Investment and Financial Calculations

This assignment involves various calculations related to investments and finance. It includes determining the number of years required for an initial investment to double using the Rule of 72, calculating the future value of a plant based on trend line analysis, and making financial decisions based on Net Present Value (NPV) results. Additionally, it involves statistical analysis, such as finding the mean of distributed marks and interpreting frequency distribution tables.

NUMERACY 1

SECTION 1
TASK 1
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2

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TASK 2
A) Reflective statement
From the above making self-assessment it can be identified that I am able to make
calculations of the power of digits and derive the outcomes easily. Along with this, I am highly
aware about the concept of square root which describes fractional value of any specific digit.
While making computation and simplifying the problems regarding square root I will not face
any issue as I have knowledge. When talking about the interest rates like simple and compound
then it can be assessed that I have idea regarding to such concepts and able to simplifying related
problems. I am aware about the Rule of 72 and can derive required years to make investment
double but not having knowledge of other rules like 69 or 70. While looking at the point of linear
equation then it can be said that I have idea about this particular concept but not able to prepare
appropriate equation. At the time of making equation I need proper guidance by which I can
easily perform calculations. Along with this, I cannot use and analyse relations between two
concepts like extrapolate as well as interpolate.
Apart from this, I have appropriate knowledge as well as idea about the future value and
net present value of the projects. When the calculation requires to perform then also I never
hesitate due to having appropriate idea of the NPV and deriving viability of one project.
Moreover, I can prepare the table of frequency distribution without taking support of any guide
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or tutor. I am able to prepare the histogram as well properly and make interpretation of that. At
the last it can be assessed by me that, I am not aware about the probabilities as well as cannot
perform computation regarding to this particular concept.
B) Two illustrations based on real life
In the reality, I use the investment appraisal method like net present value in order to
derive the future value of machine which is my father going to purchase for his factory. I show
him future value as well as viability of the new machine by applying NPV tool which supports
my father in order to take decisions of buying the machine. Along with this, there are different
machines are available for purchasing and in this condition, I help to my father for select one
machine which has the higher NPV at the end of its estimated life.
Second example is based on the simple interest rate, where I need to make my investment
amount double while the bank giving interest at the rate of 12.5%. In this I want to determine
that, up to how many years I have to put amount for investment and for that I applied Rule of 72.
By this particular rule I able to know after making calculation that my investment money will be
double within 5 years 8 months (72 / 12.5 = 5.76).
SECTION 2
QUESTION 1
A. Law of one power
In the numerical calculation, there are several kinds of laws and rule prepared which
supports to derive answer of the numerical data. As per the one power law the digit is multiplied
with the same number to determine answer. Basically, three type of power are under
consideration, which are zero, positive and negative.
B. Law of one root
Fractional value of the digit or index shown by the square root method of the
mathematics. In the numeracy, square root is denoted by the sign “√”.
C. Illustration of power law
Zero = 7^0 = 1
Positive = 7^3 = 343 (7*7*7)
Negative = 7^-3 = 0.0029 or 0.003
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D. Illustration of root law
√84 = 9.16
In this value of input is same power of outcome digit like 9.16^9.16 = 84.
QUESTION 2
A. Amount of simple interest
B. Amount of yearly compound interest
C. Amount of semi-annual compound interest
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D. Amount compound interest on the basis of quarterly
QUESTION 3
A. Principle required to invest
B. Interest rate calculation
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C. Investment duration
D. Rule or law of 72
For making calculation of different values and derived outcomes in appropriate ways
there are different kind of laws, formulas and rules used by the firm. Among various numbers of
rules, one is law of 72 which comes under the criteria of investment and highly used by
investors. From this specific rule, the investor easily able to know that particular investment
amount will take how many years in order to become double amount. For making calculation of
years there are interest rate is used. When an investor going to make investment worth of 20000
GBP at 8% annual then required years to get double money are calculated by considering rule of
72 is given as below:
72 / 8% = 9 years. It can be said that 20000 GBP will become 40000 GBP within 9 years.
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QUESTION 4
A. Scatter graph
0 1 2 3 4 5 6
0
5
10
15
20
25
30
8.8
11.4
17.6 18.4
21.3
24.2
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B. Trend line
0 1 2 3 4 5 6
0
5
10
15
20
25
30
8.8
11.4
17.6 18.4
21.3
24.2
f(x) = 3.0714285714x + 9.2714285714
Height (cm)
Linear (Height (cm))
C. Deriving appropriate values
Trend line gives information about the future data to the company and on the basis of that
different numbers of decisions are made. From the above table, it can be said that, height of the
plan will be increase in the future hours. Moreover, variable value is as below:
Here value of x like 2.5 is assumed and then further plant height will be 86.05.
D. Forecast age of the plant
Through this calculation it can be forecasted that plant age will be 17.78.
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QUESTION 5
A. NPV of the equipment or machine
B. Judgement and advices to the firm
The tool of capital budgeting which is highly considered by business entities in order to
determine future value of the initial cost or investment is known as NPV (Net Present Value). It
has two sides,positive and negative and on the basis of that investment judgements are taken
fruitfully. At the current scenario, NPV is in negative value which is worth of -7375 GBP which
shows that initial investment amount will be reduce after 4 years . On the basis of such value it
can be advised to MGS manufacturing firm that it should not purchase machine.
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QUESTION 6
A. Table of frequency distribution
The current table shows the students and marks generated by them in the class. The
frequency column gives information about the number of students where other shows range of
marks obtained by respective people.
B. Preparation of Histogram
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C. Interpreting distributed marks
Mean of the data = ∑FX / ∑F
= 1735 / 25
= 69.4
The statistical tool which shows average value of the overall available data set and on the
basis of that, business entity takes several decisions. At the current study arithmetic mean or
average value of marks is 69.4. Further, there are total seven students who achieve 69.4 marks in
relevant exam among 25 students available in the class.
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