Financial Mathematics Assignment - Analysis of Financial Problems

This financial mathematics assignment solution provides detailed answers to various financial problems. The assignment covers calculations related to future value, present value, and interest rates, including scenarios involving investments, savings, and retirement planning. The solution utilizes formulas and functions, including Excel's FV and PV functions, and considers the impact of taxes on investments like RRSPs and TFSAs. The assignment includes step-by-step solutions to multiple questions, demonstrating how to compute investment returns and analyze financial scenarios. The document also references key concepts such as compounding and discounting factors. The assignment concludes with a bibliography of relevant resources.

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

1FINANCIAL MATHEMATICS
Table of Contents
Basic Information:...........................................................................................................................2
Answer to question 1:......................................................................................................................2
Answer to question 2:......................................................................................................................3
Answer to question 3:......................................................................................................................3
Answer to question 4:......................................................................................................................3
Answer to question 5:......................................................................................................................3
Answer to question 6:......................................................................................................................3
Answer to question 7:......................................................................................................................3
Bibliography:...................................................................................................................................5

2FINANCIAL MATHEMATICS
Basic Information:
Answer to question 1:

3FINANCIAL MATHEMATICS
¿ 100,000∗( 1+ 7 %
12 )
30∗12
∗(1−25 %)
¿
[ [ 50,000∗( 1+ 7 %
12 )
30∗12
] +
[ 100
7 %
12
∗
{( 1+ 7 %
12 )
30∗12
−1 }] ]∗(1−25 %)
¿ 5,000∗( 1+ 3 %
12 )
30∗12
∗(1−40 %)
Answer to question 2:
¿( 60,000+5,500)∗( 1+ 7 %
12 )
30∗12
∗(1−25 %)
¿
[ [(10,000+50,000)∗(1+ 3 %
12 )30∗12
]+
[ 2 00
3 %
12
∗{(1+ 3 %
12 )30∗12
−1 }] ]
Answer to question 3:
¿ 13,200∗ ( 1+ 2% )(65−31)

4FINANCIAL MATHEMATICS
¿ ( 13,200∗( 1+2 % ) (60−30) )∗(1−36 % )
Answer to question 4:
¿ 7,000∗( 1+2% )(67−31)
¿ 7,000∗( 1+2% )(67−3 0)
Answer to question 5:
¿ [ [ 60,000∗( 1+2 % )30 ] ∗70 % ] ∗( 1+2 % )(60−30 )
Answer to question 6:
¿ 72,000∗ ( 1+ 2% )(88−61)
¿ 122895.83∗1
( 1+4 % )(88−61)
The formula would be same for the customer 2 also.

5FINANCIAL MATHEMATICS
Answer to question 7:
1,004,604=
[ ( 2500
i )∗(1− ( 1+i ) (88−61 )∗12 ) ]
Solving the above equation the monthly interest rate, we get the monthly interest rate as 0.13%,
then multiplying the monthly rate by 12, the annual rate comes to 1.54%. (Here, i=monthly rate
of interest)
Notes:
For computing all the above figures, compounding and discounting factors have been
used. As the TFSAs are tax free no tax adjustment has been done with it and in case of RRSPs,
its withdrawals are taxable and hence the tax treatment is given affect on the future values of
RRSPs. For computing the future values of various investments and savings the excel FV
formula has been used and for computing the current value the PV formula have been used. For
computing the rate earned on the pension, the RATE function have been used.

6FINANCIAL MATHEMATICS
Bibliography:
McFedries, P., 2007. Formulas and Functions with Microsoft Office Excel 2007. Que.
Larsen, R.W., 2001. Engineering with EXCEL. Prentice Hall PTR.
Stone, M.S., 1984. The pension accounting myth. Accounting Historians Journal, 11(2), pp.19-
38.
Wiedman, C.I. and Wier, H.A., 2004. The Market Value Implications of Post‐Retirement Benefit
Plans and Plan Surpluses—Canadian Evidence. Canadian Journal of Administrative
Sciences/Revue Canadienne des Sciences de l'Administration, 21(3), pp.229-241.
Hyvönen, E. and De Pascale, S., 1999, July. A New Basis for Spreadsheet Computing: Interval
Solver for Microsoft Excel. In AAAI/IAAI (pp. 799-806).