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Bmath 004: Business Mathematics Bridging Question Paper
Bmath 004: Business Mathematics Bridging
Course:Bridging Certificate Course In Mathematics
Institution: Kabarak University question papers
Exam Year:2009
COURSE CODE: BMATH 004
COURSE TITLE: BUSINESS MATHEMATICS
STREAM: BRIDGING
INSTRUCTIONS TO CANDIDATES:
1. Section A is compulsory. Answer ALL Questions
2. Attempt any THREE Questions in Section B.
SECTION A
1. In May 2009, Tom received Kshs. 50,000 as basic pay, Kshs. 10,000 as house allowance
and Kshs. 6,000 other allowances. His pension contribution was 5% of the basic pay and
he had a monthly personal relief of Kshs. 1,162. Kshs. 320 was paid to NHIF. Detemine his
net pay it the tax rate was 30%. (5 marks)
2. A company had a total share holding of 10,500 shares valued at Kshs. 100 par value for
common stock and Kshs.50 par value for preferred stock. The Company had not declared
dividend for the past 4 years and declares a dividend of Kshs. 800,000 this year. There are
6000 shares of common stock and preferred shares attract a dividend rate of 8%.
Determine:
a) Dividend per share of common stock
b) Dividend per share of preferred stock (5 marks)
3. Rhoda earned an interest amount of Kshs.45,000 from her account deposit of
Kshs.260,000 in three years. If the bank compounded interest twice annually, determine the
interest rate the bank offered. (5 marks)
4. Find the total amount of interest paid on a mortage taken on a house costing Kshs.2,400,000
with a down payment of 12% and the repayment period is 15 years at 15% interest rate.
(5 marks)
5. Clare who is a sales agent earned a total of Kshs.65,000 being commission for sales and
transport. His sales were 20 times the amount he earned for sales commission. What was
the commission rate if the rate if the transport claim was Kshs. 9,000? (4 marks)
6. In December 2008, Spin Knit Company had a gross profit of Kshs.765,000 and goods
available for sale of Kshs.503,000. Inventory in January was Kshs.40,000 and sales for the
year were Kshs.1,250,000. Determine:
a) the purchases for the year
b) Inventory as at December of the year
c) Cost of goods sold (5 marks)
7. A clothes dealer sold a shirt at a 30% profit. The selling price was Kshs.5,000 with
a discount of 10%. What was the buying price? (5 marks)
8. The foreign exchange rate indicates that a US Dollar is Kshs. 82 and Kshs. 14 is 100 Indian
Rupees. Traveling to New York would cost you Dollars 7,000 and travelling to Mumbai will
cost you Rupees 100,000. How much Kshs. would you need to travel to each of the two
Towns? (5 marks)
SECTION B
1. Joan had Kshs.48,000. On 1st January she deposited a half of that money in an account
that earned 6% compound interest per annum for 4 Years. On the same date she bought
shares for Kshs.24,000 which she sold after 4 years at Kshs.30,000.
a) How much did she receive after 4 years?
b) Which of the two alternatives was more profitable and by how much?
c) If interest was compounded twice a year, which alternative would be more profitable?
(10 marks)
2. Ruth, Felix and Juma are three partners who agreed to share their profits in the ratio of their
capital contributions after paying 9% interest on their investments. They commenced
business in May after contribution Kshs.560,000, Kshs.845,000 and Kshs.630,000
respectively. In October Ruth increased her investments by Kshs. decided to withdraw
his entire investment in December. If the net profits to be shared were Kshs.512,000, how
much will each partner get? (10 marks)
3. a) Determine the present value that will accumulate a total amount of Kshs.184,000 in
6 years time at a rate of interest of 8% if;
a) Interest is compounded Quarterly
b) Interest is compounded Monthly
c) Interest is compounded daily (6 marks)
b) If you deposited Kshs.4,000 each year to your account for the next 4 years, how much
will your account have at the end of the 4th year if interest rate is 12%? (12 marks)
4. a) Determine the present value of an annuity of Kshs.15,000 deposited every year for
10 years at a rate of interest of 9% compounded annually. (3 marks)
b) An electric kettle was bought on hire purchase at a deposit of Kshs.3,000 followed by
12 monthly installments of Kshs.1,500. If the compound interest charge amount was
Kshs.4,800, obtain the cash price of the kettle. (4 marks)
c) A loan of Kshs.500,000 is charged an interest rate of 12% compounded twice a year. If
the loan was to be repaid in three years, determine the effective interest rate charged on
the loan. (3 marks)
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