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Business Math TS2-1

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24 views3 pages

Business Math TS2-1

Uploaded by

jaysanga2003
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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THE UNIVERSITY OF ZAMBIA

SCHOOL OF HUMANITIES AND SOCIAL SCIENCES


DEPARTMENT OF ECONOMICS
BBA 2421: BUSINESS MATHEMATICS: (TUTORIAL SHEET TWO)

Question 1
a) What are the first three terms of a GP whose third term is 25⁄4 and the 7th term is 4⁄25 ?
b) In an arithmetic progression, the 13th term is 27, and the 7th term is three times the second term.
Find The first term, the common difference and the sum of the sum of the first ten terms.
c) Use the chain rule to differentiate the equation Y= (-6X3 _ 3X2 + 5)1/2

Question 2
a) Matusa has a choice of three suppliers of laptops. Suppliers 1, 2 and 3 offer a series discount of
20/10/25, 20/30 and 40/10/5 on a list price of K3200, K3100 and K3200 per laptop respectively.

(i) What is the discount from each supplier?


(ii) Which supplier gives matusa a lower price?
(iii) Assuming matusa buys 50 laptops, how much does it save by buying from the lower priced
supplier?
(iv) Explain the difference between a single trade discount and a series or chain trade discount.

b) Find the amount of discount for a commercial printer having a series discount of 5/15/25 and a
net cost of K1200

Question 2
a) You are and administrative assistant and have been allocated K60,000 to spend on the
development and promotion of a new product. It is estimated that if x thousands kwacha is spent
on development and y thousand is spent on promotion, approximately f(x,y) = 20x 3/2y copies of
the product will be sold. How much money should the editor allocate to development and
promotion in order to maximize sales?
Question 3

a) You are looking at a three-year project with a projected net income of $2,000 in Year 1, $4,000
in Year 2, and $6,000 in Year 3. The cost is $12,000, which will be depreciated straight-line to
zero over the three-year life of the project. What is the average accounting return (AAR)?

b) Your company wants to engage in a project that will require an initial outlay of K100,000 but
will return K40, 000 at the end of the first year and K75, 000 in net benefit at the end of the
second year. If the cost of capital is 5%, find the IRR and use it to determine if the project is
viable or not

c) Peru Para Ltd is considering investing in projects A, B and C. The forecasted cash flows are as
follows.

Year project A project B Project C

Cash flows(K) cash flows(K) Cash flows(K)

0 (15,000) (17500) (11000)

1 2500 5000 3000

2 4000 1500 2600

3 1500 6000 5000

4 3000 2000 1900

5 7000 6500 700

The investment will require a working capital of K2800 for project A and C, and K3200 for project
B. The investment will attract a 25% depreciation on reducing balance for project A and C, and
straight line allowance for project B. All the projects will have a salvage value of K5000 each at
the end expected lifetime. The tax rate is 30% on profits and that the cost of capital is 10%. The
lifetime expected is 5 years for all the projects. Calculate the following

(a) The payback period for each project


(b) The discounted payback period for each project
(c) The ARR for each project
(d) The NPV for each project
(e) The IRR for each project

Question 4

a) “Chilepule Signs and Company has found space where to build their office infrastructure,
because of the growing demand for Chilepule’s products, Chilepule signs and Company
approaches Barclays Bank and signs a 10-week simple discount note that has a maturity value
of K150,000 and discounted at 24%, calculate
(i) The bank discount
(ii) The amount that Chilepule signs and company receives from Barclays Bank
(iii) Suppose Chilepule Signs and Company wants to borrow the K150,000 from Barclays Bank
and signs a 10-week simple discount note at 24% discount rate, Find the face value
corresponding to the 10-week simple discount note.

a) K200 is deposited at the end of each quarter in an account that pays 4%, compounded quarterly.
How much money will we have in the account in 2 years and 3 months?

b) Find the future value of an investment if $150 is deposited at the beginning of each month for
9 years and the interest rate is 7.2%, compounded monthly?

c) Suppose that a court settlement results in a $750,000 award. If this is invested at 9%


compounded semiannually, how much will it provide at the beginning of each half-year for a
period of 7 years?

d) Suppose a rich person wishes to endow the University with a yearly income of USD 100,000
in perpetuity. How much money has to be set aside if the interest rate is 6%?

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