Question Four [Total 20 Marks] 1) The data in Table 3 relate to the assets of a small trust fund: Table 3 Assets of the Fund Date 1 January 2017 1 April 2017 1 July 2017 1 October 2017 1 January 2018 Market value K25,000 K29,000 K30,000 K32,000 K31,500 The only cash flow during 2017 that was not generated from the assets of the fund was an injection of K5,000 on 31 March Calculate: (a) the money-weighted rate of return for the fund for 2017 (4 marks) (b) the time weighted rate of return for the fund for 2017 [1 mark] (c) the linked internal rate of return for the fund for 2017, using quarterly subintervals. [1 mark] (ii) Winmore borrows K4,000 under a consumer credit loan. Repayments are calculated to give an APR of 15.4%. Instalments are paid monthly in arrears for 5 years. Calculate the flat rate of interest [4 marks) () A loan is to be repaid by an immediate annuity in arrears. The annuity starts at a rate of K100 pa and increases by K10 per annum. The annuity is paid for 20 years. Repayments are calculated using a rate of interest of 8% pa effective. MTA/2020 - p.4 (a) Calculate the amount of the loan. [3 marks) (b) Construct a loan schedule showing the capital and interest elements in and the amount of loan outstanding after the 11 and 12th payments. (4 marks) (c) Immediately after the 12th instalment, the borrower asks to repay the remaining loan using level annual instalments. The lender agrees, but changes the interest rate at the time of the alteration to 9.5% per annum effective. Calculate the revised instalment. [3 marks] Question Four [Total 20 Marks] 1) The data in Table 3 relate to the assets of a small trust fund: Table 3 Assets of the Fund Date 1 January 2017 1 April 2017 1 July 2017 1 October 2017 1 January 2018 Market value K25,000 K29,000 K30,000 K32,000 K31,500 The only cash flow during 2017 that was not generated from the assets of the fund was an injection of K5,000 on 31 March Calculate: (a) the money-weighted rate of return for the fund for 2017 (4 marks) (b) the time weighted rate of return for the fund for 2017 [1 mark] (c) the linked internal rate of return for the fund for 2017, using quarterly subintervals. [1 mark] (ii) Winmore borrows K4,000 under a consumer credit loan. Repayments are calculated to give an APR of 15.4%. Instalments are paid monthly in arrears for 5 years. Calculate the flat rate of interest [4 marks) () A loan is to be repaid by an immediate annuity in arrears. The annuity starts at a rate of K100 pa and increases by K10 per annum. The annuity is paid for 20 years. Repayments are calculated using a rate of interest of 8% pa effective. MTA/2020 - p.4 (a) Calculate the amount of the loan. [3 marks) (b) Construct a loan schedule showing the capital and interest elements in and the amount of loan outstanding after the 11 and 12th payments. (4 marks) (c) Immediately after the 12th instalment, the borrower asks to repay the remaining loan using level annual instalments. The lender agrees, but changes the interest rate at the time of the alteration to 9.5% per annum effective. Calculate the revised instalment. [3 marks]
