Additional Mathematics Project Work 3 Name : Steve Lim Keaw Ann I/C : 930130-10-5099 Class : 5 Local School : Kolej

Tuanku Jaafar

Additional Mathematics Project Work 3

Content
Title
Content Acknowledgement & Appreciation Objective Question of Additional Mathematics Project Work 3 Answers Part 1 a Part 1 b,c Part 1 d, Part 2 a,b Part 2 c Part 2 d(i) Part 2 d(ii), e Further Exploration Reflection Illustraion

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1 2 3 4~7 8 9 ~ 10 11 12 13 14 15 ~ 16 17 18 19 ~ 20

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Acknowledgement and Appreciation

First of all, I would like to say thank you to my friends, teachers and parents for giving me their full support in making this project successful. Not forgotten to my family for providing everything, such as money, to buy anything that are related to this project work and their advise, which is the most needed for this project. Internet, books, computers and all that act as my source to complete this project. They also supported me and encouraged me to complete this task so that I will not procrastinate in doing it. Then I would like to thank my teacher, Mr Hussin Bin Sahid for guiding me and my friends throughout this project. We had some difficulties in doing this task, but he taught us patiently and gave me guidance throughout the journey until we knew what to do. He tried his best to help us until we understand what we supposed to do with the project work. Besides that, my friends who were doing this project with me and shared our ideas. They were helpful that when we combined and discussed together, we had this task completed in just a glimpse of an eye. Last but not least, any party which involved either directly or indirect in completing this project work. Thank you everyone. Yours sincerely,

(Steve Lim Keaw Ann)

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Objective
We, as the students taking Additional Mathematics are required to carry out a project work while we are in Form 5. This year the Curriculum Development Division, Ministry of Education has prepared for tasks for us with four choices, and I chose the third task. We are to choose and complete ONLY one task based on our area of interest. This project can be done in groups or individually, but each of us are expected to submit an individually written report. Upon completion of the Additional Mathematics Project Work, we are to gain valuable experiences and able to: 1. Apply and adapt a variety of problem solving strategies to solve routine and non-routine problems 2. Experience classroom environments which are challenging, interesting and meaningful and hence improve their thinking skills 3. Experience classroom environments where knowledge and skills are applied in meaningful ways in solving real-life problems 4. Experience classroom environments where expressing ones mathematical thinking, reasoning and communication are highly encouraged and expected 5. Experience classroom environments that stimulates and enhances effective learning 6. Acquire effective mathematical communication through oral and writing, and to use the language of mathematics to express mathematical ideas correctly and precisely 7. Enhance acquisition of mathematical knowledge and skills through problem- solving in ways that increase interest and confidence 8. Prepare ourselves for the demand of our future undertakings and in workplace 9. Realises that mathematics is an important and powerful tool in solving real-life problems and hence develop positive attitude towards mathematics. 10. Train ourselves not only to be independent learners but also to collaborate, to cooperate and to share knowledge in an engaging healthy environment 11. Use technology especially the ICT appropriately and effectively 12. Train ourselves to appreciate the intrinsic values of mathematics and to become more creative and innovative 13. Realises the importance and the beauty of mathematics

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Question of Additional Mathematics Project Work 3 Year 2010

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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, , (RM) 75 125 200 250 Estimated Year demand, , (units) 4500 3500 2000 1000 Table 1

a) Determine the relationship between the demand, , and the selling price, , 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, discus and write a brief explanation on the relationship between the demand of the selling price of the computer components manufactured by the company. b) Assuming that production cost of the component is RM 50 per unit, express the yearly profit, , in terms of the selling price, . 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.

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PART 2
In year 2009, Warisan RMN made a profit of RM200,000. The company intends to increase its production in year 2010, 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) Amount 12 months 24 months 36 months 48 months 60 months (RM) 10,000 1034.00 617.00 478.00 409.00 467.00 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 23890.0 2042.00 1834.00 Table 2

a) Based on Table 2, Calculate the total amount of interest incurred for each choise of repayment period and their corresponding amount of loan. Tabulate the values in Table 3. Total Loan RM 10,000 20,000 30,000 40,000 50,000 Total Interest Incurred (RM) 24 months 36 months 48 months

12 months

60 months

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 RM 100,000. By obversing 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.

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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 RM 50,000 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 31 st 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 advantage 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 practice? Represent your opinions or feelings creatively through usage of symbols, illustrations, drawings or even in a song.

