MATH1091_Aaditya_Sehgal_Assignment_1.docx

MATH 1091: Business Mathematics 1 Student’s Name: Aaditya Sehgal (T00753501) Calculator make and model: Basic Calculator Assignment 1 Total marks: 100 1. Complete the sentences below. (5 marks) (a) Compensation for lending money that is based on one fixed sum is called: Fixed interest (b) The formula to find the maturity value of a simple interest loan is: Maturity Value = principal + (principal x Rate x Time) (c) A transferable paper that commits the signer to pay the amount shown is called: Promissory note (d) To calculate the legal due date of a Canadian promissory note you must: To the date of signing, add the number of days specified in the promissory note. (e) A loan arrangement carrying a fluctuating rate of interest, which can be terminated at any time by either borrower or lender, is called: Variable Rate Loan 2. Find the exact time between March 10 and October 17. (1 mark) 231 days; 5544 hours 3. What is the maturity date of a 90-day debt incurred on September 14? (1 mark) December 13 4. What is the legal due date of a 120-day promissory note issued on April 6? (1 mark) August 4 5. Calculate the simple interest payable on a 6-month loan of $60,000 if the interest rate is 16.5%. (1 mark) $4950 TRU Open Learning

2 Assignment 1 6. Calculate the interest payable on a 60-day promissory note for $4500 if the rate is 12% and the note was signed on July 2. (2 marks) Interest= PxRxT P= principal; R= rate; T=time Interest= 88.219 So, the interest payable on a $4500 60-day promissory note at 12% is roughly $88.22. 7. What principal will earn $600 interest at 14% in 7 months? (2 marks) P=Interest/RxT P= 7373.74 the principal that will earn $600 interest at 14% in 7 months is approximately $7,373.74. 8. How long will it take $1,200 to earn $120 at 10%? (2 marks) Time= Interest/PxR Time= 1 year 9. What rate of interest could earn $250 on a principal of $3,000 in 300 days? (2 marks) T=300/365= 0.8219 R=interest/Pxt Rate= 0.1013 the rate of interest that could earn $250 on a principal of $3,000 in 300 days is approximately 10.13%. 10. What will be the amount payable on the legal due date of a 6-month promissory note for $5,000 signed on August 12 with interest at 13%? (3 marks) Interest= PxRxT = 5000x13%x6/12 TRU Open Learning

MATH 1091: Business Mathematics 3 =325 Amount payable= 5000+325 = 5325 The amount payable of a 6-month promissory note for $5,000 signed on August 12 with 13% interest would be $5,325. 11. Determine the cost of financing a demand note signed on July 15 for $3,550 if the interest rate was 11.5% until the first part-payment of $1,350 on November 11, after which it went up to 12.5% until the note was paid in full on December 25? (4 marks) P= 3550 R!= 11.5%- 0.115 T!=119 days (July 15 to November 11) Interest!= 3550x0.115x119/365 = 133.0895 Second period- November 11- December 25 T= 45/365 Interest= 3550x0.125x45/365 = 54.7140 Total Interest= 133.0895+54.7140 = 187.8035 TRU Open Learning

4 Assignment 1 12. Use the declining-balance method to calculate the final payment needed on July 7 to clear out a 14.5% debt of $5,500 incurred on March 20 if the following partial payments were made: $1,500 on May 4 and $2,000 on June 6. (5 marks) * Doubt on how to do this question * i am not sure if this is the right way.. Initial payment = $5500 1 ST partial payment= $1500 may 4 Remaining balance = 5500-1500 = $4000 Interest = Remaining balance x R x T = 4000 x 0.145 x 1/12 = $48.34 2 ND Partial payment = $2000 on June 6 Remaining balance = $4000 - $2000 = $2000 Interest = 2000 x 0.145 x 1/12 = $24.17 Final Payment = 2000 + 24.17 = $2024.17 13. What was the cost of the loan described in Problem 12? (2 marks) Total cost = Initial debt + Interest for may 4-june 6 + interest for June 6-July 7 Total cost = 5500 + 48.34 + 24.17 = $5572.51 14. Sean plans to sell a property in Kelowna expected to have a value of $115,000 in 5 years. If money is worth 12.5% simple interest, what is a fair price to pay for the property today. Ignore local taxes. (3 marks) P=F/1+RxT P= present value F= Future Value = 115,000 P= 115000/1+12.5%x5 = 70,769.23 TRU Open Learning

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