Additional

Mathematics Project
Work 3

Name : Steve Lim Keaw

Ann
I/C : 930130-10-5099
Class : 5 Local
School : Kolej Tuanku
Ja’afar
 Additional Mathematics Project Work 3

Content
Title Page

Content 1
Acknowledgement & Appreciation 2
Objective 3
Question of Additional Mathematics Project Work 3 4~7
Answers 8
Part 1 a 9 ~ 10
Part 1 b,c 11
Part 1 d, Part 2 a,b 12
Part 2 c 13
Part 2 d(i) 14
Part 2 d(ii), e 15 ~ 16
Further Exploration 17
Reflection 18
Illustraion 19 ~ 20

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 Additional Mathematics Project Work 3

Acknowledgement and Appreciation

First of all, I would like to say thank you to my friends, teachers and parents for
giving me their full support in making this project successful.

Not forgotten to my family for providing everything, such as money, to buy anything
that are related to this project work and their advise, which is the most needed for this
project. Internet, books, computers and all that act as my source to complete this project.
They also supported me and encouraged me to complete this task so that I will not
procrastinate in doing it.
Then I would like to thank my teacher, Mr Hussin Bin Sahid for guiding me and my
friends throughout this project. We had some difficulties in doing this task, but he taught us
patiently and gave me guidance throughout the journey until we knew what to do. He tried
his best to help us until we understand what we supposed to do with the project work.
Besides that, my friends who were doing this project with me and shared our ideas.
They were helpful that when we combined and discussed together, we had this task
completed in just a glimpse of an eye.
Last but not least, any party which involved either directly or indirect in completing
this project work.

Thank you everyone.

Yours sincerely,

(Steve Lim Keaw Ann)

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Objective

We, as the students taking Additional Mathematics are required to carry out a project work while
we are in Form 5. This year the Curriculum Development Division, Ministry of Education has
prepared for tasks for us with four choices, and I chose the third task. We are to choose and
complete ONLY one task based on our area of interest. This project can be done in groups or
individually, but each of us are expected to submit an individually written report. Upon
completion of the Additional Mathematics Project Work, we are to gain valuable experiences and
able to:

1. Apply and adapt a variety of problem solving strategies to solve routine and non-routine
problems
2. Experience classroom environments which are challenging, interesting and meaningful
and hence improve their thinking skills
3. Experience classroom environments where knowledge and skills are applied in
meaningful ways in solving real-life problems
4. Experience classroom environments where expressing ones mathematical thinking,
reasoning and communication are highly encouraged and expected
5. Experience classroom environments that stimulates and enhances effective learning
6. Acquire effective mathematical communication through oral and writing, and to use the
language of mathematics to express mathematical ideas correctly and precisely
7. Enhance acquisition of mathematical knowledge and skills through problem- solving in
ways that increase interest and confidence
8. Prepare ourselves for the demand of our future undertakings and in workplace
9. Realises that mathematics is an important and powerful tool in solving real-life problems
and hence develop positive attitude towards mathematics.
10. Train ourselves not only to be independent learners but also to
collaborate, to cooperate and to share knowledge in an engaging
healthy environment
11. Use technology especially the ICT appropriately and effectively
12. Train ourselves to appreciate the intrinsic values of mathematics and to become more
creative and innovative
13. Realises the importance and the beauty of mathematics

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Question of
Additional
Mathematics
Project
Work 3 Year
2010

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CURRICULUM DEVELOPMENT DIVISION

MINISTRY OF EDUCATION MALAYSIA

ADDITIONAL MATHEMATICS PROJECT WORK 3/2010

BACKGROUND
Every business requires some form of investment and a sufficient number of customers to
buy its products or services that give profits on a continuous basis. When pricing experts set
a selling price for a new product, their goal is to maximize profits. They begin by estimating
the demand for the product at various selling prices. Generally, the demand for a product
will increase as the selling price decreases.

PART 1
Table 1 shows the various selling prices and estimated demand for a particular computer
component manufactured by a company, Warisan RMN.

Selling Price Per Unit, 𝒔, Estimated Year demand, 𝒅,

(RM) (units)
75 4500
125 3500
200 2000
250 1000
Table 1

a) Determine the relationship between the demand, 𝑑, and the selling price, 𝑠, by
plotting a graph based on the values displayed in Table 1. Plotting of the graph can
be done manually, using computer software such as Microsoft Excel or graphing
calculator. Interpret the graph, discus and write a brief explanation on the
relationship between the demand of the selling price of the computer components
manufactured by the company.
b) Assuming that production cost of the component is RM 50 per unit, express the
yearly profit, 𝑃, in terms of the selling price, 𝑠. Comment on your answer.
[Note: Total Profit = Total Sales – Total Cost]
c) Use two or more methods to determine the maximum profit and the corresponding
selling price. Explain your answers.
d) Further, determine the number of the computer components to be manufactured by
the company in order to gain maximum profit.

