a payment of R1,400.00 in 5 years and a final payment in 8
years time.
4.1 Draw a complete timeline representing all debts and payments and the chosen
year from which calculations will be based. [2]
Mathematics for Finance and Business 1B– MATDCB1 – Semester Test 1 – 2019
-5-

4.2 Find the final Payment if an interest rate of 2% compounded semi annually is
assumed. [6]

Question 5 [4]

5.1 Use the word Finite or Infinite to fill in the Blanks. [2]

Perpetuity is a/an _________________________ sequence of payments while

an Annuity is a/an _________________________ sequence of payments.

5.2 Use the word beginning or end to fill in the Blanks. [2]

An ordinary annuity has payments at the _______________ of each interval.

An annuity due has payments at the _______________ of each interval.

Question 6 [9]

Given the following system of constraints:

𝑥+𝑦 ≥6
𝑥 ≤ 12
𝑥≥0
𝑦 ≤ 4𝑥 + 2
{ 𝑦≥0
Mathematics for Finance and Business 1B– MATDCB1 – Semester Test 1 – 2019
-6-

6.1 Graph all the inequalities on the same set of axes, clearly indicating all
intercepts and the feasible region. [5]

6.2 Determine the corner points of the feasible region. [4]

Mathematics for Finance and Business 1B– MATDCB1 – Semester Test 1 – 2019
-7-

Question 7 [5]

For the following word problem, only write down the system of constraints and the
objective function. Do not solve the problem.

A company produces two types of can openers: Manual and electric. Each requires in
its manufacturing the use of three machines: A, B, and C. Each manual can opener
requires the use of machine A for 2 hours, machine B for 1 hour and machine C for 1
hour. An electric can opener requires 1 hour on A, 2 hours on B, and 1 hour on C.
Furthermore, suppose the maximum numbers of hours available per month for the use
of machine A, B and C are 180, 160 and 100 respectively. The profit on a manual can
opener is R40.00 and on an electric can opener it is R60.00. The company can sell all
the can openers they produce.

Question 8 [2]

Maximise:
𝑃 = 7𝑥 − 9𝑦
Given that the feasible region had the following corner points:
(−2; 5), (9; −3), (10; 7)
Mathematics for Finance and Business 1B– MATDCB1 – Semester Test 1 – 2019
-8-

𝑟 −𝑚𝑛 𝑟 𝑚𝑛
1 − (1 + ) (1 + 𝑚) −1
𝑚
𝐴 = 𝑅[ 𝑟 ] 𝑆 = 𝑅[ 𝑟 ]
𝑚 𝑚

𝑟 −(𝑚𝑛−1)
1 − (1 + )
𝑚
𝐼 = 𝑚𝑛𝑅 − 𝐴 𝐴 = 𝑅[ 𝑟 + 1]
𝑚

𝑟 𝑚𝑛+1
𝑟 𝑚 (1 + 𝑚) −1
𝑟𝐸 = (1 + ) − 1 𝑆 = 𝑅[ 𝑟 − 1]
𝑚
𝑚

𝑟 𝑚𝑛
𝐴 = 𝑃(1 + 𝑟𝑛) 𝐴 = 𝑃 (1 + )
𝑚
𝑅
𝐴= 𝑟
𝑚

End of Assessment – Total 64 Marks

Use this space if you want to redo a question. Clearly indicate at the
question that the answer is on Page 9.