BMAT230CaseStudy
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School
Southern Alberta Institute of Technology *
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Course
1040
Subject
Mathematics
Date
Apr 3, 2024
Type
docx
Pages
3
Uploaded by DukeOysterPerson1088
BMAT 230 Case Study
Prepare a professional Word document
which answers the six questions shown below.
Your document should be free of both grammatical and mathematical errors.
When typing formulas, you must use the equation editor
in Word for visual purposes.
You will be marked on BOTH
the overall presentation of your document AND
the correctness of the content.
BMAT 230 Case Study Checklist:
1.
Include a cover page listing case title, your name and student number, instructor name, course information, and date of submission.
2.
Scenario and questions retyped in the document so the report stands on its own.
3.
Write full solutions including formulas, given variables, substitution, calculation, and concluding statement. Ensure an indication of what each value/calculation represents is included– don’t just give me a number!
4.
Answers formatted using the equation editor
.
5.
Timelines may be drawn this by hand or in Paint and inserted as a picture
or you may use the drawing tools in Word.
Marking:
Cover page and scenario/questions – 2 marks
Question a – 5 marks
Question b – 3 marks
Question c – 9 marks
Question d – 3 marks
Question e – 4 marks
Question f – 9 marks
Total = 35 marks
Scenario:
During the COVID 19 pandemic, Jack and Diane had some money troubles and are now looking for advice on managing their income and expenditures. As their financial advisor, they have approached you for answers to their financial questions and advice on how to manage their funds.
As avid campers, Jack and Diane wish to purchase a small cottage to use for several years.
The particular property they are looking to buy requires end-of-month payments of $2880 for 15 years after a 10% down payment. You are able to provide a financing deal of 3.3% compounded annually to the couple.
a)
Calculate the full amount, in terms of today, that this cottage is worth. (5 marks)
b)
Upon learning the purchase price, Jack and Diane indicate that the cottage’s current owner is willing to alter the deal to $4550 every month for 10 years. What nominal rate, compounded monthly, is the owner applying? (3 marks)
The second major topic to discuss is Jack looking to secure a lease on a recently released all-terrain vehicle. The model he is considering has an MSRP of $9500 and is available for a 3-year lease, after which Jack will have the option of outright purchasing the ATV for $2200.
According to Jack, the lease terms require a down payment of $1000 followed
by equal payments at the start of each week.
c)
If interest is set at 2.45% compounded semi-annually, determine the size of Jack’s periodic payments. Include a detailed timeline. (9 marks)
To help offset these debts, Jack and Diane have several investments and savings accounts that help earn money for them over time.
Diane has recently taken advantage of an offer from her bank for an account with an increased interest rate of 4% compounded monthly. This account does require ongoing minimum deposits of $275 every month for at least two
years.
d)
If Diane does deposit this minimum amount, how much interest will her
bank account generate in the next two years? (3 marks)
e)
If instead of the minimum amount of $275, Diane deposits $750 at the end of each month, how long (in years and months) will it take for the account balance to reach $25,000? (4 marks)
Lastly, Jack and Diane want to start a retirement account to ensure they have enough money to live comfortably after they stop working. However, they also wish to receive small stipends from this account on a regular basis before retirement.
After hearing their wish, you are able to suggest the following:
-
They will receive $2000 at the beginning of every three months until they hit retirement age in 16 years
-
Upon retirement, they will receive $8500 at the start of every three months for 25 years
-
The account will earn interest at 5% compounded quarterly throughout
its lifetime
f)
If Jack and Diane decide to open this retirement account, what balance will they need to deposit today to meet these conditions? Include a detailed timeline.
(9 marks)
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