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PART 2
In year 2009, Warisan RMN made a profit of RM200,000. The company intends to increase
its production in year 2010, therefore needs a substantial amount of money for capital
investment.
As manager of the company, you have to decide on the amount of loan and the period of
the loan to be taken for the purpose mentioned above.

Table 2 shows part of a monthly repayment schedule for a commercial loan from bank A
Loan Monthly Payment (RM)
Amount
12 months 24 months 36 months 48 months 60 months
(RM)
10,000 1034.00 617.00 478.00 409.00 467.00
15,000 1550.00 925.00 717.00 613.00 550.00
20,000 2067.00 1234.00 956.00 817.00 734.00
25,000 2584.00 1542.00 1195.00 1021.00 917.00
30,000 3100.00 1850.00 1434.00 1225.00 1100.00
35,000 3617.00 2159.00 1673.00 1430.00 1284.00
40,000 4134.00 2467.00 1912.00 1634.00 1467.00
45,000 4650.00 2775.00 2150.00 1838.00 1650.00
50,000 5167.00 3084.00 23890.0 2042.00 1834.00
Table 2

a) Based on Table 2, Calculate the total amount of interest incurred for each choise of
repayment period and their corresponding amount of loan. Tabulate the values in
Table 3.

Total Loan Total Interest Incurred (RM)

RM 12 months 24 months 36 months 48 months 60 months
10,000
20,000
30,000
40,000
50,000
Table 3

b) Based on your findings in (a) calculate the average interest rate per month. Tabulate
your results and comment on your findings.
c) Further, tabulate the amount of yearly repayment for each choice of repayment
period up to 5 years for loan amounts from RM10,000 to RM 100,000. By obversing
the total annual payment for 12 months, show that the annual payment for loan
amount of RM10,000, RM15,000, RM20,000 and so on form a progression.

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d) The company allocated only 20% of the profit made in the year 2009 on loan
repayment period per annum. Assume that the company continues to make an
annual profit of RM200,000 in the following years.
(i) Based on your table in (c), determine the maximum amount of loan, in
multiples of RM5000, for each choice of repayment period: 1 year, 2 years, 3
years, 4 years and 5 years.
(ii) Hence, determine which loan option should the company take, and elaborate
on your reasons.
e) The company has set aside a reserve fund of RM 50,000 in a bank and earns monthly
interest beginning 1st January 2010.
Assuming that the bank gives an annual interest of 2.5%; determine the amount of
the reserve fund at the end of each month until 31 st December 2010.

FURTHER EXPLORATION
Look into other commercial loans or other financial sources available in the market that may
be utilized by the company for its capital investment. (Example: Overdraft, Islamic Loan)
Discuss the advantage and disadvantages of the different types of loans available.

REFLECTION
While you were conducting the project, what have you learnt? What moral values did you
practice? Represent your opinions or feelings creatively through usage of symbols,
illustrations, drawings or even in a song.

Extracted from “Additional Mathematics Project Work 3”

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 Additional Mathematics Project Work 3

Answers

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Part 1
a) As the selling price, 𝑠 increases, the estimated yearly demand, 𝑑 decreases. Thus we
can say that the relationship is inversely proportional as shown below

1
𝑠∝
𝑑
If a 𝑠 against 𝑑 graph is plotted, a straight line will be formed
300

250

200

150

100

50

0
1000 2000 3500 4500

Graph 1.1 Graph 𝑠 against 𝑑

Based on graph 1.1, the curve of the graph shows a curve, proving the relationship of 𝑠
against 𝑑 is inversely proportional. In which means that as the selling price increases, the
estimated yearly demand will decrease.

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1
However, if a 𝑠 against 𝑑 graph is plotted, a straight line curve is obtained
Selling price per unit , 𝒔, Estimated Yearly Demand, 𝟏
Reciprocal of 𝒅 which is 𝒅
(RM) 𝒅, (Units)
75 4500 0.0002
125 3500 0.0003
200 2000 0.0005
250 1000 0.001

300

250

200

Series 1
150
Column1
Column2
100

50

0
0.0002 0.0003 0.0005 0.001

1
Graph 1.2 Graph 𝑠 against
𝑑
1
In graph 1.2, the graph shows a straight line when it is plotted 𝑠 against 𝑑 . It actually
means the same as graph 1.1.

