Simple Interest (Average Return)

Total Marks 15

1. Find the interest on Rs. 1880.90 for one year at 5.5 %?

2. Find the interest on Rs 400,000 invested for 5 years and 6 months at 4% simple interest
per year?
3. A loan of Rs 7, 50,000 is taken for 3 months at the rate is 4.25% per year. What interest
should be charged form bank?
4. A man Invests Rs 10,000 at the rate of 12.5% and another Rs 20,000 at the rate of 13.5%
per annum. Find the total annual interest on his investment.
5. How long will it take for Rs.10, 000 as simple interest on a deposit of Rs75000 at 7.5%?
6. How long will it take to earn Rs 1500 invested at 8% simple interest to triple the amount?
7. At what rate Rs.5000 double simple interest 5 years?
8. You are tired at the end of the term and decide to borrow $500 to go on a trip to
Whatever Land. You go to the bank and borrow the money at 11% for 2 years. a) Find
the interest you will pay on the loan. b) How much will you have to pay the bank at the
end of the two years?
9. Find the interest and amount on the Rs.1, 00,000 borrowed for 7 years and 4 months at
6.5 % annum simple interest.
10. Your annual tuition at a State University is currently $20,000. If the tuition increases by
6% annually, what will be the annual cost of attending the State University in 25 years?
11. You are starting your own small business in Albuquerque. You borrow $10,000 from the
bank at a 9% rate for 5 years. Find the interest you will pay on this loan.
12. How long will it take for Rs.5000to produce Rs.500 in simple interest at a rate of 4%?
13. A capital of business grows @15% per annum compounded quarterly. If present capital is
Rs.300, 000. What will be the capital after 3 years?
14. A DVD rental firm is currently renting 8,000 DVDs per year. How many DVDs will the
firm be renting in 10 years if the demand for DVD rentals is expected to increase by 7%
per year?
15. What must be the rate of interest on Rs.40, 000 to produce Rs. 2000 in 8 months
 Compound Interest (Compound Return)
Total Marks 10

Formula A= P (1+r) n

A= Amount (Future value)

P=Principal Amount (Current value, Amount in Hand)

R= Rate of return (must be in decimal)

N= Number of times payments made

Semiannually = Twice in a year

Annually = Once in a year

Quarterly = Thrice in a year

Biannually = twice in a year

Use ^ cap sign in calculator for n

1. Find the amount if Rs 20000 is invested at 10% p.a. for 3 years.

2. Find the Compound Interest, if Rs 1000 was invested for 1.5 years at 20% p.a. compounded half
yearly. (Semiannually which mean value of twice in a year and 1.5*2)
3. How much money invested at 5% compounded annually for 3 years will yield $820?
4. You have an investment proposition in front of you where you would invest 150 dollars in a
project and after 2 years you can sell the investment. You would earn 5% paid annually. How
much would you have at the end of year 2?
5. A person will receive Rs.5000 six years from now. What is the present value at a compound
discount rate at compound discount rate of 8 %?
6. The capital of a business grows @12% per annum compounded quarterly, if present capital is Rs
300,000. What will be the capital after 3 years?
7. A Man borrowed Rs.50, 000 at 6% simple interest and invested the same amount at 6%
compounded semiannually. What would he gain after 8.5 years?
8. In what time will Rs 3000 amount to Rs. 3646.50 at 5% compound interest?
9. Mr. Asif deposited Rs.80, 000 in saving account, which pays interest at the rate of 10% per
annum. Calculate amount due is compounded quarterly for 5.5 years?
10. A man needs to borrow Rs.30,000 for two years , Which of the following loans is more
advantageous to him a) 4.1% simple interest rate b) 4% per annum compounded semi annually
________________
 Annuity
Total Marks (10)

The regular fixed periodic sequence of payments charged with compound interest is called
annuity

Types of annuity

1. Ordinary Annuity 2. Annuity Due

Ordinary Annuity

If the payment is made at the end of each payment period it is called Ordinary Annuity.

S = R [(1+i) n-1/i]

Annuity Due

If the payment is mate in the beginning of each payment period it is called annuity due.

