QUANTITATIVE METHODS

Suggested Answers
Foundation Examinations Spring 2012


Page 1 of 9
A.1
(a) ( )
4 2 2 4
y 8 y x 2 x x f =



4 4 4 2 2 4
8 2 y y y y x x + =


( ) ( )( )( ) ( )
4
2
2 2 2
2
2
9 2 y y y x x + =


( )
4
2
2 2
9y y x =


( ) ( )
2
2
2
2 2
3y y x =


( ) ( )
2 2 2 2 2 2
3 3 y y x y y x + =
( ) ( )
2 2 2 2
y 2 x y 4 x + =


( ) ( )( )
2 2
2 2 2 y x y x y x + + =



Substituting 5 = y and f(x) = 0 we get:


( ) ( )( ) 0 50 10 10
2
= + + = x x x

0 50
2
= + x is not possible

x = 10 or x = 10


Since 50
2
= x is not possible,

x = 10 or x = 10

A.1 (b) 1st number after 170 divisible by 8 = 176
Last number before 1,000 divisible by 8 = 992
Thus, the A.P. =176, 184, . . . . . 992
Sn

= 176 +184 + . . . . . . . . +992

Where,

first term: a = 176; common difference: d = 184 176 = 8
and last term: L = 992
We know that a = L (n-1)d

1 +
|
.
|

\
|
=
d
a L
n




103 1 102 1
8
816
1
8
176 992
= + = + = +
|
.
|

\
|
= n

Since ( ) l a
n
S
n
+ =
2


( ) ( ) ( ) 152 , 60 584 103 1168
2
103
992 176
2
103
= = = + =
n
S


A.1 (c) ( )( )
x x 2 x x 5
e 55 11 e 2 e 5 e 2 = +



x x x 5 x 3 x 7
e 55 e 55 e 22 e 10 e 4 = +



0 10 22 4
3 5 7
= +
x x x
e e e


0 e 5 e 11 e 2
x 3 x 5 x 7
= +


| | 0 5 11 2
2 4 3
= +
x x x
e e e


0
3
=
x
e is not possible
QUANTITATIVE METHODS
Suggested Answers
Foundation Examinations Spring 2012


Page 2 of 9


0 5 e 11 e 2
x 2 x 4
= +

Substituting e
2x

= y we get:
0 5 11 2
2
= + y y

0 5 y y 10 y 2
2
= +



( ) ( ) 0 5 y 1 5 y y 2 =


( ) ( ) 0 5 1 2 = y y


5 , 5 . 0 = = y or y

5 5 . 0
2 2
= =
x x
e or e


If
, .5 0 e
x 2
=


) 5 . 0 ln(
2
1
= x = 0.3466


If
5
2
=
x
e


) 5 ln(
2
1
= x = 0.8047


A.2 (a) The future value of Rs. 300,000 on completion of five years would be:
S = P(1 + i)
n
= 300,000(1 + 0.03)

8
= 300,000(1.03)
8

= 300,000(1.27) = 380,031.02

It means if Rs. 300,000 had not been drawn after three years then at the end of
investment period, Ali would had a sum of:

380,031.02 + 500,000 = 880,031.02

Since
( )
( ) i
i
i
R A
n
+
(

+
= 1
1 1


( )
( )
(

+
+
=
1 i 1
i
i 1
A
R
n


( ) ( )
(

+ +
=
1 03 . 1
03 . 0
03 . 1
02 . 031 , 880
20
R

( )
07 . 797 , 31 ) 04 . 0 ( 05 . 339 , 854
81 . 0
03 . 0
03 . 1
02 . 031 , 880
= =
(

= R


Hence Ali would be required to deposit Rs. 31,797.07 to get the required amounts on
time.

