MTH302 1st Assignment Solution Fall 2011

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?

Answer:
shares at Rs.56.27 = 56270
Commission at 1.2% = 56270*1.2/100 = 675.24
Total cost = 56270+ 675.24
= 56945.24
Sold:
1000 shares at Rs. = 65250
Commission at 1.2% = 65250*1.2/100
= 783
Total Sale = 65250- 783 = 64467
Gain
Net receipts = 64467
Total cost = 56945.24
Net Gain = 64467 – 56945.24 = 7521.76
Return on investment = 7521.76/56945.24*100
= 13.20%

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.
Answer:

Amount of annuity = 10000 Rs
Rate of interest = i = 12% / 4 = 0.03
Number of periods = n = 15*4 = 60
Discount Factor = (1-1/(1+i)^n)/i
=((1-1/(1+0.03)^60)/0.03)
= 27.675
Discounted Value = 10000 * 27.675 = 276750