S = R [(1+i) n+1-1/i]-R

S= Amount

R= Regular payments per period

n= Number of payments during annuity

i= Compound interest rate.

Practice Questions

1) What is the sum of an annuity of Rs. 10000 payable at the end of each year for 8 years at
the rate of 6% compounded yearly?
2) How many annual payments of Rs 1000 be made in an ordinary annuity amounting to
Rs.73359@ 8 %compounded annually.
3) Find the amount of annuity due of Rs 2000 per month for a year if the money is grow at
the rate of 12% per annum compounded monthly?
4) Mr Sajjad wanted to get 4 monthly installments of Rs 500 each to meet the operating
expenses of his business. How much amount he should deposit now to bank if the rate of
interest is payable by the bank 18% pa compounded monthly.
5) A loan of Rs 5318 is to be paid back to a bank in 12 quarterly installments the first one
after 3 months from the date of loan. If the interest is charged at the rate of 20% pa
compounded quarterly on the unpaid principal. What will be the amount of installment of
each quarter?
6) Mr Farooq purchases an equipment on installments for business use. The amount of
monthly installments is Rs.640 and continues for a year. If interest rate charged is
30%compounded monthly.
7) Mr Ahsan has borrowed Rs 2, 50,000 from home building finance corporation of
Pakistan. The payments will be made 20 equal monthly installments. If rate charged by
the bank is 24% pa compounded monthly find the monthly installments
8) Suppose you borrow a 15 years building loan of Rs 500,000 at one percent per month and
payable in 180 equal monthly installments. Calculate monthly installments.
9) An equipment is bought for Rs 2000 as down payment and a monthly installment of
Rs.400 each for one year. If money is worth 12% compounded monthly. What is the cash
price of the equipment?
10) Mr Zaheer has deposited Rs 2, 00,000 in HBL. According to the rules of the account the
bank paid 12% interest pa compounded monthly and the maturity period of the scheme is
5 years. First monthly receipt is due after 30 days of deposit. Find the amount?
 Revision Assignment
Business Stats and Math
Total Marks 15

Index
1. About times is a multiband store that stocks different international brands. ( Data is in
000)

Years Chopard Omega Seiko

2006 81 82 111
2007 77 96 116
2008 87 88 128
2009 75 89 139
2010 90 84 146

1. Evaluate the performance of each brand by keeping 2006 as a bench mark year
2. Evaluate the performance of About times from year 2006 till 2010 by keeping 2008 as a
base period
3. Evaluate the performance of each brand in consecutive years
4. Evaluate the performance of about times in consecutive years
5. Analyze the calculated values and give reasons

Z-test
1. The time a customer must wait before check out in an apparel retail outlet has been
observed for each of 100 randomly selected patients. The sample mean is 70.3 minutes ad
sample standard deviation is 28.2 minutes. Test the hypothesis at 1% level of
significance, that the mean waiting time in the retail outlet is not more than 60 Minutes
Chi Square:
2. Either there is a relationship between the store location and sales Revenue? At 5% the
value is 7.815

Sales Revenue

Stores 0 -5 5-10 10 -15 15 & Over Total

Lahore 28 42 30 24 124
 Karachi 44 78 78 76 276
Total 72 120 108 100 400

Simple Interest:
3. You deposit $1000 into a bank account paying 7% simple interest per year. You left the
money in for 3 years. Find the interest earned and the amount at the end of those 3 years?
4. You deposit some money into a bank account paying 4% simple interest per year. You
received $72 in interest after 3 years. How much the deposit (principal) was?
Compound Interest
5. The capital of business grows @12% per annum compounded quarterly. If present capital
is Rs. 300,000 what will be the capital after 3 years?
Annuity
6. How many annual payments of Rs.1000 each made in form of an ordinary annuity
amounting to Rs.13180.80@ 6% per annum?
Find the amount of an annuity?

7. Mr Saleem Purchases a TV set on Installments of Rs.500pm for a year, the first

installments is paid at the time of purchase. If the interest charged 24% pa. Compounded
monthly. Find the cash price?