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# MTH302 Fall 2011, Assignment 1

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in question number 3 interest rate should not be 0.03 as it is compounded quarterly?

12% = 0.12/4 = 0.03

dear if the intrest rate is 12% per anum compounded quartly then we have to devide 12% by 4

but

in question "interest is 12% compounded quarterly "   the per anum is  not used  so..

i think its clear now

Assignment Solution MTH 302

Question No. 1:

A company bought  shares at Rs.  per share and sold them after  year at Rs. .  With a  commission rate of buying and selling the stock. What is its return on investment?

Solution Question# 1

Bought

Total Share Bought= 1,000 Nos

Per Share Rate= 56.27 Rs

1000 shares value at 56.27 = 1,000*56.27=56270 Rs

Commission at 1.2% = 56270*0.012 = 675.24 Rs

Total Costs =56,270+675.24 = 56945.24 Rs

Sold

Total Share Sold = 1,000 Nos

Per Share Rate= 65.25 Rs

1000 shares value at 65.25 = 1,000*65.25=65250 Rs

Commission at 1.2% = 65250*0.012 = 783 Rs

Total Costs =65,250-783 = 64467 Rs

Gain

Net receipts = 64467

Total cost = - 56945.24

Net Gain = 64,467– 56945.24 = 7521.56 Rs

Return on investment = 7521.56 / 56945.24*100

= 13.21 %

Solution Question No. 2:

In a domestic business an owner invests 15,000 Rs at 15% per annum for a period of 66 months. Calculate compound interest and also future value.

Compound Interest

Invested Amount=P=15,000

Interest Rate= I= 15%

Period= 66/12=5.5 years

S = P(1 + r/100)^ n

S= 15000(1+15/100) ^5.5

S(Which is also the future value) =32354.1 Rs

Now Compound Interest is

Compound interest = S – P

Compound interest=32354.1-15000

Compound interest=17354.1 Rs

Future Value=32354.1 Rs

we can also find fv by this formula

fv (future value)= pv(present value)*(1+i)^n

Question No. 3:

How much money deposited now will provide payments of Rs. 10,000 at the end of each quarter for 15 years if interest is 12% compounded quarterly.

Amount of annuity (R) = 10,000 Rs

Rate of interest (I) = 12% / 4 = 0.030

Number of periods = n = 15 ×4 = 60

PV =R* [(1-(1+i) ^- n)/I]

PV = 10000*[1-(1+0.12)^-60/0.12]

PV = 10000*[0.9907]

PV= 9907.16 RS

Hi Don't you think that we should divide interest by 12 in the formula because the payment period is 66 months. If you take 5.5 years, then why we are taking 15% interest for the last year as the months are only 6.

=15000*(1+15%/12)^66=34,053.63

Dear Plz check your following steps

PV = 10,000 [0.998 / 0.12]

PV = 10,000 [8.32]

PV = 83,240.49

First you should solve upper portion then divide it by 0.12

Dear Adnan i appreciate your help with students. but i am not agreed with your idea solution, because the answer of third question is wrong. If you wanna upload something about assignment or quiz, then upoload the material which is correct, otherwise don't play with the students.

thanks brother it is clear now

One more idea solution of MTH302 assignment#1 Fall 2011

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Question No. 1:

A company bought shares at Rs. per share and sold them after year at Rs. . With a commission rate of buying and selling the stock. What is its return on investment?

Solution:

Bought

1000 shares at Rs. 56.27 = 56,270
Commission at 1.2% = 675.24
Total Costs = 56,270 + 675.24 = 56,945.24

Sold

1000 shares at Rs. 65.25 = 65,250
Commission at 1.2% = 783
Total Sale = 65,250 – 783 = 64,467

Gain

Net receipts = 64,467
Total cost = 56,270
Net Gain = 64,467 – 56,270 = 8,197
Dividends (1000*10/10) = 1,000
Total Gain = 8,197 + 1,000 = 9,197
Return on investment = 9,197 / 56,945.24 * 100
Return on investment = 16.15%

Totat Income(Gain)= Total sale + dividend - total Buying     ( if dividend have not maintian so we will skip it like Total Gain =total selling - total buying )

Tariq Your solution is not up to the mark,,there is no dividend maintioned in qus???????????

1st question ka ans  13.20% hy ya 16.15%

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