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# Business Matematics and Statistics (MTH 302)........Gdb no 1 ( Start date : 13 may 2016........End date : 19 may 2016)........Marks : 5

Q1. If the basic salary of an employee is Rs. 25000, then

1. What is the total saving per month of the employee on account of gratuity fund?
2. What is the amount of allowances of house rent = 45%, conveyance allowance = 2.5% and utilities allowance = 2.5%?

Q2. Payments of Rs. 15000 are being made at the end of each month for 6 years at an interest rate of 8% compounded monthly? Calculate the Present Value.

Opening Date of Graded Discussion Board:

Friday, May 13, 2016 at 12:01 a.m.

Closing Date of Graded Discussion Board:

Thursday, May 19, 2016 at 11:59 p.m.

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### Replies to This Discussion

Mth302 gdb solution

a. By law, 1/11th of Basic Salary per month is contributed by the company to the gratuity fund to the account of the employee thus there is a saving of 1/11th of basic salary on the behalf of the employee in gratuity fund.
Total savings to the employee in Gratuity Fund=(1/11)*25000=2272.73 Rs.
b.
Amount of House Rent Allowance= 25000*45%=11250 Rs.
Amount of Conveyance Allowance=25000*2.5%=625 Rs.
Amount of Utilities Allowance=25000*2.5%=625 Rs
Given that
Cash flow per period= C =Rs.15000 per month
Interest Rate= i = 8%/12 =0.08/12= 0.00667
Present Value= PV= ?
We know that
PV=C*[{1-(1+i)^(-n)}/i]
PV=15000*[{1-(1+0.00667)^(-72)}/0.00667]
PV=15000*[{1-(1.00667)^(-72)}/0.00667]
PV=15000*[{1-0.61977}/0.00667]
PV=15000*[0.38023/0.00667]
PV=15000*[57.006]
PV=855090.287 Rs.

Compound Interest
Let us suppose we have 100 rupees the increment for the two years is as follows
1).at the end of first year the interest is 20%
2). at the end of second year the interest is 30% of the first year amount

So after addition of 20% interest at the end of first year we have 120 rupees and
at the end of second year we have 30*120/100+120=156  rupees.

i.e. the compound interest is nothing but accumulated interested amount

Formula for calculating compound interest:

Where,
Mathematics
Salary
Rates
Payment Solutions
Chat Room
P = principal amount (initial investment)
r = annual nominal interest rate (as a decimal)
k = number of times the interest is compounded per year
t = number of years
A = amount after time t

Question # 1:
Solution:

A. By law, 1/11th of Basic Salary per month is contributed by the company to the gratuity fund to the account of the employee thus there is a saving of 1/11th of basic salary on the behalf of the employee in gratuity fund.

Total savings of the employee in Gratuity Fund = (1/11) x Rs. 25,000 = Rs. 2,272.73/-

B. Amount of House Rent Allowance = Rs. 25,000 x 45% = Rs. 11,250/-

Amount of Conveyance Allowance = Rs. 25,000 x 2.5% = Rs. 625/-

Amount of Utilities Allowance = Rs. 25,000 x 2.5% = Rs. 625/-

Question # 2:
Solution:

Given that:

Cash flow per period = C = Rs.15,000 /month

Interest Rate = i = 8%/12 = 0.08/12 = 0.00667

Period of Time = n = 6 Years = 72 Months

Present Value = PV = ?

We know that:

PV = C x [{1-(1+i)^(-n)}/i]

PV = Rs. 15,000 x [{1-(1+0.00667)^(-72)}/0.00667]

PV = Rs. 15,000 x [{1-(1.00667)^(-72)}/0.00667]

PV = Rs. 15,000 x [{1-0.61977}/0.00667]

PV = Rs. 15,000 x [0.38023/0.00667]

PV = Rs. 15,000 x [57.006]

PV = Rs. 855,090.287/-

GDB k result aana k bd sub must post karna plz apna apna answer........

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