SIBT - ACST101
Lecture 3 Solutions
We are still working with the compound interest formula
S = P * (1+i) n
So far we have solved 2 types of problem:
Given P, i, and n -> find S, the accumulated value.
Given S, i, and n -> find P, the PV
Now we have 2 more

Sydney Institute of Business & Technology
ACST101 Elements and Techniques of Finance
Tutorial 12 Solutions
PART A: Capitalised Costs
Q1.
A perpetuity pays $100 every 4 years, and the first payment is at the end of 4 years. What
is the present value of thi

Sydney Institute of Business and Technology
ACST101 Elements and Techniques of Finance
Tutorial 8 Solutions
A. FLAT RATE LOANS
Q1.
Find the total loan interest, the monthly instalment, and the effective
monthly and annual rates of interest for a loan of $

MACQUARIE UNIVERSITY
Faculty of Business and Economics
ACST201: FINANCIAL MODELLING
WEEK 05 PRACTICALBOND PRICING
Questions to try before the practical
1. Find the price, to yield 6% net, of a 10-year 8% Treasury bond, allowing for 30% tax on
(a) interest

ACST201: FINANCIAL MODELLING
WEEK 04 PRACTICAL
Questions to try before the practical
1. Calculate the maturity value, and then the annualised (simple interest) yield, if
$100,000 is invested for 145 days in three stages, and earns:
12% for the first 40 da

MACQUARIE UNIVERSITY
Faculty of Business and Economics
ACST201: FINANCIAL MODELLING
WEEK 07 TUTORIALHPY & Duration
Question 1
A $100,000 120-day bank bill is purchased for a price of $98,144.66. When it has
90 days to run to maturity, the bill is sold for

MACQUARIE
University
This question paper may be retained by candidates.
FORMAL EXAMINATION PERIOD: SESSION 2, NOVEMBER 2015
EXAMINATION DETAILS:
j Unit Code:
I Unit Name:
! Duration of Exam
(including reading time if applicable)
! Totai No. of Questions:

CHAPTER
1
Mathematics of Finance
1.1. INTRODUCTION
In this chapter we will discuss mathematical methods and formulae which are helpful in business
and personal finance. One of the fundamental concepts in the mathematics of finance is the time
value of mon

Question 3
Amount due (future value)
Present value
period days
Amount of interest
Rate of simple interest per period
Rate of simple interest per annum
Using formula
100000
98866.42
90
1133.58
0.011466
4.65%
Amount due (future value)
Present value
Using go

Using Goal Seek to find duration
Input
Output
Duration of 6 years
Yield rate (j2)
Coupon rate (j2)
Face value
Coupon per half year
Duration (half year)
Duration (year)
17.10%
8%
100
4
12.00006
6.000031
Time (half year)
Cash flow
Present value of cash flow

MACQUARIE UNIVERSITY
Faculty of Business and Economics
ACST201: FINANCIAL MODELLING
WEEK 12 TUTORIALForward Contracts
These spot rates (compound interest) are available in the bond market:
Term (years)
1
1
2
Spot rate (j2% pa)
4.5
4.7
4.9
5.1
Term (years)

MACQUARIE UNIVERSITY
Faculty of Business and Economics
ACST201: FINANCIAL MODELLING
WEEK 06 PRACTICALTRCY
Question 1
A 6% 20-year Treasury bond is bought at a yield of 8.5% (compounded half-yearly) for a price of
$76.153 (per $100 face value). If the bond

S = P(1 + rt)
3,000 = P(1 + 0.055 60/365)
P = $2,973.12
P = S(1 dt)
= 100,000 (1 0.05 50365)
= $99,315.07
I = 99,000 98,600 = $400
I = Prt
400 = 98,600 r 35/365
r = 4.23% p.a.
t = 35 days
P = S(1 dt)
t = 90 35 = 55 days
99,000 = 100,000(1 d 55/365)
d = (1

MACQUARIE UNIVERSITY
Faculty of Business and Economics
ACST201: Financial Modelling
WORKSHOP PROBLEMS (Week 04)
BOND PRICES AND YIELDS
1. Find the price, to yield 10% net, of a 10-year 12% Treasury bond,
allowing for 30% tax on:
(a) interest only;
(b) int

