Question 1

Mary makes a gross profit of 50% on sales. If his Cost of Sales for the month was $30,000, what were total Sales?

Solution:,

Sales Price = …………………

=

=

Using a financial calculator: Enter

MAR SEL COMP CST

=

Question 2

An item with a list price of $100 is discounted 10% then a further 20%.

What is its new price?

Solution:

Discount Price = SP (1 – DR1) (1 – DR2)

=

=

=

Question 3

( a ) A retailer offers a trade discount of 30% and a cash discount of 10%. If a tradesperson pays cash of $315:

( i ) What was the list price of the goods bought?

( ii ) What is the percentage saved?

Solution:

( i ) List Price (SP) = =

=

( ii ) Saving % = =

( b ) Mo earns a monthly retainer of $1,000 plus 10% on all sales.

( i ) How much will Mo have to sell in a month in order to earn $4,000?

( ii ) What are Mo’s net earnings? Tax is withheld at the rate of 33 1/3%.

Solution:

( i ) Commission Earned = Total earnings – retainer

= =

Sales =

= =

( ii ) Net Pay = Total Pay ( 1 – Tax Rate)

= $............................... =

Question 4

Ken is offered a choice of two alternative earnings packages.

Package 1 is commission only at 20% on sales.

Package 2 is a monthly salary of $1,000 plus commission of 10% on all sales.

( a ) If Ken expects to make monthly sales of $30,000, with which package would he earn more money? Support your answer with a calculation.

( b ) At which monthly sales level would it make no difference which earnings package he chose?

Question 5

( a ) Calculate the value in 6 years of an investment of $1,000 earning 7% simple interest per year.

( b ) If an investment earning simple interest of 6% p.a. is today worth $1,568, what was it worth 2 years ago?

( c ) How long would you need to invest $800 at a simple interest rate of 5% to earn interest of $400?

( d ) A sum of $1,200 grows to $1,560 after 5 years. What rate of simple interest is this investment earning?

( e ) What is the value at maturity of a $2,000 bill of exchange over 120 days at 5% p.a.?

( f ) What is the face value of a promissory note at 8% p.a., if at maturity in 180 days it will be worth $10,394.53?

Solution:

( a ) A = …………………………………………………………………….

= …………………………………………………………………….

( b ) P = …………………………………………………………………….

P = …………………………………………………………………….

( c ) T = …………………………………………………………………….

= …………………………………………………………………….

( d ) R = …………………………………………………………………….

= …………………………………………………………………….

( e ) M = ………………………………………………………………….

= ………………………………………………………………….

( f ) F = ………………………………………………………………….

=

=

Question 6

Complete the following compound interest questions.

Present Value Future Value Interest rate Period

( a ) 5,000 ? 8 % 5

( b ) 7,000 14,000 ? 8

( c ) 9,000 18,000 6% ?

Solution:

Present Value Future Value Interest rate Period

( a ) 5,000 $7346.64 8 % 5

( b ) 7,000 14,000 9% 8

( c ) 9,000 18,000 6% 11 years and 11 months

Question 7

How long would it take $1,000 to accumulate to $1,814.02 if it earned 6% p.a. paid quarterly?

Solution

COMP N Answer: 10 years

I PV FV No. of Periods = …4… periods

No. of Periods = …10….. years

Question 8

( a ) Calculate the repayments on a loan of $18,500 repayable over sixty equal monthly instalments at an interest rate of 6.0% p.a..

( b ) A borrower is making semi annual repayments of $4,000 on a loan at 9 % compounding annually, the loan being taken over 20 years. How much was the original amount of the loan?

( c ) Find the interest rate at which deposits of $250 at the end of every month for ten years will accumulate to $57,509.67.

( d ) How much should an investor deposit now, to produce an annuity of $10,000 per year, for ten years given an annual interest rate of 9%.

Solution

( a ) ………. ( b ) ………. ( c ) ………. ( d ) ……….

