BASIC SOLUTIONS FOR DSC1630 EXAMINATION QUESTION PAPER.

1. Identification: Simple interest rate R9 000 R10 000 2 months now 10 months Savings worth at month 10 – move R9 000 from 2 month’s ago to 10 month’s in future: S = P (1 + rt) 12 = 9 000 1 + 0,115 × 12 = 9 000(1,115 . . .) = R10 035,00. Money Short: R10 035,00 − R10 500 = −465,00 She shorts R465,00. Option [3] 2. Identification: Simple discount rate 31 Aug R5 000 d = 0,18 t = day number 306 - day number 243 = 63 days 2 Nov P = S(1 − dt) 63 5 000 5 000 = S = S 1 − 0,18 × 365 1 − 0,18 × 63 S = R5 160,32. Option [2] 3. Identification: Compound interest jm = 12% m = 12 P = P S = 2P t = ? S = P 1 + tm m m 2P = P (1 + 0,12 )t12 12 2P = 1 + P 0,12 12 12t 0,12 ln 2 ln 2 = 12t ln 1 + 12 = 12t 0,12 12 t = ln 2 ln(1+ 0,12 ) 12 t = 5,80506 years t ≈ 5,81. Option [1] 4. Identification: Odd periodes – method given R375 000 7 March 1 April 1 May 1 June 1 July 1 Aug 1 Sept 1 Oct 1 Nov 28 Nov S = P (1 + rt)(1 + r)t(1 + rt) 7 × 12 = 375 000 1 + 0,1045 × 25 365 0,1045 1 + 12 12 1 27 1 + 365 × 0,1045 = 404 419,5870 . . . ≈ R404 419,59.