Extracted from Additional Mathematics Project Work 3

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Additional Mathematics Project Work 3

Answers

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Part 1
a) As the selling price, increases, the estimated yearly demand, decreases. Thus we can say that the relationship is inversely proportional as shown below 1 If a against graph is plotted, a straight line will be formed
300 250 200 150 100 50 0 1000 2000 3500 4500

Graph 1.1 Graph against Based on graph 1.1, the curve of the graph shows a curve, proving the relationship of against is inversely proportional. In which means that as the selling price increases, the estimated yearly demand will decrease.

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1

However, if a against graph is plotted, a straight line curve is obtained Selling price per unit , , (RM) 75 125 200 250
300 250 200 150 100 50 0 0.0002 0.0003 0.0005
1 1

Estimated Yearly Demand, , (Units) 4500 3500 2000 1000

Reciprocal of which is 0.0002 0.0003 0.0005 0.001

Series 1 Column1 Column2

0.001

Graph 1.2 Graph against

In graph 1.2, the graph shows a straight line when it is plotted against . It actually means the same as graph 1.1.

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b) Cost of the computer product = RM50 per unit Express yearly profit, , in terms of selling price, . = 50 Where is the total profit, is the selling price per unit and is the estimated yearly demand. For example below Selling Price Per Estimated Yearly Total Sales () Total Cost Profit Unit, , (RM) Demand, , (Units) (50) ( = ) 75 4500 337,500 225,000 112,500 125 3500 437,500 175,000 262,500 200 2000 400,000 100,000 300,000 250 1000 250,000 50,000 200,000 Table 1.1 Based on Table 1.1 calculation has been made to calculate the total profit using the formula = . It was found that the maximum profit can be obtained is when the selling price is RM200 per unit. Thus, Warisan RMN should sell each computer component at a price of RM 200 to ensure the amount of user buying the component is at maximum to produce maximum profit. Although, the selling price was RM75 and the demand was 4500, the profit earned is still not as high as the previous one. c) First method to determine the maximum profit is to produce a lot of computer component at a time. However, the company should ensure that they have already gained a place in the users heart so that they will purchase. This keeps the demand running on and on thus preventing wastage of natural resources. We should keep in mind that excessive production does not guarantee a 100% reward. If production is too high and the demand for the certain product is low, it might cause losses due to lack of demand. Therefore, an advice for new companies is to produce minimum but rewarding amount of product. After the company gains the users trust, then the company can start producing huge amount of product. However, provision should be made for demand and economic crisis. Then only a maximum profit can be determined. The second method is profit maximization. It is a process by which a firm determines the price and output level that returns the greatest profit. There are several approaches to this problem. The total revenue - total cost method relies on the fact that profit equals revenue minus cost, and the marginal revenuemarginal cost method is based on the fact that total profit in a perfectly competitive market reaches its maximum point where marginal revenue equals marginal cost. Any costs incurred by a firm may be classed into two groups: fixed cost and variable cost. Fixed costs are incurred by the business at any level of output, including zero output. These may include equipment maintenance, rent, wages, and general upkeep. Variable costs change with the level of output, increasing as more product is
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generated. Materials consumed during production often have the largest impact on this category. Total cost is the total when fixed cost and variable cost are combined. d) Referring to table 1.1, the maximum profit is obtained at the selling price of 200. In order to obtain maximum profit, the selling price should be allocated in between RM125 and RM250. This is because the highest profit is in between the selling price of RM125 and RM250.

PART 2
a) The total interest incurred is calculated through the formula below = Where is total interest, is the total month for monthly payment and for the number of months. For example loan amount of RM10,000 for 12 months payment where each month repayment is RM1034.00 = = 12 1034 = 12,408 Total Loan RM 10,000 20,000 30,000 40,000 50,000 Total interest incurred (RM) 24 months 36 months 48 months 4,808 7,208 9,632 9,616 14,416 19,216 14,400 21,624 28,800 19,208 28,832 38.432 24,016 36,004 48,016 Table 1.2

12 months 2,408 4,804 7,200 9,608 12,004

60 months 12,020 24,040 36,000 48,020 60,040

b) To calculate the average interest rate per month, a table in drawn and data are inserted. Average rate of interest per month is calculated as follow using the formula below. 100 =

Indicator means average rate of interest per month means total interest incurred which can be obtained from table 1.2 means the total loan and lastly means the total number of months of repayment

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Average rate of interest per month 12 months 24 months 36 months 48 months 60 months 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% Table 1.3 From the results above, we can conclude that the percentage of interest incurred is 2% for each period of repayment. Besides, the total amount of interest needed to pay exceeds the loan when the total repayment months are 60. Thus, this means that the percentage of interest incurred is same for all loan regardless of the repayment period.

