Business Mathematics 2 (MGS312)
DIPET 1 in Economics - ECNT
Semester: First Semester
Level: 400
Year: 2017
a) Determine the four period moving averages
b) Compute the Adjusted Seasonal Index (AST) and hence derive the deseasonalised output.
REPUBLIC OF CAMEROON
Peace — Work — Fatherland
THE UNIVERSITY OF BAMENDA
HIGHER TECHNICAL TEACHER TRAINING
COLLEGE
P.O. BOX 39, BAMBILI
Tel : (+237) 33 15 64 19
REPUBLIQUE DU CAMEROUN
Paix — Travail — Patrie
UNIVERSITE DE BAMENDA
ECOLE NORMALE SUPERIEURE DE
L'ENSEIGNEMENT TECHNIQUE
COURSE TITLE: BUSINESS MATHEMATICS II CODE: MGS303
FIRST SEMESTER EXAMINATION
TIME ALLOWED: 2 HOURS DATE: DECEMBER 2017
ANSWER ALL QUESTIONS
Question one (20 marks)
DCF Ltd. is investing in an extension to one of its factories. The cost of construction now is 50,000,
30,000 will be invested in equipment in 12 months' time and a further 8,000 at the end of 2 years.
The management accountant estimates that the cash inflows will commence at the end of year 3 and
will continue as set out in the following schedule. The scrap value of the equipment at the end of
year 7 is 10,000.
Year 3 4 5 6 7
Cash inflow 30,000 30,000 30,0000 30,000 20,000
The cost of borrowing is 10 percent p.a. All figures are in Millions of FRS.
You are required to;
a) Calculate the Net Present Value and advise the company if it should proceed with the
extension,
b) Outline the key advantages of the NPV technique over the Payback period technique for
evaluating investment project.
Question two (30 marks)
a) Assume that a business wishes to buy a machine for 500,000 FRS which it expects to keep
for 4 years, before selling it at a scrap value of 100,000 FRS. Determine the yearly
depreciation percentage using the reducing balance method and hence prepare a depreciation
schedule.
b) An item is purchased on hire purchase and a down payment of 10 percent of the cost is
made. If the item cost 100,000 frs, and the balance will be paid in 5 equal end of period
annuity at an interest rate of 10% p.a. Determine the yearly payment and prepare and
amortization schedule for the loan.
Question three (20 marks)
Study the following
data showing the output of maize in tons produced by DCF LTD.
Quarters/Years 2014 2015 2016
Q1
14
18
24
Q2
26
32
34
Q
3
20 24 26
Q5
24 28 34
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