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Mat112 Assignment

This document is a study guide for a course on compound interest and annuities. It contains a description of the course details including the semester, title, group, and lecturer. It then provides two sample questions with multiple parts to help students practice calculating compound interest, periodic payments on loans, amounts of investments over time, and differences in interest charged between financial institutions. It includes tables of interest rates and investment details as well as instructions for calculating totals, interest earned/charged, numbers of payments, and amounts needed to settle loans and arrears.

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2023829762
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134 views11 pages

Mat112 Assignment

This document is a study guide for a course on compound interest and annuities. It contains a description of the course details including the semester, title, group, and lecturer. It then provides two sample questions with multiple parts to help students practice calculating compound interest, periodic payments on loans, amounts of investments over time, and differences in interest charged between financial institutions. It includes tables of interest rates and investment details as well as instructions for calculating totals, interest earned/charged, numbers of payments, and amounts needed to settle loans and arrears.

Uploaded by

2023829762
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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SEMESTER OCTOBER 2023 – FEBRUARY 2024

TITLE:
COMPOUND INTEREST AND ANNUITY

GROUP: 3 (AC1101G)

PREPARED BY:

NO. STUDENTS’ NAME STUDENT ID

1 NUR FARHANI BINTI MOHAMMAD FAROUK 2023829762

2 WAN NUR AIN BINTI MOHD WAN NASIR 2023841444

3 NUR FARAH SYAMIMI BINTI MOHD ROHISHAM 2023838024

LECTURER: MADAM NORHUDA BINTI MOHAMMED


QUESTION 1

Adib Adam received a cash prize after winning a competition in which he participated. He plans
to invest all the cash prize in three different investment schemes for five years. Table 1 shows all
the details of the investment.

Table 1

Bank Amount of deposit (RM) Interest rate charged Remarks

Scheme ASIC X 4.2% compounded The total amount at


monthly the end of the
investment period is
RM13,318.84

Scheme TREX 15 000 3.8% compounded every The new interest is


two monthly 4.5% compounded
every two months,
starting in the fourth
year.

Scheme PM 20 000 5% compounded -


quarterly
a) Calculate the value of X.

(5 marks)

b) Calculate the total amount in the account of Scheme TREX at the end of the investment
period.

(7 marks)
c) How much is the total interest earned from the three investments?

(5 marks)

d) How much is the cash prize Adib Adam won?

(3 marks)
QUESTION 2

A piece of land costing RM100000 is purchased by making a 20% down payment. Your
company paid the down payment and wished to choose Octo and Novo Bank to finance the
balance. After having a thorough discussion, all the CEOs agreed to a sum of RM1780 as a
periodic payment. The details about Octo and Novo Bank are presented in Table 2.

Table 2

Bank Interest rate charged Frequency of Payment

Octo Bank 9.7% compounded monthly Every month

Novo Bank 9.6% compounded every two months Every two months

a) For each bank, calculate the


i) number of periodic payments.
ii) total repayment amount.
iii) total interest charged.
What is the difference in the total interest charge between the two banks?

(10 marks)
b) Which bank should your company choose to apply for the loan based on your answer in (a)
and give your reason.

(2 marks)

c) If your company failed to make the first five payments, how much should your company pay
on the sixth payment to settle all the outstanding arrears?

(3 marks)
d) If your company wants to settle the loans immediately after paying the 30th payment,
calculate
i) the amount your company needs to pay.

ii) the total interest paid.

(5 marks)
REFERENCES
Nur Hidayah Masni,Syafiza Saila Samsudin,Business Mathematics,Faculty Of Computer &
Mathematical Sciences,Universiti Teknologi Mara

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