(b) Part (i):
We know that:






Hence effective rate of interest = 10.92%


QUANTITATIVE METHODS
Suggested Answers
Foundation Examinations Spring 2012


Page 3 of 9


Part (ii):

We know that:
mn
m
i
P S
|
.
|

\
|
+ = 1

3 4
4
1 000 , 400 881 , 545

|
.
|

\
|
+ =
i


3647 . 1
000 , 400
881 , 545
4
1
12
= =
|
.
|

\
|
+
i


( ) 02625 . 1 3647 . 1
4
1
12
1
= = +
i


( ) % 5 . 10 105 . 0 1 02625 . 1 4 = = = i

Hence, nominal rate of interest if the interest is compounded quarterly is 10.5%.


A.3 (a)
( )( )
x
x x
x
x x
y
6 2 3
2
+
=
+
=


( )
( )
2
2 2
6 ) 6 (
x
x
dx
d
x x x x
dx
d
x
dx
dy
|
.
|

\
|
+ +
=


( )
x
x x x x x
dx
dy
5 . 0 2
5 . 0 6 ) 1 2 (

+ +
=


( )
x x
x x x x
dx
dy
2
6 ) 1 2 ( 2
2
+ +
=


x x
x x x x
dx
dy
2
6 2 4
2 2
+ +
=


x x
x x
dx
dy
2
6 3
2
+ +
=

(b) (i) q=150,000-75p
R=f(p)
R=p(150,000-75p)
= 150,000p-75p

2

150p - 150,000 = ) ( p f

To maximise profit, take:


) ( p f = 0
150,000 150p = 0
p = 1,000

Taking second order derivative:



0 < 150 ) ( = p f


0 < 150 ) 1000 ( = f
QUANTITATIVE METHODS
Suggested Answers
Foundation Examinations Spring 2012


Page 4 of 9
Therefore, revenue is maximized at p = 1,000.
(ii) f(1,000) = 1,000 (150,000 75,000)
= 75,000,000
Maximum revenue = 75,000,000

(iii) at p =1,000
q = R/p = 75,000,000/1,000 = 75,000


A.4 (a) Consider x + y 6
x + y = 6
Putting x = 0, we have y = 6 (0 , 6)
Putting y = 0, we have x = 6, (6,0)

Now consider, 5x + 3y 15
5x + 3y = 15
Putting x = 0 we have 3y=15, y=5 (0,5)
Putting y = 0, we have 5x=15, x=3 (3, 0)







x + y 6 is a redundant constraint.


(b)
(

=
(

=
3 2
7 5
5 2
7 3
B A

(

=
3 2
7 5
5 2
7 3
AB

(

+
+
=
15 14 10 10
21 21 14 15


(

=
1 0
0 1



Hence it is proved that B is the inverse of A.
QUANTITATIVE METHODS
Suggested Answers
Foundation Examinations Spring 2012


Page 5 of 9
A.5
Mean of company A = 50 =
a


Standard deviation of company A = 24 . 0 =
a


Mean of company B = 8 . 49 =
b


Standard deviation of company B = 75 . 0 =
b


From the sampling distribution of
2 1
x x we know that


2 1 x x
2 1
=

2 . 0 8 . 49 50 = = =
b a x x
b a


Again from sampling distribution of means we have:


2
2
2
1
2
1 2
n n
b a
x x

+ =

( ) ( )
02067 . 0
30
6201 . 0
30
5625 . 0
30
0576 . 0
30
75 . 0
30
24 . 0
2 2
2
= = + = + =