Total Loan RM 10,000 20,000 30,000 40,000 50,000

c)

Total Loan RM 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000 75,000 80,000 85,000 90,000 95,000 100,000

12 months 2,400 3,600 4,800 6,000 7,200 8,400 9,600 10,800 12,000 13,200 14,400 15,600 16,800 18,000 19,200 20,400 21,600 22,800 24,000

Total Interest incurred (RM) 24 months 36 months 48 months 4,800 7,200 9,600 7,200 10,800 14,400 9,600 14,400 19,200 12,000 18,000 24,000 14,400 21,600 28,800 16,800 25,200 33,600 19,200 28,800 38,400 21,600 32,400 43,200 24,000 36,000 48,000 26,400 39,600 52,800 28,800 43,200 57,600 31,200 46,800 62,400 33,600 50,400 67,200 36,000 54,000 72,000 38,400 57,600 76,800 40,800 61,200 81,600 43,200 64,800 86,400 45,600 68,400 91,200 48,000 72,000 96,000
Table 1.4

60 months 12,000 18,000 24,000 30,000 36,000 42,000 48,000 54,000 60,000 66,000 72,000 78,000 84,000 90,000 96,000 102,000 108,000 114,000 120,000

Notes: All interests rate are based on Table 1.3

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d) Profit in year 2009 = RM200,000 20% of the profit = RM 40,000 Purpose of provision of 20% = loan repayment Assumption = making the same profit in the same following years i) The table below shows the maximum amount of profit earn in 5 years Year 2009 2010 2011 2012 2013 Profit earn for 200,000 200,000 200,000 200,000 200,000 that year Total profit 200,000 400,000 600,000 800,000 1,000,000 Provision for 40,000 80,000 120,000 160,000 200,000 repayment Table 1.5 If the Warisan RMN chooses to repay in 1 year time, I would recommend them to make loan of RM 30,000. This is because the amount needed to return back is RM37,200 (RM30,000+RM7,200) including interests. This does not exceed the provision set by the company. For the second choice of repayment is 2 years time. For this choice, I recommend the company to request a loan of RM50,000. The total amount needed to repay is RM74,000 (RM50,000+RM24,000) inclusive of interests. For the third choice of repayment is 3 years time. I recommend the company to request a loan of RM65,000. The amount needed to repay is RM111,800 (RM65,000+RM46,800) For the fourth choice is to repay within 4 years time. In this case, I suggests that a loan of RM80,000 should be made. The amount of money needed to repay is RM156,800 (RM80,000+RM76,800). For the last choice is to pay within 5 years time. I will urge the company to make a loan of RM 90,000. The total repayment amount is RM198,000 (RM90,000+RM108,000) In conclusion, all the reason above is within the provision for repayment. Thus it can be summarised into a table as follows. Period of Year Profit For Total Total Total Total Repayment That Year Provision Loan RM Interest Amount of (Year) For incurred Repayment Repayment RM 1 2009 200,000 40,000 30,000 7,200 37,200 2 2010 200,000 80,000 50,000 24,000 74,000 3 2011 200,000 120,000 65,000 46,800 111,800 4 2012 200,000 160,000 80,000 76,800 156,800 5 2013 200,000 200,000 90,000 108,000 198,000 Table 1.6

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ii)

Based on the the company, Warisan RMN situation, the firm needs a substantial amount of money for capital investment. Therefore, I, as the manager of the company, should choose the best choice for the company thus can make more profit from the loan and the repayment should not be a burden to the company. Based on the Table 1.6, we can see that the amount of repayment does not exceed the provision for repayment. Therefore, I would choose to make a loan of RM90,000 with a repayment within 5 years or 60 months. In this case, the total interests incurred is RM108,000. When we sum it up, the total is RM198,000. For RM198,000, we can divided into 60 months which is the repayment period. So in that case, we need to pay RM3,300 per month. Besides, we can make use of the loan by investing to make new computer components which can be very profitable.

e) Situation The company has set aside a reserve fund of RM50,000 in a bank an earns monthly interest beginning 1st January 2010. Interest rate: 2.5% Problem: Amount of the reserve fund at the end of each month until 31 st December 2010. From the situation above, we can conclude that the amount of money in the bank increases by 2.5% per annum. Thus the information can be shown in a table form as follows.