MACQUARIE UNIVERSITY
Faculty of Business and Economics
ACST201: FINANCIAL MODELLING
WEEK 12 WORKSHOP PROBLEMS
VALUING OPTIONS
Problem 1a (Contingent payments approach)
XYZ Corp share price is currently $100. We expect that, over the next month, the price

ACST201 Financial Modelling
Question 1
On-line quiz 1
S1 2016
[10 marks]
Refer to Question 7 of the revision problems from week 04.
a. [2 marks] Use Goal seek to solve the question in a spreadsheet. Make
sure you carefully document the steps you used in t

Q1
a. Coupon per half year=12%/2*100=6
Price=
100+6
145
1+0.0626365
= 103.428
b. For most short term financial instruments (e.g., bank bills,
promissory notes), it is true that the price should be always
less than the face value. The reason is that each o

ACST201 Financial Modelling
Question 1
Take-home quiz 2
S1 2016
[6 marks]
a. [1 mark ] Find the price (per $100 face value, rounded to 3 decimal
places) of a 12% Treasury bond, 145 days before maturity, at a yield
of 6.26% p.a. 1
b. [2 marks] Suppose anot

ACST201 Financial Modelling
Question 1
Take-home quiz 1
S1 2016
[4 marks]
a. [1 mark ] What principal will accumulate to $3 000 in 60 days if the
simple interest rate is 5 1/2% p.a.?
b. [1 mark ] A 120-day commercial bill will mature for $100 000. Using
5

MACQUARIE UNIVERSITY
Faculty of Business and Economics
ACST201: FINANCIAL MODELLING
WEEK 10 TUTORIALSAMPLE SOLUTIONS
Questions to try before the tutorial
A bank makes one-year loans of $25,000 and wants to earn j1 = y% on its whole portfolio of such
loans

ACST201 Financial Modelling
Question 1
On-line quiz 2
S1 2016
[10 marks]
In the lecture notes in Week 07 (and some other weeks) weve dealt with a
bond that has a duration of 7 years. We wish to determine the purchase
yields (as j2 rates) for this bond (10

Q1
Interest rate per year
Deposit starting time (age)
Deposit ending time (age)
Deposit amount
Focal date (age)
Time unit
Number of 2000 deposit
Size of fund
Q2
Interest rate
Deposit starting time (age)
Deposit ending time (age)
Focal date (age)
Deposit a

Question 3
Amount due (future value)
Present value
period days
Amount of interest
Rate of simple interest per period
Rate of simple interest per annum
Amount due (future value)
Present value
Using formula
100000
98866.42
90
Using goal seek
100000
99023.33

Sydney Institute of Business & Technology
ACST101 Elements and Techniques of Finance
Tutorial 11 Solutions
Q1.
Payment:
Time:
R
3R
1
0
2R
2
3
(n-2)R (n-1)R
.
n-2
n-1
nR
n
The first payment is $R and the constant difference between successive payments is a

Sydney Institute of Business and Technology
ACST101 Elements and Techniques of Finance
Tutorial 2 Solutions
Q1.
(a)
How much will P accumulate to in n time periods at a compound interest rate
of i per time period ?
S = P * (1+i) n
(b)
What is the present

Sydney Institute of Business & Technology
ACST101 Elements and Techniques of Finance
Tutorial 1 Solutions
Q1.
(i) What is the rule for calculating the time between two dates ?
Count the first day OR the last day, but not both.
However: if the question sta

Sydney Institute of Business and Technology
ACST101 Elements and Techniques of Finance
Tutorial 3 Solutions
Q1.
A payment of $100 is due in 3 years. If the interest rate is j1 = 10%,
calculate the equivalent payment:
(i)
due in 1 year ?
(ii)
due in 7 year

Face Value
Yield rate p.a.
Yield rate per half year
Number of half year
Price
100
7.40%
3.70%
7
77.544
Input
Output
(a)
Face value
Price
Coupon rate p.a.
Coupon payment per half year
Number of half year
Interest rate per half year
Interest rate j2
100
94.

Using Goal Seek to solve the question
Interest rate
n value
Annuity Present value
7.25%
15
8.965824
Inputs
Outputs
To use Goal Seek.
1. We need to input a dummy interest rate, e.g., 7.25
2. Put the formula for Present value inside the annui
3. Choose Pres