b a
x x


143771 . 0 =

b a
x x


) 25 . 0 ( ) 25 . 0 ( ) 25 . 0 ( < + > = >
b a b a b a
x x P x x P kg x x P


Since
( )
2 1
2 1
2 1
x x
x x
x x
Z

( ) 348 . 0
143771 . 0
2 . 0 25 . 0
) 25 . 0 ( > =
|
.
|

\
|
> = > z P Z P x x P
b a


( ) 348 . 0 1 ) 25 . 0 ( < = > Z P x x P
b a


3632 . 0 6368 . 0 1 ) 25 . 0 ( = = >
b a
x x P

|
.
|

\
|
< = <
143771 . 0
2 . 0 25 . 0
) 25 . 0 ( Z P x x P
b a


( ) ( ) 13 . 3 13 . 3 ) 25 . 0 ( > = < = < Z P Z P x x P
b a


( ) 13 . 3 1 ) 25 . 0 ( < = < Z P x x P
b a


0009 . 0 9991 . 0 1 ) 25 . 0 ( = = <
b a
x x P

3641 . 0 0009 . 0 3632 . 0 ) 25 . 0 ( = + = >
b a
x x P


A.6 (a) Years 2006 2007 2008 2009 2010
Wages (w) 12,000 13,500 14,800 16,500 19,000
Real wages (r) 10,800 11,300 11,100 10,550 10,900


baseindex
r
w
= Index Price

111.1 119.5 133.3 156.4 174.3





(b)
wages real
index base
index current
Wages =


600 , 21 . 500 , 13
5 . 119
2 . 191
2011 Rs in Wages = =

QUANTITATIVE METHODS
Suggested Answers
Foundation Examinations Spring 2012


Page 6 of 9

A.7 (a)
Range
Class
Boundaries
f CF
00 09 0.5 9.5 1 1

10 19 9.5 19.5 0 1
20 29 19.5 29.5 1 2
30 39 29.5 39.5 4 6
40 49 39.5 49.5 4 10
50 59 49.5 59.5 10 20
60 69 59.5 69.5 7 27
70 79 69.5 79.5 2 29
80 89 79.5 89.5 1 30

Here Class Interval = h = 10






(b)
4
30
4
f
Q
1
= =

=7.5
th

value.
Class of Q1

= (39.5 49.5)
Q1
( ) F . C 5 . 7
f
h
L + =

= ( ) 25 . 43 75 . 3 5 . 39 ) 5 . 1 ( 5 . 2 5 . 39 0 . 6 5 . 7
4
10
5 . 39 = + = + = +


= = =

4
90
4
f 3
Q
3
22.5
th

value.
Class of Q3

= (59.5 69.5)
Q3
( ) F . C 5 . 22
f
h
L + =

= ( ) 07 . 63 57 . 3 5 . 59 ) 5 . 2 ( 43 . 1 5 . 59 20 5 . 22
7
10
5 . 59 = + = + = +
Inter-quartile range = Q3 Q

1
= 63.07 43.25 = 19.82





QUANTITATIVE METHODS
Suggested Answers
Foundation Examinations Spring 2012


Page 7 of 9


A.8 (a) x y x
2
y
2
xy
31 10 961 100 310
45 16 2,025 256 720
63 18 3,969 324 1,134
53 20 2,809 400 1,060
56 19 3,136 361 1,064
43 16 1,849 256 688
291 99 14,749 1,697 4,976





5 . 48
6
291
= = =

n
x
x and 5 . 16
6
99
= = =

n
y
y


( )

=
2
2
y y n
y x xy n
d


2
) 99 ( ) 1697 ( 6
) 99 )( 291 ( ) 4976 ( 6

= d

75 . 2
381
1047
9801 10182
28809 29856
= =

= d



y d x c =


125 . 3 ) 75 . 2 )( 5 . 16 ( 5 . 48 = = c

We know that the regression equation for x on y is:
x = c + dy
Hence the required equation is:


y x 75 . 2 125 . 3 + =


(b)
( ) ( ) ( ) ( )




=
2
2
2
2
y y n x x n
y x xy n
r



( )( )
2 2
) 99 ( ) 1697 ( 6 ) 291 ( ) 14749 ( 6
) 99 )( 291 ( ) 4976 ( 6


= r


( )( )
87 . 0
3 . 1205
1047
1452753
1047
) 381 )( 3813 (
1047
9801 10182 84681 88494
28809 29856
= = = =


= r

The value of r shows strong/high positive correlation between x and y.

