An employee is working 6 days a week from Monday to Saturday. Assume the overtime for the employee is one and a half after 40 hours.

 Question 1 (20 points)

(A) An employee is working 6 days a week from Monday to Saturday. Assume the

overtime for the employee is one and a half after 40 hours. The following

table shows his working hours. (6 points)

1. Complete the table below (Show your work)

M T W Th F Sa	Total Hours	Regular Hours	Overtime Hours	Regular Rate	Overtime Rate
10hr 10hr 10hr 9hr 9hr 6 hr	??	??	??	$ 7.50	??

M T W Th F Sa	Total Hours	Regular Hours	Overtime Hours	Regular Rate	Overtime Rate
10hr 10hr 10hr 9hr 9hr 6 hr	54	40	14	$ 7.50	$11.25

Workings:

Total hours worked in a week = 10 + 10+ 10 + 9 + 9 + 6 = 54 hrs

regular hours = 54 hrs – 40 hrs = 14 hrs

overtime rate = overtime as a decimal * regular rate

= 1.50 * $ 7.50

= $11.25

2. Find the gross earnings of the employee.

Gross earning of the employee = amount of money employee earned for time worked

for regular hours = 40hrs * $7.50 = $ 300

for overtime hours = 14 hrs * $11.25 = 157.5

Total gross pay = $ 300 + 157.5 = $ 457.5

(B) Hamad is a salesclerk who receives a salary of $ 750 per week plus a commission of 7% on all sales exceeding $ 40,000. During a four-week period he sold products worth $ 55,000, what were Hamad's gross pay? (7 points)

Hamad Gross pay

salary for the for weeks = $ 750 * 4 weeks = $ 3000

commission = 55,000 * 7% = $3850

Total gross pay = $6850

(C) Jasem makes handicraft items for an ornaments shop. He is paid on the following differential pay scale:

Units produced	Amount per unit
1 – 60	$ 2.20
61 – 160	$ 3.15
161 – 200	$ 5.90
Over 200	$ 7.25

If he made 230 items in a week, how much is his gross pay? (7 points)

(Round your answer to the nearest hundredth)

Jasem Gross pay

He produced over 200 units which is charged at $7.25

Thus: 230 units * $7.25 = $1 667.50

= $1 668

6. + 7 + 7 = 20 marks)

Question 2 (20 points)

(A) A businessperson took out a loan of $ 60,000 from the Bank at a simple interest rate of 5.25% on March 15, which is due on June 11. (6 points)

1. Find the number of days of the loan from March 15 until June 11.

Finding the number of days of the loan from March 15 until June 11

number of days = 88 days

2. Using exact interest, find the interest amount (I=?)

I = PRT

= $60 000 * (5.35/100) * (88 days/ 365 days)

= $60 000 * 0.0525 * 0.24109589

= $ 759.45

I = $ 759

(B) A dealer borrowed $ 5,000 on a 120-day 3% simple interest note. He paid $ 1,000 toward the note on day 30. On day 80 he paid an additional $ 1,000. Assume 360-day year, what is his ending balance due? (7 points)

calculating balance due

finding total interest =

I = P rt

I = $5000 * 3/100 * 120/360

I = 5000 * 0.03 * 0.3333

I = $50

Total amount to be paid = $5000 + $50

Thus Ending balance due = $5050 – $2000 (amount already paid) = $3050

(C) A Supplier borrowed $ 14,000. The loan was for 15 months at a simple interest rate of 7%. What is the interest and the maturity value? (7 points)

Finding the interest and maturity value

Interest = PRT

= $14000 * 0.07* 15/12

= 14 000* 0.07 * 1.25

= $1,225

maturity rate = P + I

= $14,000 + 1,225

= $15,225

(6 + 7 + 7 = 20 marks)

Question 3 (20 points)

(A) A man deposits $ 14,850 into a bank, which pays 4% interest that is compounded semiannually. What will he have in his account at the end of three years? (7 points)

Calculating what he will have in the account

finding interest

I = P [ (1+r) ^n – 1]