Question 9

You borrow $30,000 to be repaid in equal monthly instalments over 10 years. The interest on the loan is 12% p.a. (1% per month)

( a ) What is the monthly repayment?

( b ) How much would it cost to pay out the loan after 4 years? Payout figure is the amount owing on the loan i.e., principal balance.

( c ) How much interest is saved?

Solution

( a ) Using the financial calculator.

COMP PMT

N l PV Payment = $...........

( b ) Principal

( c ) Interest

Question 10

Max borrows $200,000 to buy a unit. His loan calls for equal monthly instalments for 12 years. Interest on the loan is 6% p.a.

( a ) What is the monthly repayment on the loan?

( b ) At the end of the fifth year, just after paying the instalment due at that time, Max has a windfall and is considering paying out the loan. How much would it cost? How much interest would he save?

( c ) Max decides against repaying the loan at this time, opting instead to reduce the term of the loan by 3 years. What is his new instalment?

( d ) At the end of the seventh year, just before the instalment due at that time, Max pays out the loan. How much does this cost him and how much will he save?

Solution

( a ) Sharp EL 738

Answer:

N l PV Payment = ……………

( b ) Sharp EL 738

Enter

Enter Balance = 0.00

Payout figure Principal = ………………..

Saving Interest = ………………..

( c ) Treat as for new loan

For EL 738 Enter ON/C 2ndF ALPHA 0 0

Answer:

N l PV Payment = …………

( d ) Sharp EL 738

Answer:

Interest saved

Answer:

Question 11

An asset which cost $15,000 on 1st January 2015 has an expected useful life of 10 years and a residual value of $1,000.

Calculate the depreciation charge per annum using the straight line method. What will its written down value be on 30th June 2016?

Solution

Annual Depreciation Charge = …………. = ………….

Written Down Value = …………………………………… = ……………

Question 12

An item of plant, which cost $16,000 on 1st July 2015, is being depreciated at 25% per annum using the reducing balance method.

Calculate the depreciation charge at 30th June 2016 and 30th June 2017.

Solution

Year 1 WDV = $.......... Charge = $.........

Year 2 WDV = $.......... Charge = $.........

Question 13

A business uses its motor vehicles for 200,000 kilometres, at which time they are sold. A motor vehicle costing $30,000 has an expected resale value of $5,000 after 200,000 kilometres.

What is the depreciation charged for a year in which the vehicle travels 90,000km?

Solution:

Rate =

Depreciation charge =

Question 14

A truck costing $80,000 has an expected life of 8 years. What is its written down value in 5 years if it is depreciated using:

( a ) Straight line method?

( b ) Reducing balance method? (assuming the rate is 1.5 times the straight line rate)

Solution:

( a )

( b )

Question 15

COSAB produces a product which has a unit variable cost of $8.00 per unit and a fixed cost of $100,000. Each unit has a selling price of $12.00.

Required: Determine the following assuming 40,000 units are produced and sold

( a ) Total variable costs.

( b ) Total costs.

( c ) Total revenue after 40,000 units are sold.

( d ) Profit at 40,000 units.

Solution:

( a ) Variable Cost =

=

( b ) Total Costs =

=

( c ) Total Revenue =

=

( d ) Profit =

Question 16

Dell Co. sells its product at a unit price of $80.00, representing a mark-up of 60% on cost. Calculate the unit cost.

Solution:

Question 17

Lou has started a new business selling roller blades. Each set of blades will cost $100 and will retail for $150. The annual rent is $5,000 and 100 units are sold. Determine the profit or loss.

Solution:

Question 18

Co Co. sells calculators at a unit price of $60.00. The variable cost per unit is $20.00, with fixed costs of $40,000.

Required:

(a) Sales breakeven in units.

(b) Sales breakeven in dollars.

(c) Graph the breakeven point ( in units 0f 1,000 )

Level of Activity 0 1,000 2,000 3,000 4,000 5,000 6,000

Total Revenue

Total Costs

*

Notes

Mary makes a gross profit of 50% on sales. If his Cost of Sales for the month was $30,000, what were total Sales?