(c) The x on y and y on x regression lines always intersect at the means of the two series.
Therefore, for the given data, the lines will intersect each other at (48.5, 16.5).








QUANTITATIVE METHODS
Suggested Answers
Foundation Examinations Spring 2012


Page 8 of 9


A.9 (a) Number of Courses Frequency Probability

4 20 2 . 0
100
20
=

5 50 5 . 0
100
50
=

6 30 3 . 0
100
30
=

100 f

=

Hence the required probability distribution is: P(x) = 0.2, 0.5, 0.3

(b) Since n>30, we can use normal approximation

Number of courses Probability
px px
2

(x) (p)
4 0.2 0.8 3.2
5 0.5 2.5 12.5
6 0.3 1.8 10.8

0 . 1 p

= 1 . 5 px

= 5 . 26 px
2

=

1 . 5
1
1 . 5
p
px
mean = = = =

Standard Deviation =
2
2
p
px
=

7 . 0 49 . 0 ) 1 . 5 (
1
5 . 26
2
= = =



For a sample of size 40 (with replacement):


|
|
|
.
|

\
|

> = >
n
x
Z P X P

) 3 . 5 (


) 807 . 1 (
1107 . 0
1 . 5 3 . 5
40
7 . 0
1 . 5 3 . 5
> = |
.
|

\
|
> =
|
|
|
.
|

\
|

> = Z P Z Z P

= 1 0.9649 = 0.0351

For a sample of size 40 (with replacement), we have:

P(
|
|
|
.
|

\
|

> = >
n
x
Z P X

) 3 . 5


) 807 . 1 (
1107 . 0
1 . 5 3 . 5
40
7 . 0
1 . 5 3 . 5
> =
|
.
|

\
|
> =
|
|
|
.
|

\
|

> = Z P Z Z P

= 0.5 0.4649 = 0.0351

QUANTITATIVE METHODS
Suggested Answers
Foundation Examinations Spring 2012


Page 9 of 9


(c) For n=2, normal distribution cannot be used.
The possible outcomes, in this case, are:

] 6 , 6 [ ], 5 , 6 [ ], 4 , 6 [
], 6 , 5 [ ], 5 , 5 [ ], 4 , 5 [
], 6 , 4 [ ], 5 , 4 [ ], 4 , 4 [


The favourable outcomes are: [4,4], [4,5], [5,4]
P(4,4) = 0.2 x 0.2 = 0.04
P(4,5) = 0.2 x 0.5 = 0.1
P(5,4) = 0.5 x 0.2 = 0.1
P(mean<4.7) = 0.04 + 0.1 + 0.1 = 0.24


A.10 (a) Let A = Violation of sanitary standards => A = Compliance of sanitary standards
Let B = Violation of Security Standards => B = Compliance of security standards
Therefore, AB = Violation of both standards

P(A) = 79/190 = 0.4158
P(A) = 1 0.4158 = 0.5842
P(B) = 86/190 = 0.4526
P(AB) = 58/190 = 0.3053

P(complied with sanitary standards but not with security standards)
= P(A B) = P(B) P(A B) = 0.4526 0.3053 = 0.1473
P(both security and sanitary standards are complied)
= P(A B)= P(A) P(A B) = 0.5842 0.1473 = 0.4369

(b) Part (i)
Probability that both balls are of same colour = P(both are red) + P(both are green)

P(both are red) =
6
1
8
3
9
4
=

P(both are green) =
12
1
8
2
9
3
=

P(both balls are of same colour) = 25 . 0
4
1
12
1
6
1
= = +

Part (ii)
P(both balls are of different colour) = 1 P(both balls are of same colour)
= 1 0.25 = 0.75
Part (iii)
P(at least one ball is green) = 1 P(no ball is green)

5833 . 0
12
7
12
5
1
8
5
9
6
1 = = = =


(THE END)