# 8. FINANCE 149 – FIRST ASSIGNMENT. Table of Contents. S

Added on - Sep 2019

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1FINANCE 149 – FIRST ASSIGNMENT

2Table of ContentsSolution to Question 13Solution to Question 23Solution to Question 33-4Solution to Question 44-5Solution to Question 55-6Solution to Question 66Solution to Question 76-7Solution to Question 87References8

31.Solution to Question 1As the question is not aligned correctly, the following assumption is madeProfit is 2% of the regular selling priceAlso given, Overhead is 13.5% of the regular selling priceTherefore, selling price of the utensil is $53.69 + 13.5% of Selling Price (Overhead Cost) +2% of Selling Price (Profit)SP = $53.69 + 13.5%(SP) + 2%(SP)On solving, SP = $63.54Operating Profit or Loss on Sale:Product sold at markdown of 18% of SP, which is $63.54 – 18% (63.54) = $52.10Therefore, Operating Profit/Loss on sale = $52.10 - $53.69 – 13.5%(63.54) = $10.17 (Loss)2.Solution to Question 24/10, n/90, This means that the credit period is 90 days and if the Invoice is paid within10 days, discount received shall be 4% of the Invoice value.(a)Highest simple interest rate shall be the rate at which the discount received shall beequal to the simple interest on the borrowing amount which is computed as follows:Discount = $7600 *4% = $304, which shall be the simple interest for the bill period of90 days on $7,600. No of days in a year is taken at 360 days.Therefore, the simple interest rate shall be:$304 = $7,600 * x% * (90/360)On solving, Simple interest rate shall be 16%.(b)If borrowed at 9.5%, savings shall be the excess of Discount over Interest paid which iscomputed as follows:Interest = $7,600*9.5%*(90/360) = $180.5Therefore, Savings = $304 - $180.5 = $123.53.Solution to Question 3(a)Maturity date of the note = 6 months from 31 March, 2008 which is 30 September,2008.