Q (1).

Calculate the future value of an investment of 10,000 dollars, after 3 years: In the first year, the interest rate is 3% p.a. compounded monthly. In the second year, the interest rate is 5% p.a. compounded monthly. In the third year, the interest rate is 7% p.a. compounded monthly. Ans. FOR 1st YEAR N=12 PV= -10,000 I\Y=3% P/Y=12 C/Y= 12 PMT= 0 FV= 10304.16 BEG\END= END FOR 2nd YEAR N= 12 PV= -10,304.16 I\Y= 5% P/Y=12 C/Y= 12 PMT= 0 FV= 10831.34 BEG\END= END FOR 3rd YEAR FOR 1st YEAR

N= 12 PV= -10,831.34 I\Y= 7% P/Y= 12 C/Y= 12 PMT= 0 FV= 11614.34 BEG\END= END Q (2). Convert the daily rate of 0.07% into the monthly, semi-annual and annual effective rates, as well as into the annual rate compounded daily, monthly and semiannually. Ans. J365 = 0.07% daily [GIVEN] J1= 0.07% X 365= 25.55% Annual J12= 25.55/ 12= 2.13% Monthly Jsemi= 25.55/2= 12.78% Semi-Annual Annual Rate Compounded Daily RATE= (1+R) N-1 RATE= (1+0.2555/365) 365-1= 29.1% Annual Rate Compounded Monthly RATE= (1+0.2555/12) 12-1= 28.77% Annual Rate Compounded Semi-Annually RATE= (1+0.2555/2) 2-1= 27.18% Q (3). Calculate the time for an investment to triple under a rate of 7% p.a. compounded daily.

Ans. N= 15.70 (5729.03/365) PV= -1,000 I\Y=7% P/Y=365 C/Y= 365 PMT= 0 FV= 3000 BEG\END= END Q (4). Calculate the time needed to pay off a mortgage valued at $400,000 today, if the rate is 8% compounded daily, and you pay at the end of each month $6000 (in equal instalments). How much will be your last payment? Ans. PV= 400,000 I\Y=8% P/Y=12 C/Y= 365 PMT= -6000 FV=0 So N= 88.46 months BEG\END= END Last payment= 3377 Q (5). Calculate the time needed to save $100,000 in a deposit account if you start with $5000 in the account today, and follow with weekly equal deposits of $500 (end-of-theweek). The rate is 2.5 % compounded daily.

Ans. N= 181 (WEEKS) PV= -5,000 I\Y=2.5% P/Y=52 C/Y= 365 PMT= -500 FV= 100,000 BEG\END= END Q (6). Calculate the net present value and the internal return rate for the investment plan where you invest $30,000 today; at the end of the next year you receive $10,000; one year later, you receive $20,000; one more year later you receive $30,000. The benchmark rate is 10% p.a. compounded daily. Ans. CF0= -30,000 C01= 10,000 F01= 1 C02= 20,000 F02=1 C03=30,000 F03= 1 I=[(1+0.10/365) 365-1]*100= 10.52% NPV= 17644.68 IRR= 36.19%

Q (7). Calculate the optimum solution for the system: x1 + x2 + x3 + x4 <= 1000 3*x1 = x2 x4 + x3 >= 50 700*x1 + 500*x2 + 600*x3 + 200*x4 <= 200000 100 >= x1 >= 0 200 >= x2 >= 0 300 >= x3 >= 0 400 >= x4 >= 0 where the function to be maximized is y= 8*x1 + 4*x2 - 2*x3 + x4. Ans. Sci-Notes c = [ 8; 4; -2; 1 ]; A=[ 1 1 1 1 3 -1 0 0 0 0 1 1 700 500 600 200 ]; b = [ 1000; 0; 50; 200000 ]; lb = [ 0; 0; 0; 0 ]; ub = [ 100; 200; 300; 400 ]; [xopt,fopt,exitflag,iter,yopt]=karmarkar([],[],c,[],[],[],[],[],A,b,lb,ub) Scilab Console >exec('C:\Users\ \Documents\Downloads\Documents\numerical analysis\scilad\e4.sce', -1) Xopt (ENTER) xopt = 66.666298 199.99975 49.999711 0.0001420

Q (8). Calculate the growth of your buying power by the end of 4 years if your earnings increase linearly by 5% per year, whereas the inflation is compounded annually at 3%.