Bmath 004: Business Mathematics Question Paper
Bmath 004: Business Mathematics
Course:Certificate Of Bridging Mathematics
Institution: Kabarak University question papers
Exam Year:2010
INSTRUCTIONS:
1. Answer ALL questions in Section A and any other TWO in Section B
2. Show your workings clearly.
SECTION A
1) Festo made some investment 10 years ago which has accumulated to Kshs. 880,000. If
interest was 12% compounded monthly, determine how much Festo invested. (5 Marks)
2) A Television Set costing Kshs. 32,000 was sold on hire purchase with a down payment of
10% and an interest rate of 14% compounded monthly on unpaid balances. Determine
the monthly installments and the total interest paid if the repayment period was two
years. (5 Marks)
3) The monthly basic salary for Omollo is Kshs. 78,750 with monthly allowances
amounting to Kshs.35,000. He pays pension of 5% of his gross pay and is entitled to a
personal relief of Kshs. 1276 per month. If his mandatory contributions amounts to Kshs.
720 and he pays tax at a rate of 30%, compute his net pay. (5 Marks)
4) A mother deposited Kshs. 300,000 in her sons account on his third birthday that earned
9% interest compounded monthly. Calculate the amount in the sons account on his 18th
birthday. (5 Marks)
5) Alex plans to deposit some amount each year for the next 10 years into a fund that he
wants to use for buying a house. If the interest rate is 10% and the value of the house
currently is Kshs. 3,500,000, how much should he deposit each year. (5 Marks)
6) The shares of a company are 4000 out of which there are 8% cumulative preferred shares
at per value of Kshs. 50 per share. The common shares have a par value of Kshs. 100 and
a total par value of Kshs. 250,000. Dividend has not been paid for the last three years. If
the company declares dividend this year and a total of Kshs. 400,000 is to be distributed,
determine the dividend per share of preferred stock and dividend per share of common
stock. (5 Marks)
7) A company had total sales of Kshs.940,000 in a year with inventory on 31st December of
Kshs. 75,000. The operating expenses were Kshs. 180,000 with sales returns of 10% of
the sales. If the purchases for the year were Kshs. 375,000, obtain the gross profit and
the net income. (5 Marks)
8) The total expenses to be distributed to a company’s three departments are Kshs. 280,000
according to income generated. The total income for the company for the year was Kshs.
450,000 out of which Kshs. 320,000 was generated by two departments on equal basis.
Compute how much share of the expenses each of the three departments will get.
(5 Marks)
SECTION B
Question One
a) On 12th July, Alice opened an account with a deposit of Kshs. 48,000 whose interest
was 8% compounded daily. On 17th September of the same year she deposited another
Kshs. 12,000.How much was in her account on 30th September and what was her compound
interest. (5 Marks)
b) Oduor got a mortgage loan for a house costing Kshs. 4,420,000 at 26% interest. Determine
the monthly installment payments and the total interest he will pay if the repayment period is
20 years with a down payment of 10% of the cost. (5 Marks)
c) A sales agent sold the following items in a month: 80 Nokia handsets at Kshs. 8,000 each, 65
Motorola sets at Kshs. 4,500 each, 30 Samsang at Kshs.7,500 each and 23 electronic cameras
at Kshs. 25,000 each. He charged 10% commission on half of his sales and 8% on the
remainder. He also charged 2% on contingencies and claimed Kshs. 11,000 as transport.
2 of the electronic cameras and 5 Nokia handsets were faulty and customers returned them.
Determine the net pay for the agent. (6 Marks)
d) John took a loan of Kshs. 120,000 on simple interest of 12% for 90 days. Determine the
exact interest and the ordinary interest that he paid. (5 Marks)
Question Two
a) Two partners X and Y commenced business on 1st May 2009 with each contributing Kshs.
480,000 and Kshs.550,000 respectively. They agree to share their profits on the ratio of their
capital contribution.
i) In the first year, the profits made was Kshs. 280,000. How much did each get? (5 Marks)
ii) In the second year, they agreed to introduce another partner Z who contribute Kshs. 350,000.
They then agreed to distribute their profits in the ratio 3:4:2 after allowing for a 5% interest
on capital contributed. If the profits for year two were Kshs.400,000, determine how much
share of the profit each partner got. (10 Marks)
b) Two students A and C scored the following marks in their exams: A scored 35 out of 63 marks
and C scored 42 out of 78 marks. Which student performed better than the other? What is the
difference between their marks. (3 Marks)
c) If you would like to get a 10% profit on an item that you want to sell at Kshs.8,000. How much
should you pay for it? (3 Marks)
Question Three
a) If you deposited Kshs. 10,000 into an account at the beginning of each year for the next 5 years
that earned an interest of 9% compounded once yearly, how much will be in your account after
the 5th year. (10 Marks)
b) Determine the present value of the deposits in (a) above (5 Marks)
c) If the effective interest rate for a Company is 10.6%. Determine the company’s normal rate if
interest rates are compounded quarterly. (3 Marks)
d) Allocate 32,000 in the ratio 3/5: 5/6: 2/3 (2 Marks)
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