DSC1630 May/Jun 2013 exam paper — questions

Free sample

99.89999999999996 of 100 marks extracted so far — the rest is still being read.

  1. Question 1 · Simple interest and simple discount

    Hasin estimates that he will need R10 500 in ten months' time (from now) to replace the tyres on his truck. Two months ago he invested R9 000 for this purpose at a simple interest rate of 11,5% per year. Determine the amount that Hasin will still be short in ten months' time.Show the full question

  2. Question 2 · Compound interest and effective rates

    Determine the number of years it will take for R6 000 to accumulate to R9 000 if the annual interest rate is 8%, compounded every three months.Show the full question

  3. Question 3 · Simple interest and simple discount

    A loan of R30 000 is due eight months from now. The applicable simple discount rate is 16,5% per year. Calculate the present value of the loan.Show the full question

  4. Question 4 · Compound interest and effective rates

    Mabe deposits R13 300 into an account where money is worth 11,35% per year, compounded every two months. Determine the accumulated amount she will receive after 38 months.Show the full question

  5. Question 5 · Annuities, perpetuities and sinking funds

    Sakkie borrowed money from Lulu, to be repaid in instalments of R25 000 every second month for six years, with interest applied at 7,5% per year compounded every second month. Determine the present value of this loan.Show the full question

  6. Question 6 · Annuities, perpetuities and sinking funds

    Margaret, owner of the Beautiful Me Spa, plans to discharge a debt worth R870 000 in eight years' time using the sinking fund method. The debt bears interest at 13,4% per year compounded quarterly, while the sinking fund earns 9,2% per year compounded monthly. Calculate the monthly deposit Margaret must make into the sinking fund.Show the full question

  7. Question 7 · Annuities, perpetuities and sinking funds

    Pieter borrowed money from his friend Gerhard to purchase a share in a game farm. Pieter will not be able to repay anything for the first five years; after that he intends to pay Gerhard R40 000 every six months for seven years. Money is worth 9,56% per year, compounded half-yearly. Determine the amount Pieter owes Gerhard after five years, at the point he starts making repayments.Show the full question

  8. Question 8 · Annuities, perpetuities and sinking funds

    Continuing the same scenario, Pieter borrowed money from Gerhard to buy a share in a game farm, repaying nothing for five years and then R40 000 every six months for seven years, with money worth 9,56% per year compounded half-yearly. Determine the amount that Gerhard originally lent Pieter to buy the share in the game farm.Show the full question

  9. Question 9 · Annuities, perpetuities and sinking funds

    After being struck on the head by a golf ball, Charl received compensation from the Three Iron Fund. He chose to receive R18 900 per month indefinitely. If money is worth 9,95% per year compounded monthly, determine the approximate amount he was awarded.Show the full question

  10. Question 10 · Regression and correlation

    Pedal-a-lot sells bicycles. Data collected shows that when 5 bicycles were sold the price was R500, when 15 were sold the price was R900, when 19 were sold the price was R1 500, and when 7 were sold the price was R2 000 (with x representing the number sold and y the selling price in rand). Calculate the standard deviation of the number of bicycles sold (the x-values).Show the full question

  11. Question 11 · Regression and correlation

    Using the same Pedal-a-lot data (x = number of bicycles sold: 5, 15, 19, 7; y = selling price in rand: 500, 900, 1 500, 2 000), determine the approximate correlation coefficient of a linear regression between x and y.Show the full question

  12. Question 12 · Annuities, perpetuities and sinking funds

    Semi-annual payments of R5 500 are made into an account for ten years, earning 8,9% interest per year compounded monthly. Determine the accumulated amount, rounded to the nearest thousand rand.Show the full question

  13. Question 13 · NPV, IRR and project evaluation

    The Twinkle Toes Boutique recorded cash inflows over nine years as follows: R45 000 in year 3, R90 000 in year 6, and R115 000 in year 9. The applicable interest rate is 11,59% per year, and the present value of the cash outflows is R95 000. Determine the approximate future value of the cash inflows.Show the full question

  14. Question 14 · NPV, IRR and project evaluation

    Using the same Twinkle Toes Boutique cash inflow data (R45 000 in year 3, R90 000 in year 6, R115 000 in year 9, at 11,59% per year, with the present value of the cash outflows equal to R95 000), calculate the MIRR (modified internal rate of return).Show the full question

  15. Question 15 · Annuities, perpetuities and sinking funds

    Payments of R5 000 are made at the beginning of every quarter into an account for ten years, earning interest of 9,5% per year compounded quarterly. Determine the present value of these payments.Show the full question

  16. Question 16 · Amortisation and loan schedules

    An extract from the amortisation schedule of the King Cake Shop's loan (to be paid off in 15 years) shows that at month 15, the outstanding principal at the start of the month was R385 232,41, interest due at month end was R3 081,86, the payment was A, the principal repaid was R1 119,21, and the outstanding principal at month end was labelled 'a'. At month 120, the outstanding principal at the start of the month was R202 152,34, interest due was R1 617,22, the payment was A, the principal repaid was B, and the outstanding principal at month end was R199 568,48. Determine the value of A.Show the full question

