Additional Mathematics Project Work 3 2010

CURRICULUM DEVELOPMENT DIVISION

MINISTRY OF EDUCATION MALAYSIA

ADDITIONAL MATHEMATICS PROJECT WORK 3/2010

BACKGROUND
Every business requires some form of investment and a sufficient number of customers to
buy its products or services that give profits on a continuous basis. When pricing experts set
a selling price for a new product, their goal is to maximize profits. They begin by estimating
the demand for the product at various selling prices. Generally, the demand for a product will
increase as the selling price decreases.

PART 1
Table 1 shows the various selling prices and estimated demand for a particular computer
component manufactured by a company, Warisan RMN.

Selling Price Per Unit, s, Estimated Yearly Demand, d,

(RM) (units)
75 4500
125 3500
200 2000
250 1000
Table 1

(a) Determine the relationship between the demand, d, and the selling price, s, by plotting
a graph based on the values displayed in Table 1. Plotting of the graph can be done
manually, using computer software such as Microsoft Excel or graphing calculator.
Interpret the graph, discuss and write a brief explanation on the relationship between
the demand and the selling price of the computer components manufactured by the
company.
(b) Assuming that the production cost of the computer component is RM 50 per unit,
express the yearly profit, P, in terms of the selling price, s. Comment on your answer.
[Note: Total Profit = Total Sales – Total Cost]
(c) Use two or more methods to determine the maximum profit and the corresponding
selling price. Explain your answers.
(d) Further, determine the number of the computer components to be manufactured by the
company in order to gain maximum profit.

Curriculum Development Division, Ministry of Education Malaysia

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 Additional Mathematics Project Work 3 2010

PART 2
In year 2009, Warisan RMN made a profit of RM200 000. The company intends to increase
its production in year 2010, and therefore needs a substantial amount of money for capital
investment.
As manager of the company, you have to decide on the amount of loan and the period of the
loan to be taken for the purpose mentioned above.

Table 2 shows part of a monthly repayment schedule for a commercial loan from Bank A:
Loan Monthly Payment ( RM)
12 months 24 months 36 months 48 months 60 months
Amount
(RM)

10 000 1034.00 617.00 478.00 409.00 367.00

15 000 1550.00 925.00 717.00 613.00 550.00
20 000 2067.00 1234.00 956.00 817.00 734.00
25 000 2584.00 1542.00 1195.00 1021.00 917.00
30 000 3100.00 1850.00 1434.00 1225.00 1100.00
35 000 3617.00 2159.00 1673.00 1430.00 1284.00
40 000 4134.00 2467.00 1912.00 1634.00 1467.00
45 000 4650.00 2775.00 2150.00 1838.00 1650.00
50 000 5167.00 3084.00 2389.00 2042.00 1834.00
Table 2

(a) Based on Table 2, calculate the total amount of interest incurred for each choice of
repayment period and their corresponding amount of loan. Tabulate the values in
Table 3.

Total Loan Total Interest Incurred(RM)

RM 12 months 24 months 36 months 48 months 60 months

10 000
20 000
30 000
40 000
50 000
Table 3
(b) Based on your findings in (a) calculate the average interest rate per month. Tabulate
your results and comment on your findings.

(c) Further, tabulate the amount of yearly repayment for each choice of repayment period
up to 5 years for loan amounts from RM10 000 to RM100 000. By observing the total
annual payment for 12 months, show that the annual payment for loan amount of
RM10 000, RM15 000, RM20 000 and so on form a progression.

Curriculum Development Division, Ministry of Education Malaysia

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 Additional Mathematics Project Work 3 2010

(d) The company allocated only 20% of the profit made in the year 2009 on loan
repayment period per annum. Assume that the company continues to make an annual
profit of RM200 000 in the following years.
(i) Based on your table in (c), determine the maximum amount of loan, in multiples of
RM5000, for each choice of repayment period: 1 year, 2 years, 3 years, 4 years
and 5 years.
(ii) Hence, determine which loan option should the company take, and elaborate on
your reasons.

(e) The company has set aside a reserve fund of RM50 000 in a bank and earns monthly
interest beginning 1st January 2010.
Assuming that the bank gives an annual interest of 2.5%; determine the amount of the
reserve fund at the end of each month until 31st December 2010.

FURTHER EXPLORATION
Look into other commercial loans or other financial sources available in the market that may
be utilized by the company for its capital investment. (Example: Overdraft, Islamic Loan)
Discuss the advantages and disadvantages of the different types of loans available.

REFLECTION
While you were conducting the project, what have you learnt? What moral values did you
practise? Represent your opinions or feelings creatively through usage of symbols,
illustrations, drawings or even in a song.

Curriculum Development Division, Ministry of Education Malaysia

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