= $14,850 [ (1+04) ^5-1 (n= 3 yrs to pay*2-1 = 5)

= $ 14,850 [ (1.04)^5-1)

= $14,850 (1.217-1)

=$14,850 (0.217)

= $ 3,222.45

= $3,222

Amount in the bank after 3 years = P + I

= $14,850 + 3,222.45

= $18, 072

(B) The owner of a small factory thinks that he will need $ 35,900 for new equipment in 10 years. He decides that he will put aside the money now so that after 10 years the $ 35,900 will be available. His bank offers him 8% interest compounded semiannually. What is the present value of the $ 35,900? (7 points)

Finding the present value of $35,900

( i=8%/ 2 six-month periods= 4%) (n=10 years*2=20)

FV = PV *(1.00+i)^n

= $35,900 * (1.00+0.04)^20

= $35.900 * (1.04)^20

= $35,900* 2.191

= $ 78, 661

(C) A person deposited $ 14,820 at a bank at an interest rate of 12% compounded quarterly. Find the effective rate (APY). Write your answer in percentage rounded to the nearest hundredth. (6 points)

Finding the effective rate (APY) = (1 + r/n)^n-1

= (1+0.12/4)^4-1

= 0.126 (*100)

= 12.55 %

=13%

(7 + 7 + 6 = 20 marks)

Question 4:(20 points)

(A) A company borrowed $ 18,000. The company plans to set up a sinking fund that will pay back the loan at the end of 7 years. Assuming a rate of 10% compounded semiannually, find the Sinking Fund of the ordinary annuity. (6 points)

PM = FV * r / ((1+r)^N – 1) (10%/2 = 0.05% and N =7 years * 2 = 14)

= $18,000 * 0.05 / ((1+0.05)^14-1)

APR = $918.43

(B) An employee decided to invest $ 750 quarterly for 9 years in an ordinary annuity at 12%. What is the total cash value of the annuity at end of year 9? (7 points)

FV = PM ((1+r) ^N-1) /r

= $750 ((1+0.03)^36-1) /0.03

= 47,456.95

= $ 47,457

(C) What must YOU invest today to receive an annuity of $ 1,250 for 10 years compounded at 16% quarterly when all withdrawals will be made at the end of each period? (7 points)

FV = PM ((1+r) ^N-1) /r

= 1,250 ((1+0.04) ^40-1)/0.04

= $118, 782 (amount to be invested today to get the annuity)

(6 + 7 + 7 = 20 marks)

Question 5:(20 points)

(A) A university graduate bought a new car. The cash price is $ 19,000; he made a $ 1,400 down payment on it. The bank's loan was for 20 months. Finance charges totaled $ 4,900. What was the monthly payment? (7 points)

Finding the monthly payment for the car

Amount of loan=Car price - down payments + charges

=19,000 – 1,400 + 4,900

=$ 22,500

amount to be paid for 20 months

= $22,500/ 20 months

= $1.125 per month

(B) A steel factory bought new equipment. The cash price of the equipment is $ 9,000, putting down $ 3,800 and financing the remainder with 20 monthly payments of $ 288.50 each. Find the APR by table lookup. (7 points)

Calculating APR

amount to remaining $ 9,000 – 3,800 = $5,200

finding the amount on interest to be paid I = PRT

= 5,200 * (288.50/5,200) * 1.67

= $481.795

finding APR = 24*I

P (T+1)

= 24($481.795)

5200*(1+20)

= 0.1058 (which is in the table)

(C) A person bought an apartment. The cash price is $ 190,000; he made a $ 40,000 down payment on it. The bank's loan was for 120 months. Finance charges totaled $ 30,000. What was the monthly payment? (6 points)

calculating the monthly payment

amount of loan $ 190,000 – $40,000 = $150,000

Interest rate = PRT

finding the monthly payment $ 150,000 * 30,000/ 190,000 * 120/12

= $236.835

= $236.84

(7 + 7 + 6 = 20 marks)

END OF EXAM QUESTIONS