Solution:,

Sales Price = …………………

=

=

Using a financial calculator: Enter

MAR SEL COMP CST

=

Question 2

An item with a list price of $100 is discounted 10% then a further 20%.

What is its new price?

Solution:

Discount Price = SP (1 – DR1) (1 – DR2)

=

=

=

Question 3

( a ) A retailer offers a trade discount of 30% and a cash discount of 10%. If a tradesperson pays cash of $315:

( i ) What was the list price of the goods bought?

( ii ) What is the percentage saved?

Solution:

( i ) List Price (SP) = =

=

( ii ) Saving % = =

( b ) Mo earns a monthly retainer of $1,000 plus 10% on all sales.

( i ) How much will Mo have to sell in a month in order to earn $4,000?

( ii ) What are Mo’s net earnings? Tax is withheld at the rate of 33 1/3%.

Solution:

( i ) Commission Earned = Total earnings – retainer

= =

Sales =

= =

( ii ) Net Pay = Total Pay ( 1 – Tax Rate)

= $............................... =

Question 4

Ken is offered a choice of two alternative earnings packages.

Package 1 is commission only at 20% on sales.

Package 2 is a monthly salary of $1,000 plus commission of 10% on all sales.

( a ) If Ken expects to make monthly sales of $30,000, with which package would he earn more money? Support your answer with a calculation.

( b ) At which monthly sales level would it make no difference which earnings package he chose?

Question 5

( a ) Calculate the value in 6 years of an investment of $1,000 earning 7% simple interest per year.

( b ) If an investment earning simple interest of 6% p.a. is today worth $1,568, what was it worth 2 years ago?

( c ) How long would you need to invest $800 at a simple interest rate of 5% to earn interest of $400?

( d ) A sum of $1,200 grows to $1,560 after 5 years. What rate of simple interest is this investment earning?

( e ) What is the value at maturity of a $2,000 bill of exchange over 120 days at 5% p.a.?

( f ) What is the face value of a promissory note at 8% p.a., if at maturity in 180 days it will be worth $10,394.53?

Solution:

( a ) A = …………………………………………………………………….

= …………………………………………………………………….

( b ) P = …………………………………………………………………….

P = …………………………………………………………………….

( c ) T = …………………………………………………………………….

= …………………………………………………………………….

( d ) R = …………………………………………………………………….

= …………………………………………………………………….

( e ) M = ………………………………………………………………….

= ………………………………………………………………….

( f ) F = ………………………………………………………………….

=

=

Question 6

Complete the following compound interest questions.

Present Value Future Value Interest rate Period

( a ) 5,000 ? 8 % 5

( b ) 7,000 14,000 ? 8

( c ) 9,000 18,000 6% ?

Solution:

Present Value Future Value Interest rate Period

( a ) 5,000 $7346.64 8 % 5

( b ) 7,000 14,000 9% 8

( c ) 9,000 18,000 6% 11 years and 11 months

Question 7

How long would it take $1,000 to accumulate to $1,814.02 if it earned 6% p.a. paid quarterly?

Solution

COMP N Answer: 10 years

I PV FV No. of Periods = …4… periods

No. of Periods = …10….. years

Question 8

( a ) Calculate the repayments on a loan of $18,500 repayable over sixty equal monthly instalments at an interest rate of 6.0% p.a..

( b ) A borrower is making semi annual repayments of $4,000 on a loan at 9 % compounding annually, the loan being taken over 20 years. How much was the original amount of the loan?

( c ) Find the interest rate at which deposits of $250 at the end of every month for ten years will accumulate to $57,509.67.

( d ) How much should an investor deposit now, to produce an annuity of $10,000 per year, for ten years given an annual interest rate of 9%.

Solution

( a ) ………. ( b ) ………. ( c ) ………. ( d ) ……….

