SCHOOL OF BUSINESS Gute Be BS 140/BF150 MATHEMATICAL ANALYSIS/FINANCIAL MATHEMATICS TIME ALLOWED TWO (2) HOURS TEST TWO MONDAY, 17th NOVEMBER, 2008 INSTRUCTIONS TO CANDIDATES 1. Answer ALL THREE (3) questions. 2. Marks are indicated on each question . You must show ALL your workings clearly to get FULL marks Use the question paper as the answers sheet no zttachments will be marked. DO NOT TURN THE QUESTION PAPER UNTIL YOU ARE TOLD TO DO SO. NAME STUDENT ID Thy (ome # fp CBU PROGRAMME. OF STUDY PAB finn TCS Pe) nail(ON ONE QUESTION ONE itbrium i : Determine the equilibrium income and interest rat give (© jfformation about the commodity market ed c= oar +100 [=-20r +1000 And the money market, «2375, 1, =0.¥ 1, =-25r +2000, What effet woulda decrease inthe money supply have on the equilibrium levels of Y and? omy V=C+T = & OY4 Joo —-AaY + (eo 0:2f =- dv F1(00 = He 0 = PD Mc=Gtl, OB 7-= aly —ISy pb SR poy arly Y =37% poy -—F72- Ves anh Y= 500 Bde. Ihevey Fpety eco By & Ps Die baa. ee ly~ 8 y y= nv Linteoay p Qnle encrenay, Wale Treen iu / Whang tot adh *Brmnnct;, el My | Kerneey yn tee Moby 4) (wath)ae fe) ‘and demand function P = Q*+20+7, Crest the equilibrium price and quantity. At ‘pol bren ph B egt]= 9 rs g =3r L Ree 06 prin» Pare @os COTO br x(ave be eavein lout o Fes ; Best (2- >. €=/, Pere] Fy) = s* a let 5%, Ast os _ ¢t -htH =o ays wah LON mat w Log s(1~ #) +Lag, 242) =2 4 8 a st aN) =f t= % een») Determine the equilibrium prices ofthree interdependent commodities which iafy using matrix algebra 22 442,42, =77 42432, +77, 2114 2h +P, +3P, 248 aaa) v WG x) 2 -d ~ ow A RY Is ”) h j= te im) f “e * . (3 Marks)ee : ae + 2000(1.02)* +... +2000(1.02)"# q=dbe 5 aa n= Shoe [/- “Gy fom [-Fa 2 = 24937 (@ Marks) 1 0 bead Sf ar} 0 UIIIH I Mais)“(A pies que nal avn gf 25 lent mama ene ‘of K70 million in two years in time. ‘Whit is the NPV assuming a dacount rate of $947 (2 Masks) What the IRR of the project? (4 Masks). struct an amortization schedule fora loan of K525 million repaid by thee ) iy etliments ath treo 12% compound none RAI, 705-16. 67 A Barras man an Gt lad of Saris Bel, feng EY I Sydfo, 0 BR Sto.to YAS hop 1, 58 ble a Fig BI PUA (015g Lege jure Mra Lingus SACMLa 5/32 ayy mae — S28, 00 (8 Marks) END OF PAPER NOE ma Teas T Maer