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b) Cost of the computer product = RM50 per unit

Express yearly profit, 𝑃, in terms of selling price, 𝑠.
𝑃 = 𝑠𝑑 − 50𝑠
Where 𝑃 is the total profit, 𝑠 is the selling price per unit and 𝑑 is the estimated yearly
demand.
For example below
Selling Price Per Estimated Yearly Total Sales (𝒔𝒅) Total Cost Profit
Unit, 𝒔, (RM) Demand, 𝒅, (Units) (50𝒅) (𝑷 = 𝒔𝒅 − 𝟓𝟎𝒔)
75 4500 337,500 225,000 112,500
125 3500 437,500 175,000 262,500
200 2000 400,000 100,000 300,000
250 1000 250,000 50,000 200,000
Table 1.1
Based on Table 1.1 calculation has been made to calculate the total profit using the
formula 𝑷 = 𝒔𝒅 − 𝟓𝟎𝒔 . It was found that the maximum profit can be obtained is
when the selling price is RM200 per unit. Thus, Warisan RMN should sell each
computer component at a price of RM 200 to ensure the amount of user buying the
component is at maximum to produce maximum profit. Although, the selling price
was RM75 and the demand was 4500, the profit earned is still not as high as the
previous one.

c) First method to determine the maximum profit is to produce a lot of computer

component at a time. However, the company should ensure that they have already
gained a place in the users’ heart so that they will purchase. This keeps the demand
running on and on thus preventing wastage of natural resources. We should keep in
mind that excessive production does not guarantee a 100% reward. If production is
too high and the demand for the certain product is low, it might cause losses due to
lack of demand. Therefore, an advice for new companies is to produce minimum but
rewarding amount of product. After the company gains the users’ trust, then the
company can start producing huge amount of product. However, provision should be
made for demand and economic crisis. Then only a maximum profit can be
determined.
The second method is profit maximization. It is a process by which a firm determines
the price and output level that returns the greatest profit. There are several
approaches to this problem. The total revenue - total cost method relies on the fact
that profit equals revenue minus cost, and the marginal revenue–marginal cost
method is based on the fact that total profit in a perfectly competitive market
reaches its maximum point where marginal revenue equals marginal cost. Any costs
incurred by a firm may be classed into two groups: fixed cost and variable cost. Fixed
costs are incurred by the business at any level of output, including zero output.
These may include equipment maintenance, rent, wages, and general upkeep.
Variable costs change with the level of output, increasing as more product is

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generated. Materials consumed during production often have the largest impact on
this category. Total cost is the total when fixed cost and variable cost are combined.

d) Referring to table 1.1, the maximum profit is obtained at the selling price of 200. In
order to obtain maximum profit, the selling price should be allocated in between
RM125 and RM250. This is because the highest profit is in between the selling price
of RM125 and RM250.

PART 2
a) The total interest incurred is calculated through the formula below
𝐼 = 𝑀𝑎 − 𝐿
Where 𝐼 is total interest, 𝑀 is the total month for monthly payment and 𝑎 for
the number of months.
For example loan amount of RM10,000 for 12 months payment where each
month repayment is RM1034.00
∴ 𝐼 = 𝑀𝑎
𝐼 = 12 𝑅𝑀1034
𝐼 = 𝑅𝑀12,408

Total Loan Total interest incurred (RM)

RM 12 months 24 months 36 months 48 months 60 months
10,000 2,408 4,808 7,208 9,632 12,020
20,000 4,804 9,616 14,416 19,216 24,040
30,000 7,200 14,400 21,624 28,800 36,000
40,000 9,608 19,208 28,832 38.432 48,020
50,000 12,004 24,016 36,004 48,016 60,040
Table 1.2

b) To calculate the average interest rate per month, a table in drawn and data are
inserted. Average rate of interest per month is calculated as follow using the formula
below.
𝐼
× 100
𝑖= 𝐿
𝑚

Indicator
𝑖 means average rate of interest per month
𝐼 means total interest incurred which can be obtained from table 1.2
𝐿 means the total loan and lastly
𝑚 means the total number of months of repayment

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Total Loan Average rate of interest per month

RM 12 months 24 months 36 months 48 months 60 months
10,000 2% 2% 2% 2% 2%
20,000 2% 2% 2% 2% 2%
30,000 2% 2% 2% 2% 2%
40,000 2% 2% 2% 2% 2%
50,000 2% 2% 2% 2% 2%
Table 1.3
From the results above, we can conclude that the percentage of interest incurred is
2% for each period of repayment. Besides, the total amount of interest needed to
pay exceeds the loan when the total repayment months are 60. Thus, this means
that the percentage of interest incurred is same for all loan regardless of the
repayment period.

