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Assignment 01

This document contains two questions for an assignment on business mathematics and statistics. [1] The first question asks the student to choose the best retirement plan option that offers either a lump sum payment today or annual payments over 15-20 years. The student calculates the future values of each option using the interest rate and determines that option B, receiving annual payments of Rs. 192,500 over 20 years, is most valuable. [2] The second question provides data on beverage deliveries to four stores over two months. The student sums the delivery quantities, multiplies by the per unit prices to calculate the total costs for each store, finding them to be Rs. 4,238, Rs. 3,503, Rs. 4

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41 views

Assignment 01

This document contains two questions for an assignment on business mathematics and statistics. [1] The first question asks the student to choose the best retirement plan option that offers either a lump sum payment today or annual payments over 15-20 years. The student calculates the future values of each option using the interest rate and determines that option B, receiving annual payments of Rs. 192,500 over 20 years, is most valuable. [2] The second question provides data on beverage deliveries to four stores over two months. The student sums the delivery quantities, multiplies by the per unit prices to calculate the total costs for each store, finding them to be Rs. 4,238, Rs. 3,503, Rs. 4

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HAROON EDITZ
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© © All Rights Reserved
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Assignment 01

Business Mathematics & Statistics ( MTH302)

ROLL NO:MUHAMMAD HAROON KHALID(BC220418192)

Question # 1
Suppose you are going to retire at the age of 65 today. For your retirement plan department is
offering following options:
I. Receive Rs. 3,500,000 today.
II. Receive 20 payments of Rs. 192,500 over the next 20 years (
).
III. Receive Rs. 800,000 today and 15 payments of Rs. 194,000 over the next 15 years (the
first payment will be at the end of this year).
You have to chose the best possible option. Whereas, your savings account pays an interest
rate of 5% annually.
a) Would you use the Future Value or Present Value to solve this question? Why?
b) Determine which option is best for you.

Answer no 1:

(A):

PLAN A PLAN B PLAN C


Receive Rs. 35,000,00 Receive 20 payments of Rs. 192,500 over the Receive Rs. 800,000 today
today = 35,000,00 next 20 years. ( the first payment will be at the and 15 payments of Rs.
end of the this year) s. 194,000 over the e next
15 years.

Formula : FV = C*[(𝟏 + 𝒊) 𝒏 -1] / I

= 192,500*[(1 + 5%) 20 -1] / 5%


= 192,500*[(1 +. 05) 20 -1] / .05
= 192,500*[(1.05) 20 -1] / .05
= 192,500*[2.65-1] / .05
= 192,500*[1.65/.05]
= 192,500*33
= 63,52,500
PLAN C:
Formula : FV = C*[(𝟏 + 𝒊) 𝒏 -1] / i

= 194,000*[(1 + 5%) 15 -1] / 5%


= 194,000*[(1 +. 05) 15 -1] / .05
= 194,000*[(1.05) 15 -1] / .05
= 194,000*[2.07-1] / .05
= 194,000*[1.07 / .05 ]
= 194,000*21.4 = 4,151,600
= 4,151,600 + 800,000
= 4,951,600
(b):
Plan b is beneficial for us beacause its value is more than
plan A and plan C. In plan A there is (35,000,00) and in plan
C (4,951,600) so plan B is more beneficial because in plan B
(63,52,500) amount we can achieve.

QUESTION NO 2:
A beverage company delivers three type of drinks which are
Milk(M), Carbonated drinks(C ) and Juice (J) to four stores
( A, B, C, D) for a period of two month. The number of pets of
each type of beverage delivered to four stores in first month is
represented in Matrix K and second month is Matrix L
K = [ 8 4 3 2 2 2 1 3 1 3 1 3 ] And 𝐿 = [ 1 3 1 2 7 2 8 3 4 9 2
6]
i. Suppose, the price charged for pet of each type of drink is
given by the matrix. Calculate the total number of pets
delivered over the period of 2 months to each store
P = [ 225 195 212 ]
ii. Calculate the cost of each store ( A, B, C, D) on the
beverages in two months
ANSWER NO 2: (PART 1)
K=
[843
222
131
313] And 𝐿 = [ 1 3 1
272
834
9 2 6]
K+L = [ 8 + 1 4 + 3 3 + 1 2 + 2 2 + 7 2 + 2 1 + 8 3 +
3 1+4 3+9 1+2 3+6]
= [ 9 7 4 4 9 4 9 6 5 12 3 9]
PART 2:
O=[974
494
965
12 3 9 ]
And P = [ 225
195
212 ]
O x P = [ 9 ∗ 225 +7 ∗ 195 +4 ∗ 212
4 ∗ 225 +9 ∗ 195 +4 ∗ 212
9 ∗ 225 +6 ∗ 195 +5 ∗ 212
12 ∗ 225 +3 ∗ 195 +9 ∗ 212]
= [ 2025 + 1365 + 848
900 + 1755 + 848
2025 + 1170 + 1060
2700 + 585 + 1908 ]

= [ 4238 3503 4255 5193]

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