ARITHMETIC FINANCE AND MTH Scored Activity 3. Mark: Date corrected: Corrector s signature: Student s Identification. Name: Address:

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FINANCE AND ARITHMETIC MTH-1101-3 Scored Activity 3 Mark: Date corrected: Corrector

1 FINANCE AND ARITHMETIC MTH Scored Activity 3 Mark: Date corrected: Corrector s signature: Student s Identification Name: Address: Telephone No.: Date sent:

2 MTH FINANCE AND ARITHMETIC This scored activity was produced by the Société de formation à distance des commissions scolaires du Québec. Project Coordinator: Author: Illustration: Content Revision: Pedagogical Revision Translation: Proofreading: Desktop Publishing: Graphical Layout: Ronald Côté (SOFAD) André Dumas Marc Tellier Gilles Gacon Alain Bombardier Louise Lachapelle Claudia de Fulviis Claudia de Fulviis Serge Mercier Alain Lemay Despite the following statement, SOFAD authorizes adult education centres using the related learning guide to reproduce this scored activity. (SOFAD) All rights for translation and adaptation, in whole or in part, reserved for all countries. Any reproduction by mechanical or electronic means, including micro-reproduction, is forbidden without the written permission of a duly authorized representative of the Société de formation à distance des commissions scolaires du Québec (SOFAD). 2 SOFAD

3 SCORED ACTIVITY 3 Scored Activity 3 deals with learning situations 5 and 6 of the guide entitled Finance and Arithmetic. Once you have completed this activity, send it to your tutor together with any related documents. Most education centres reuire that you obtain an average of 60% or more in order to write the official examination. Instructions Fill in the Student s Identification section. Carefully read each uestion before answering it. Write your answers in the appropriate spaces and give complete solutions, as applicable. The weighting for each uestion is indicated to the left of each number, in parentheses. You may use a calculator. Note: As much as possible, show your calculations in detail. SOFAD 3

4 MTH FINANCE AND ARITHMETIC Scored Activity 3 Points Roberta wants to do some home renovations. Knowing that banks reuire clients to make up a financial statement before they give out a loan, she goes ahead and does this on her own initiative. Here is her abridged financial statement. Financial statement (abridged) Assets Assets (short term) $1, Assets (long term) $12, Personal property $278, Total assets Debts (Liabilities) Total debts (short term) $4, Total debts (long term) $216, Total debts Net worth (3) 1. Complete the above table. Calculate Roberta s net worth, according to the information in tbe statement. (5) 2. Roberta s short-term debts are relatively high compared with her short-term assets. The carpenter estimated that the work would cost $3, The renovations will begin March 1, Once he has analyzed her statement, the financial advisor will not hesitate to give her a loan. How will he justify his decision? 4 SOFAD

5 SCORED ACTIVITY 3 After drawing up her financial statement and before meeting with her advisor, Roberta considers different possibilities for borrowing money. She decides to explore all the options available to her in order to find the most economical solution. To make the best decision, she must analyze all of her options. First option: Debit card Roberta rules this out altogether. (5) 3. Justify Roberta s decision. Second option: LUCRE credit card Roberta doubts that this is the best option, but, as she wants irrefutable proof, she does the calculations. She could borrow money on one of her two credit cards: the LUCRE card or FASTCASH card. 4. LUCRE card: Annual rate of 21.5%. Conditions: monthly payment of $ and balance payable by May 31, with interest charges billed at the daily rate. (2) a) Write the seuence of operations for calculating the April 1 balance. (6) b) First, calculate the daily rate. Then, calculate the interest, the monthly balance and the final payment. Round the results to the nearest hundredth. Line 1: Interest Balance Line 2 : Interest Balance Line 3 : Interest Balance Final payment SOFAD 5

6 MTH FINANCE AND ARITHMETIC (5) c) Complete the table below. Statement for LUCRE card Line Freuency Interest Payment Balance March 1 $0.00 $0.00 $3, April 1 2 May 1 3 June 1 $0.00 (2) d) Calculate the amount of interest paid. (2) e) What whole irreducible fraction (rounded) represents the interest? First write the seuence of operations. 5. FASTCASH card: Monthly rate of 1.85%. Conditions: monthly payment of $ and payment of the balance by May 31, with interest charges billed at the daily rate. (6) a) First, calculate the daily rate. Then, calculate the interest, the monthly balance and the final payment. Round the results to the nearest hundredth. Daily rate March: 31 days: Interest Balance April: 30 days: Interest Balance May: 31 days: Interest Balance Final payment 6 SOFAD

7 SCORED ACTIVITY 3 (5) b) Complete the table below. Statement for the FASTCASH card Line Freuency Interest Payment Balance March 1 $0.00 $0.00 $3, April 1 2 May 1 3 June 1 $0.00 (2) c) Calculate the amount of interest paid. (2) d) What whole irreducible fraction (rounded) represents the interest? First write the seuence of operations. Roberta s task now is to analyze the various financial products the financial institution offers its clients. She meets with a financial advisor who presents the following three commonly used products: - line of credit; - term loan with interest and principal payable at maturity; - term loan with eual monthly payments, payable before maturity. SOFAD 7