c) Total Loan Total Interest incurred (RM)

RM 12 months 24 months 36 months 48 months 60 months
10,000 2,400 4,800 7,200 9,600 12,000
15,000 3,600 7,200 10,800 14,400 18,000
20,000 4,800 9,600 14,400 19,200 24,000
25,000 6,000 12,000 18,000 24,000 30,000
30,000 7,200 14,400 21,600 28,800 36,000
35,000 8,400 16,800 25,200 33,600 42,000
40,000 9,600 19,200 28,800 38,400 48,000
45,000 10,800 21,600 32,400 43,200 54,000
50,000 12,000 24,000 36,000 48,000 60,000
55,000 13,200 26,400 39,600 52,800 66,000
60,000 14,400 28,800 43,200 57,600 72,000
65,000 15,600 31,200 46,800 62,400 78,000
70,000 16,800 33,600 50,400 67,200 84,000
75,000 18,000 36,000 54,000 72,000 90,000
80,000 19,200 38,400 57,600 76,800 96,000
85,000 20,400 40,800 61,200 81,600 102,000
90,000 21,600 43,200 64,800 86,400 108,000
95,000 22,800 45,600 68,400 91,200 114,000
100,000 24,000 48,000 72,000 96,000 120,000

Table 1.4
Notes: All interests rate are based on Table 1.3

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d) Profit in year 2009 = RM200,000

20% of the profit = RM 40,000
Purpose of provision of 20% = loan repayment
Assumption = making the same profit in the same following years
i) The table below shows the maximum amount of profit earn in 5 years
Year
2009 2010 2011 2012 2013
Profit earn for 200,000 200,000 200,000 200,000 200,000
that year
Total profit 200,000 400,000 600,000 800,000 1,000,000
Provision for 40,000 80,000 120,000 160,000 200,000
repayment
Table 1.5
If the Warisan RMN chooses to repay in 1 year time, I would recommend them to
make loan of RM 30,000. This is because the amount needed to return back is
RM37,200 (RM30,000+RM7,200) including interests. This does not exceed the
provision set by the company.
For the second choice of repayment is 2 years time. For this choice, I recommend the
company to request a loan of RM50,000. The total amount needed to repay is
RM74,000 (RM50,000+RM24,000) inclusive of interests.
For the third choice of repayment is 3 years time. I recommend the company to
request a loan of RM65,000. The amount needed to repay is RM111,800
(RM65,000+RM46,800)
For the fourth choice is to repay within 4 years time. In this case, I suggests that a
loan of RM80,000 should be made. The amount of money needed to repay is
RM156,800 (RM80,000+RM76,800).
For the last choice is to pay within 5 years time. I will urge the company to make a
loan of RM 90,000. The total repayment amount is RM198,000
(RM90,000+RM108,000)
In conclusion, all the reason above is within the provision for repayment. Thus it can
be summarised into a table as follows.
Period of Year Profit For Total Total Total Total
Repayment That Year Provision Loan RM Interest Amount of
(Year) For incurred Repayment
Repayment RM
1 2009 200,000 40,000 30,000 7,200 37,200
2 2010 200,000 80,000 50,000 24,000 74,000
3 2011 200,000 120,000 65,000 46,800 111,800
4 2012 200,000 160,000 80,000 76,800 156,800
5 2013 200,000 200,000 90,000 108,000 198,000

Table 1.6

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ii) Based on the the company, Warisan RMN situation, the firm needs a
substantial amount of money for capital investment. Therefore, I, as the
manager of the company, should choose the best choice for the company
thus can make more profit from the loan and the repayment should not be a
burden to the company. Based on the Table 1.6, we can see that the amount
of repayment does not exceed the provision for repayment. Therefore, I
would choose to make a loan of RM90,000 with a repayment within 5 years
or 60 months. In this case, the total interests incurred is RM108,000. When
we sum it up, the total is RM198,000. For RM198,000, we can divided into 60
months which is the repayment period. So in that case, we need to pay
RM3,300 per month. Besides, we can make use of the loan by investing to
make new computer components which can be very profitable.

e) Situation
The company has set aside a reserve fund of RM50,000 in a bank an earns monthly
interest beginning 1st January 2010.
Interest rate: 2.5%
Problem: Amount of the reserve fund at the end of each month until 31 st December
2010.

