Question

Q-6 Determine the quarterly payment necessary to repay a loan of $25,000. The interest is computed at the rate of 12% per year compounded quarterly. Assume the loan is to be repaid in 10 years. How much interest will be paid over 10 year period? [05] Q-7 A company sells its two products A and B. The prices of products A and B are $5 and $8 per unit respectively. The material costs for A and B are $0.5 and $1.5 per unit respectively. The labour charges of $0.5 per unit is same for both of the products A and B. The fixed cost of the business is estimated as $3000. [05] (a) Formulate the total revenue function if xq and x2 units are sold of product A and B respectively. (b) Formulate the total cost function if Xi and X2 units are produced of product A and B respectively. (c) Formulate the total profit function if x¡ and X2 units are produced and sold of product A and B respectively. (d) Calculate the total profit if 50,000 units of product A and 80,000 units of product B are produced and sold. Q-8 A student has received $10,000 loan from a bank in order to finance his education. The terms are that the loan must be repaid in full after 10 years. If the simple interest rate is 5% semiannually, find the total amount that must be repaid after 10 years and the total interest. [05]

Answer 1

r. nt A = P(1 +-)" n

A = Final amt  

P = Principle = 25,000

r = Interesr rate = 12 % = 0.12

n = no. of times interest applied per time period = 4

t = no. of time periods = 10

0.12 A = 25,000(1+ 4*10 4

40 A = 25,000(1 + 0.03)

25,000(1.03)40

A = 25,000 * 3.262

A = 81,550.94

Interest = A - P

= 81,550.94 - 25,000

= $56,550.94