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Month

January February March April May June July August September October November December 1 Year

Amount of Money in the beginning of the month 50,000 50,104.17 50,208.34 50,312.51 50,416.68 50,520.85 50,625.02 50,729.19 50,833.36 50,937.53 51,041.70 51,145.87 50,000

Amount of Interest (RM) 104.17 104.17 104.17 104.17 104.17 104.17 104.17 104.17 104.17 104.17 104.17 104.13 1,250

Total Amount Of Money at the end of the month 50,104.17 50,208.34 50,312.51 50,4146.68 50,520.85 50,625.02 50,729.19 50,833.36 50,937.53 51,041.70 51,145.87 51,250 51,250

The amount of interest obtained for a year is RM1,250. If it would be divided into 12 months, the amount will be RM1046 which is an infinite number. To make it rational number, I made some adjustment where the first 11 months will receive RM104.17 as interests and the last month which is December we will receive an interests of RM104.13. Sum it up we will get RM1,250 (RM104.1711 + RM103.13 =RM1,250)
1

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FURTHER EXPLORATION
RHB Bank Fast credit decision, upon receipt of full documentation Quick "Yes" or "No" to your application Simple documentation requirements 27 easily accessible Commercial Banking Business Centres and a wide network of branches throughout Malaysia Prompt and friendly customer service In line with the Government's call to support SME businesses nationwide Uses a transparent and objective credit scoring approach Fastest turnaround time for Loans up to RM 1 Million A comprehensive range of financial products and services Holistic approach to credit approval with emphasis on your business experience, payment history and account activity patterns SME Bank Bumiputra Bank No collateral required - You Non-Collateralize , no don't have to pledge your guarantor required & assets to be eligible, only CCRIS/CTOS/FIS also guarantee can apply from your directors and/or Government servants & shareholders is/are required. private sector staffs Easy to apply - No need to ( Bhd / Sdn Bhd / get property valuation report Enterprise ) or transfer money from Pensioner or SOCSO other bank or Those who are to use FD as security. blacklisted with any Fast approval - Upon bank financial receiving full and institutions - also can satisfactory documentation apply from you, drawdown will CRITERIA : SALARY be available within 2 weeks MUST BE CREDITED subject to approval THROUGH BANK conditions. Specialized & designed Loan from RM 50,000 to for Bumiputra working RM 500,000 - You choose in KL & Selangor the sum that suits your Guaranteed the lowest business needs. installment plan in town Flexible repayment tenure Loan up to 3-5 times of You can choose a period of salary / 10000 / higher repayment between 1 to 5 subjected to terms and years. conditions Instant approval within 30 minutes Bring us your document as follow : 3 months latest payslip 3 months latest bank statement Employment confirmation letter Utilities bill

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REFLECTION
Throughout the project while I was conducting it, I learned many stuff. This includes on usage of knowledge and ways to conduct the project. While I was conducting the project, I collected information from the internet and brochures from the banks regarding the loans. Besides, I manipulated my knowledge in other fields such as accounting and economics in this research. However, the most important this I have learnt from this project is to plan before we do something. In this project, I was regarded as the manager of the firm Warisan RMN. I was required to make decision on making loans so that the company is able to increase its production in the following year, Year 2010. Thus, planning is required and information was given. Bank A provides such a loan and repayment period where we can make our choice wisely. While planning, I made few tables on total interest incurred, average interest rate per month and also annual payment for the loan. This has taught me that a lot of work should be done such as consideration and provision for repayment before making a loan. We must be able to clear the debt within the time given and should not make decision in a haste because great haste make great waste. Besides, I learned how to cooperate with friends. My friends and I discussed about the project and we shared ideas amongst ourselves. This discussion has made me more confident when doing something. I also learned to be disciplined in terms of punctuality, doing project and not least to avoid plagiarism. In a nutshell, I have learned something about the future and how serious can it be if we make a wrong decision. Moreover, work that we done must be original and not totally derived from other people. These two images have expressed my opinions from this project.

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Everything comes with a plan. Without a plan, we will fail. Just like the saying goes, we dont plan to fail but we fail to plan.

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A perfectly good business plan is a must to be done to have a long-lasting and profitable business.

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