From the situation above, we can conclude that the amount of money in the bank
increases by 2.5% per annum. Thus the information can be shown in a table form as
follows.

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Month Amount of Money Amount of Total Amount Of

in the beginning of Interest (RM) Money at the end
the month of the month
January 50,000 104.17 50,104.17
February 50,104.17 104.17 50,208.34
March 50,208.34 104.17 50,312.51
April 50,312.51 104.17 50,4146.68
May 50,416.68 104.17 50,520.85
June 50,520.85 104.17 50,625.02
July 50,625.02 104.17 50,729.19
August 50,729.19 104.17 50,833.36
September 50,833.36 104.17 50,937.53
October 50,937.53 104.17 51,041.70
November 51,041.70 104.17 51,145.87
December 51,145.87 104.13 51,250
1 Year 50,000 1,250 51,250

The amount of interest obtained for a year is RM1,250. If it would be divided into 12
1
months, the amount will be RM1046 which is an infinite number. To make it rational
number, I made some adjustment where the first 11 months will receive RM104.17
as interests and the last month which is December we will receive an interests of
RM104.13. Sum it up we will get RM1,250 (RM104.17×11 + RM103.13 =RM1,250)

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FURTHER EXPLORATION
RHB Bank SME Bank Bumiputra Bank
 Fast credit decision, upon  No collateral required - You  Non-Collateralize , no
receipt of full don't have to pledge your guarantor required &
documentation assets to be eligible, only CCRIS/CTOS/FIS also
 Quick "Yes" or "No" to guarantee can apply
your application from your directors and/or  Government servants &
 Simple documentation shareholders is/are required. private sector staffs
requirements  Easy to apply - No need to ( Bhd / Sdn Bhd /
 27 easily accessible get property valuation report Enterprise )
Commercial Banking or transfer money from  Pensioner or SOCSO
Business Centres and a other bank or  Those who are
wide network of branches to use FD as security. blacklisted with any
throughout Malaysia  Fast approval - Upon bank financial
 Prompt and friendly receiving full and institutions - also can
customer service satisfactory documentation apply
 In line with the from you, drawdown will  CRITERIA : SALARY
Government's call to be available within 2 weeks MUST BE CREDITED
support SME businesses subject to approval THROUGH BANK
nationwide conditions.  Specialized & designed
 Uses a transparent and  Loan from RM 50,000 to for Bumiputra working
objective credit scoring RM 500,000 - You choose in KL & Selangor
approach the sum that suits your  Guaranteed the lowest
 Fastest turnaround time business needs. installment plan in town
for Loans up to RM 1  Flexible repayment tenure -  Loan up to 3-5 times of
Million You can choose a period of salary / 10000 / higher -
 A comprehensive range of repayment between 1 to 5 subjected to terms and
financial products and years. conditions
services  Instant approval within
 Holistic approach to credit 30 minutes
approval with emphasis on  Bring us your document
your business experience, as follow :-
payment history and  3 months latest payslip
account activity patterns  3 months latest bank
statement
 Employment
confirmation letter
 Utilities bill

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REFLECTION

Throughout the project while I was conducting it, I learned many stuff. This includes
on usage of knowledge and ways to conduct the project. While I was conducting the project,
I collected information from the internet and brochures from the banks regarding the loans.
Besides, I manipulated my knowledge in other fields such as accounting and economics in
this research.

However, the most important this I have learnt from this project is to plan before we
do something. In this project, I was regarded as the manager of the firm Warisan RMN. I was
required to make decision on making loans so that the company is able to increase its
production in the following year, Year 2010. Thus, planning is required and information was
given. Bank A provides such a loan and repayment period where we can make our choice
wisely.

While planning, I made few tables on total interest incurred, average interest rate
per month and also annual payment for the loan. This has taught me that a lot of work
should be done such as consideration and provision for repayment before making a loan.
We must be able to clear the debt within the time given and should not make decision in a
haste because great haste make great waste.

Besides, I learned how to cooperate with friends. My friends and I discussed about
the project and we shared ideas amongst ourselves. This discussion has made me more
confident when doing something. I also learned to be disciplined in terms of punctuality,
doing project and not least to avoid plagiarism.

In a nutshell, I have learned something about the future and how serious can it be if
we make a wrong decision. Moreover, work that we done must be original and not totally
derived from other people. These two images have expressed my opinions from this project.

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Everything comes with a plan. Without a plan, we will fail. Just like the saying goes, we don’t
plan to fail but we fail to plan.

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A perfectly good business plan is a must to be done to have a long-lasting and profitable
business.

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