Financial Mathematics Question Answer 2022

Running head: FINANCIAL MATHEMATICS
Financial Mathematics
Name of the Student
Name of the University
Author Note

1
FINANCIAL MATHEMATICS
Table of Contents
Answer to Question 1...................................................................................................................2
Answer to Question 2...................................................................................................................5
Answer to Question 3...................................................................................................................8
Bibliography...............................................................................................................................10

2
FINANCIAL MATHEMATICS
Answer to Question 1
a) Payment due to the company 50000
0
Time remaining (in months) 6
Discount p.a. 16%
Immediate payment made by discount house Payment due - (Discount
percentage * Payment Due *
6/12)
46000
0
Note: In the above case, the discount is charged on
an annual basis, but we calculate it on the basis
of 6 months as that is the time available for the
payment to become due
b) Details Formula Amount
Amount in Savings account (P) 5000
Simple Interest p.a. (r) 10%
Time invested for (in years) (T) 6
i Amount at the end of 6 years P +
((P*T*R)/100
)
8000
ii Amount initially invested for 3 years P + 6500

3
FINANCIAL MATHEMATICS
((P*T*R)/100
)
The new principal becomes 6500
When this amount is reinvested, the new amount at the end of
next 3 years is
Amount P +
((P*T*R)/100
)
8450
c) Amount invested in the savings account 250
Interest rate convertible monthly for the first 3 months 18%
Interest rate convertible quarterly for the first 9 months 20%
Amount of interest for 3 months PTR/100 11.25
Amount of interest for 9 months PTR/100 9.375
Amount at the end of the end of the year Initial
Invested +
Interest
271
In the above case, the payment for the second interest is done on a quarterly basis. Hence,
the time will be taken to be (3*number of months)/12.
d) Value of a monthly payment -1000