Question 9

You borrow $30,000 to be repaid in equal monthly instalments over 10 years. The interest on the loan is 12% p.a. (1% per month)

( a ) What is the monthly repayment?

( b ) How much would it cost to pay out the loan after 4 years? Payout figure is the amount owing on the loan i.e., principal balance.

( c ) How much interest is saved?

Solution

( a ) Using the financial calculator.

COMP PMT

N l PV Payment = $...........

( b ) Principal

( c ) Interest

Question 10

Max borrows $200,000 to buy a unit. His loan calls for equal monthly instalments for 12 years. Interest on the loan is 6% p.a.

( a ) What is the monthly repayment on the loan?

( b ) At the end of the fifth year, just after paying the instalment due at that time, Max has a windfall and is considering paying out the loan. How much would it cost? How much interest would he save?

( c ) Max decides against repaying the loan at this time, opting instead to reduce the term of the loan by 3 years. What is his new instalment?

( d ) At the end of the seventh year, just before the instalment due at that time, Max pays out the loan. How much does this cost him and how much will he save?

Solution

( a ) Sharp EL 738

Answer:

N l PV Payment = ……………

( b ) Sharp EL 738

Enter

Enter Balance = 0.00

Payout figure Principal = ………………..

Saving Interest = ………………..

( c ) Treat as for new loan

For EL 738 Enter ON/C 2ndF ALPHA 0 0

Answer:

N l PV Payment = …………

( d ) Sharp EL 738

Answer:

Interest saved

Answer:

Question 11

An asset which cost $15,000 on 1st January 2015 has an expected useful life of 10 years and a residual value of $1,000.

Calculate the depreciation charge per annum using the straight line method. What will its written down value be on 30th June 2016?

Solution

Annual Depreciation Charge = …………. = ………….

Written Down Value = …………………………………… = ……………

Question 12

An item of plant, which cost $16,000 on 1st July 2015, is being depreciated at 25% per annum using the reducing balance method.

Calculate the depreciation charge at 30th June 2016 and 30th June 2017.

Solution

Year 1 WDV = $.......... Charge = $.........

Year 2 WDV = $.......... Charge = $.........

Question 13

A business uses its motor vehicles for 200,000 kilometres, at which time they are sold. A motor vehicle costing $30,000 has an expected resale value of $5,000 after 200,000 kilometres.

What is the depreciation charged for a year in which the vehicle travels 90,000km?

Solution:

Rate =

Depreciation charge =

Question 14

A truck costing $80,000 has an expected life of 8 years. What is its written down value in 5 years if it is depreciated using:

( a ) Straight line method?

( b ) Reducing balance method? (assuming the rate is 1.5 times the straight line rate)

Solution:

( a )

( b )

Question 15

COSAB produces a product which has a unit variable cost of $8.00 per unit and a fixed cost of $100,000. Each unit has a selling price of $12.00.

Required: Determine the following assuming 40,000 units are produced and sold

( a ) Total variable costs.

( b ) Total costs.

( c ) Total revenue after 40,000 units are sold.

( d ) Profit at 40,000 units.

Solution:

( a ) Variable Cost =

=

( b ) Total Costs =

=

( c ) Total Revenue =

=

( d ) Profit =

Question 16

Dell Co. sells its product at a unit price of $80.00, representing a mark-up of 60% on cost. Calculate the unit cost.

Solution:

Question 17

Lou has started a new business selling roller blades. Each set of blades will cost $100 and will retail for $150. The annual rent is $5,000 and 100 units are sold. Determine the profit or loss.

Solution:

Question 18

Co Co. sells calculators at a unit price of $60.00. The variable cost per unit is $20.00, with fixed costs of $40,000.

Required:

(a) Sales breakeven in units.

(b) Sales breakeven in dollars.

(c) Graph the breakeven point ( in units 0f 1,000 )

Level of Activity 0 1,000 2,000 3,000 4,000 5,000 6,000

Total Revenue

Total Costs

*

Notes

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