Quantitative Methods for Business Economics and Finance Assignment 1 STUDENT NO: …………… SURNAME: ………………… FIRST NAME: ………… The variables V(4.72), W(5.63), X(8.00), and Y(59.0) which are unique to each...

2306AFE
Quantitative Methods for Business Economics and Finance
Assignment 1
STUDENT NO: …………… SURNAME: ………………… FIRST NAME: …………
The variables V(4.72), W(5.63), X(8.00), and Y(59.0) which are unique to each student, are visible in the marks centre in the marked columns.
QUESTION 1: (10 Marks)
ACME printing company based at Coopers Plains in Brisbane needs your help for strategic advice. The ACME manager has to make a decision on how to allocate their capital in order to achieve the optimal outcome for their business. The firm has 2 factories (printeries) which produce corporate brochures and stationary. ACME has just received an order for 200,000 annual reports to be printed for BANKEAST and an Initial Public Offer (IPO) product disclosure statement from ComTEL.
In order for ACME to fulfil its new orders it must buy 2 new printing presses. One will be located at Coopers Plains and the other at its new warehouse in Moorooka. As a consultant at a Top 5 firm you are tasked with finding the optimal strategy for ACME.
The print presses which ACME need to buy are extremely big and expensive but they have different operating purposes. Coopers Plains requires Machine A at a cost of $800,000, and Moorooka requires Machine B at a cost of $1,200,000 for a total loan of $2,000,000. Using the interest rate X with a term of 20 years and monthly repayments, please calculate the following:
A. Firstly prepare the loan repayment schedule using interest rate V
(5 Marks)
1. Calculate and then use the monthly repayment P that pays out the loan in 20 years.
$12,891.73
2. How much interest is paid (in dollars/cents) in the first month?
$7,866.67
3. What is the principal remaining (loan balance) after 12 months?
$1,938,377.51
4. What is the sum of all the repayments?
$3,094,014.49
5. How much interest is paid in total?
$1,094,014,49
B. Now redo the loan repayment using interest rate W
(3 Marks)
1. Calculate and then use the monthly repayment P that pays out the loan in 20 years. $13,905.01
4. What is the sum of all the repayments?
$3,337,201.62
5. How much interest is paid in total?
$1,337,201.62
C. Using the schedule of payments from Part B to then:
Use interest rate W for X years, the bank changes the interest rate V for the remainder of the long term.
(2 Marks)
1. Calculate and the Average the monthly repayment P that pays out the loan in 20 years.
$14,577.14
QUESTION 2: (10 Marks)
ACME makes two types of printed products...