Question

Chen Grocery recorded sales for January, February, and March as RM22,000, RM36,000 and RM50,000, respectively. For any given month of sales, the following percentages are received over time in cash: 60% in cash from that same month of sales; 30% in cash from the previous month's sales; and 10% in cash from the sales from two months ago.

What amount of cash will Chen Grocery received during February and March respectively?

Select one:

a. RM28,200 and RM43,000

b. RM64,200 and RM93,000

c. RM36,000 and RM50,000

d. RM30,400 and RM43,000

You decide you want your child to be a millionaire. You have a son today and you deposit $10,000 in an investment account that earns 7% per year. The money in the account will be distributed to your son whenever the total reaches $1,500,000. How old will your son be when he gets the money (rounded to the nearest year)?

Select one:

a. 74 years

b. 82 years

c. 49 years

d. 60 years

A financial advisor tells your parents that they can make you a millionaire if your parents just start saving early. Your parents decide to put an equal amount in the beginning of each year into an investment account that earns 7 interest per year, starting on the day you is born. How much would your parents need to invest each year (rounded to the nearest ringgit to accumulate a million for you by the time your age reach 35 years old? (Your last deposit will be made on his 34th birthday.)

Select one:

a. RM12,500

b. RM7,910

c. RM6,760

d. RM20,347

In a stream of past dividends, the initial dividend is RM0.75 and the most recent dividend is RM1.25. The number of years between these two dividends (n) is 8 years. What is the average growth rate during this eight-year period? Use a calculator to determine your answer.

Select one:

a. 6.62%

b. 6.72%

c. 6.59%

d. 6.69%

You borrow RM30,000 and agree to pay it off with one lump sum payment of RM40,000 in 6 years. What annual rate of interest will you be charged?

Select one:

a. 5.50%.

b. 5.91%.

c. 4.50%.

d. 4.91%.

Answer 1

1. a

Solution:

Cash received in Januray - RM22,000*60% = RM13,200

Cash received in February - (RM36,000*60%) + (RM22,000*30%) = RM21,600 + RM6,600 = RM28,200

Cash received in March - (RM50,000*60%) + (RM36,000*30%) + (RM22,000*10%) = RM30,000 + RM10,800 + RM2,200 = RM43,000

Hence, Cash received in February and March = RM 28,200 and RM 43,000 respectively.

2. a

Solution:

Let, Amount deposited be 'PV', Amount distributed to son be 'FV', Age of son be 'n' and Rate of interest earned be 'r'.

FV = PV * (1+r)^n

1,500,000 = 10,000* (1+0.07)^n

On evaluating the given equation, we get

n = 74

Hence, Age of son at the time he receives the money = 74 years

Note: i) '^' stands for "to the power of"

Note: ii) We can solve this equation by putting the options in the place of 'n' and calculating the 'FV'. Whichever option gives the 'FV' as 1,500,000 will be the answer.

3. c

Solution:

This, question can have option 'b' or 'c' as the answer depending on the judgement we make,

Let, Amount invested each year be 'PV', Amount received at the end of 35 years be 'FV', Time period be 'n' and Rate of interest be 'r'.

FV = PV * [{(1+r)^n - 1}/ r]

Option 'c':

If, we are looking for the nearest value which is lesser than a million then, we take option 'c', i.e., RM 6,760

FV = RM 6,760 * [{(1+0.07)^35 - 1}/ 0.07

Hence, FV = RM 934,502

Option 'b':

FV = RM 7,910 * [{(1+0.07)^35 - 1}/ 0.07

Hence, FV = RM 1,093,478

If, we are looking for the nearest value which is greter than a million then, we take option 'b', i.e., RM 7,910

Note: i) '^' stands for "to the power of"

Note: ii) We can solve this equation by putting the options in the place of 'PV' to calculating the 'FV'. Whichever option gives the 'FV' as 1,000,000 will be the answer.

4. c

Solution:

Let, Initial dividend be 'IV', Recent dividend be 'PV', Average growth rate be 'Avg' and Time period be 'n'.

Avg = [(PV/FV)^1/n - 1] * 100

Avg = [(1.25/0.75)^1/8 - 1] * 100

Avg = [1.677^0.125 - 1] * 100

Avg = 6.59%

Hence, Average growth rate = 6.59%

5. a

Solution:

Simple interest formula will be applied in this question.

Let, Rate of interest be 'I', Amount borrowed be 'P', Lump sum payment be 'A', Rate of interest be 'R' and Time period be 'T'

I = (P * R * T)/ 100

I = (30,000 * R * 6)/100

A = P + I

40,000 = 30,000 + 1800 * R

R = 5.5%

Hence, Rate of interest (R) = 5.5%