8 MTH FINANCE AND ARITHMETIC Third option: 6. Line of credit: Annual rate of 9.25%. Conditions: $ payment every two weeks; interest also charged every two weeks; last payment on the last day of the last week; duration of line of credit: from March 1 to May 31, Note: There are 13 weeks in a three-month period. (3) a) Write the seuence of operations for calculating the balance after the 1st period. (10) b) Complete the table on the next page. Write your calculations legibly in the box below. Round the result to the nearest hundredth. 8 SOFAD

9 SCORED ACTIVITY 3 Statement for line of credit from March 1 to May 31, Number of payment Freuency (weeks) Interest Payment Balance 0 $0.00 $0.00 $3, (3) c) Write the seuence of operations for calculating the balance for the last period. (2) d) Calculate the interest amount. (2) e) What irreducible fraction (rounded) represents the interest? SOFAD 9

10 MTH FINANCE AND ARITHMETIC Fourth option 7. Loan with interest and principal payable at maturity: Annual rate of 9.15%. Conditions: interest calculated according to the daily rate; single payment of principal and interest at maturity on May 31, (5) a) Calculate the interest payable. First write the seuence of operations. (5) b) How much will Roberta pay at maturity? Fifth option 8. Loan with eual monthly payments: Annual rate of 9.35%. Conditions: eual monthly payments of $513.73, maximum term of six months with the possibility of repaying the loan before maturity. (3) a) Write the seuence of operations for the balance of the 2nd payment. (10) b) Complete the table on the next page. Write your calculations legibly in the box below. (12 points) 10 SOFAD

11 SCORED ACTIVITY 3 Loan with eual monthly payments Number of payment Payment Interest Principal repaid Balance $0.00 $0.00 $3, $0.00 Total (4) c) If Roberta decided to repay her debt after 3 months, how much would she pay? (3) d) How much would Roberta save by repaying her debt after the third month? Decision (5) 9. Roberta now has all the information she needs to make an informed decision and choose the most suitable product for her. Given the costs involved in all five options, what do you advise Roberta to do in order to finance her home renovations? SOFAD 11

12 MTH FINANCE AND ARITHMETIC Review of Operational Competencies What is an operational competency? An operational competency is not related to any specific subject, but can be used in all subjects. For example, the competency Adopts effective work methods is acuired to different degrees in all subjects, and not in any subject in particular. However, it is closely related to the subject-specific competencies (mathematics, science, English, history, etc.) since it is used to develop them to varying extents even though you may not be aware of this. There are several operational competencies. The following two are developed in this course: To communicate and to reason logically. To communicate In light of the learning situations you have just comleted, indicate your ability to interpret and convey the following informations. Subject of communication Information Yes In part No Symbolic language - Meaning of GST and QST - Usefulness of parentheses and brackets - Knowledge of the law of signs (+, -, and ) in arithmetic operations Vocabulary - Meaning of rate - Meaning of daily rate - Meaning of monthly rate - Meaning of annual rate - Meaning of percentage - Meaning of of euivalent fraction - Meaning of line of credit - Meaning eual monthly payments - Meaning of term loan 12 SOFAD

13 SCORED ACTIVITY 3 Calculations - Applying the priority of multiplication and division over addition and subtraction - Applyong the rule of signs (+, -, and ) in arithmetic operations - Calculating the daily rate - Calculating interest on purchases and a credit card balance - Calculating transaction fees on a debit card - Calculating the interest on a line of credit - Calculating the interest and principal paid on a loan with eual monthly payments - Calculating seuences of operations - Percentage of a number and a fraction - Adding decimals - Subtracting decimals - Multiplying decimals - Dividing decimals - Adding fractions - Subtracting fractions - Multiplying fractions - Dividing fractions - Determining euivalent fractions Production - Choosing the appropriate type of loan SOFAD 13

14 MTH FINANCE AND ARITHMETIC To reason logically In light of the learning situations you have just comleted, indicate your ability to perform the following operations. Operations Yes In part No - Using negative numbers in real-life situations - Using percentages in real-life situations - Placing amounts in the correct categories (gains and expenses) - Checking the plausibility of one s calculations - Selecting the appropriate information before doing a calculation - Determining the magnitude of a fraction in relation to other fractions - Estimating the magnitude of a result by rounding it before calculating its exact value - Solving a problem by applying a method - Ability to predict the value of a result - Establishing seuences of operations 14 SOFAD

15 SCORED ACTIVITY 3 Student s Questions SOFAD 15

16 Tutor s comments May 2013

ARITHMETIC FINANCE AND MTH Scored Activity 1. Mark: Date corrected: Corrector s signature: Student s Identification. Name: Address:

ARITHMETIC FINANCE AND MTH Scored Activity 1. Mark: Date corrected: Corrector s signature: Student s Identification. Name: Address: FINANCE AND ARITHMETIC MTH-1101-3 Scored Activity 1 Mark: Date corrected: Corrector s signature: Student s Identification Name: Address: Email: Telephone No.: Date sent: MTH-1101-3 FINANCE AND ARITHMETIC