  17. Question 17 · Amortisation and loan schedules

    Using the same King Cake Shop amortisation schedule (month 15: outstanding principal R385 232,41, interest due R3 081,86, payment A, principal repaid R1 119,21; month 120: outstanding principal R202 152,34, interest due R1 617,22, payment A, principal repaid B, outstanding principal at month end R199 568,48), determine the value of B.Show the full question

  18. Question 18 · Annuities, perpetuities and sinking funds

    Brian invests in a retirement savings account, making an initial annual payment of R7 500 which he increases by R1 200 each subsequent year. At an applicable interest rate of 12,0% per year, determine the amount Brian can expect to receive after 20 years.Show the full question

  19. Question 19 · Annuities, perpetuities and sinking funds

    Agnes deposited R100 000 into an account earning interest of 9,71% per year compounded quarterly. After four years, she began depositing an additional R12 000 into this account every three months. Assuming the interest rate remains at 9,71% per year compounded quarterly, determine the total balance in the account after seven years.Show the full question

  20. Question 20 · Compound interest and effective rates

    Sweetness wants to buy a new car on promotion on 15 July 2013. On 4 March 2013 she deposited R450 000 into an account earning 7,65% interest per year compounded monthly, with interest credited on the first day of each month. If simple interest is used for odd periods and compound interest is used for the rest of the term, determine the amount Sweetness will have available to buy her car on 15 July 2013.Show the full question

  21. Question 21 · Compound interest and effective rates

    Using the same scenario (Sweetness deposited R450 000 on 4 March 2013 into an account earning 7,65% per year compounded monthly, with interest credited on the first day of each month, aiming to buy a car on 15 July 2013), determine the amount she will have available on 15 July 2013 if fractional compounding is used for the full term.Show the full question

  22. Question 22 · Amortisation and loan schedules

    Conrad secured a home loan for 20 years at 11,9% per year compounded monthly, with a monthly repayment of R17 505,96. An average inflation rate of 4,75% per year compounded monthly is expected over the term. Determine the real cost of the loan.Show the full question

  23. Question 23 · Compound interest and effective rates

    Four years ago you borrowed R120 000 from Tanya at 12,65% per year compounded quarterly, due two years from now. Six months ago you also borrowed R65 000 from Tanya at 15,2% per year compounded monthly, also due two years from now. Determine the total amount you must pay Tanya two years from now to settle both loans.Show the full question

  24. Question 24 · Compound interest and effective rates

    Having calculated what you owe Tanya two years from now (from the R120 000 loan at 12,65% per year compounded quarterly and the R65 000 loan at 15,2% per year compounded monthly, both due in two years), you decide to reschedule the debt. You will pay Tanya R85 000 now and the remaining balance five years from now. Tanya agrees on condition that the new agreement runs from now and is subject to 13,7% interest per year compounded half-yearly. Determine the amount you will pay Tanya five years from now.Show the full question

  25. Question 25 · Compound interest and effective rates

    The nominal interest rate per year, j_m, where m is the number of compounding periods, is expressed in terms of the effective rate, j_eff. Identify the correct formula relating j_m and j_eff from the options given.Show the full question

  26. Question 26 · Compound interest and effective rates

    R12 000 is invested at a continuous compound interest rate of 16,5% per annum for a period of five years. Determine the accumulated sum.Show the full question

  27. Question 27 · Bonds and bond pricing

    Consider Stock AAA, which has a half-yearly coupon rate of 10,5% per year, a yield to maturity of 7,955% per year, a maturity date of 8 October 2047, and a settlement date of 29 May 2013. Determine the all-in price of the bond.Show the full question

  28. Question 28 · NPV, IRR and project evaluation

    The Beautiful People Shop has a net present value (NPV) of R14 983 and a profitability index (PI) of 1,034. Determine the approximate initial investment made in the shop.Show the full question

  29. Question 29 · Compound interest and effective rates

    Trinette decides not to accept an offer from the Flower Fund to receive quarterly payments from her R600 000 investment. Instead, she requests two lump-sum payments: one four years from now, and a second payment, twice the size of the first, eight years from now. If money is worth 12,6% per year compounded quarterly, determine the amount Trinette expects to receive eight years from now.Show the full question

  30. Question 30 · Bonds and bond pricing

    For Bond OPE, the present value on 24 June 2013 is given by the formula P(24/6/2013) = 7,35·a(29 angle 0,135÷2) + 100(1 + 0,135/2)^-29, where the fraction of the half year to be discounted back is 74/181, and the accrued interest equals R4,30932%. Determine the clean price for Bond OPE.Show the full question