Name: Jenisa Reed, Che Hinds, Destiny Alleyne, Tamarie Wilson, Mikhaela Small

Date: 22nd November 2017

Subject: Practical Mathematics

Tutor: Mr. E. Knight

Course Code:

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Table of Contents:

Chapter 1 Page 3

What is Mathematics? Page 3

Why is Mathematics such an important subject? Page3

What fields can Mathematics be used in? Page 3

How is math important in everyday life scenarios? Page 4

The Scenario Page 5

Chapter 2 Page 6

The Lending Institutions Page 6

Royal Bank of Canada Page 6

Scotia Bank Page 9

First Caribbean Page 10

Internal Renovations Page 13

Tiling Page 13

Painting Page 15

Fencing Page 18

Financial Proposal Page 20

Chapter 3 Page 22

Summary Page 22

Recommendations Page 23

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 Chapter 1

What is Mathematics?

Mathematics is the study of measurements properties and relations of quantities using

numbers and symbols. It is group of related sciences including algebra: geometry,

calculus along with the study of number, quality, shape, space and their

interrelationship by using a specialized notation.

Why is math an important subject?

Maths can be important is everyday situations such as children’s learning in basic

addition, subtraction and simple problems. It can be used in the house, whether it is in

building a house, paying off a loan, mortgage or bill, buying a car, planning an event

and even cooking food or buying ingredients. Math is integrated in practically every

part of everyday life.

We should study maths because it will further push us as people to move forward in

the world. Computer Programmers, Doctors and even Construction workers have to

utilize math in their day to day tasks.

What fields can math be used in?

Computer Programmers also have to be versatile in mathematics and its sub-topics

such as college algebra, statistics, calculus I and calculus II. These classes are applied

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in two different ways for computer programming. The most obvious is using the math

taught to solve complex equations. The less obvious is the skills learned to master

advanced math is similar to the skills required to build complex applications. These

skills include logic and following complicated step-by-step processes.

Pediatricians use numbers to calculate the patient’s growth, using growth charts to

assess how well a child is developing physically. Children’s weight and height are

measured in kilograms and centimeters, respectively. These measurements are then

converted from the metric system to the English system, using math to change

kilograms to pounds and centimeters to inches.

Construction workers must use math in a variety of ways while practicing their trade,

including taking measurements, converting quantities and solving equations. While it

is not necessary for construction workers to have an advanced education, they must be

comfortable with basic mathematics and capable of performing several simple

operations. Construction workers must be able to add, subtract, divide and multiply as

well as work with fractions. Construction workers must also use ratios frequently. For

example, when figuring out the proportions of the roof’s length to its height, a

construction worker must be able to divide the length by the height to obtain the

correct ratio.

How is math important in everyday life scenarios?

1) Math is used when calculating the distance with speed and time when

traveling from one place to the other.

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 2) It is used when preparing a dish from a recipe because you may have to

convert milliliters to ounces to create a correct measurement.

3) Math is used when you are at a store and you have to calculate how much
VAT is going to be added to the product.

4) Math is used to read and understand your bank statements properly when you
get them.

The Scenario

Ms. Jones is a newly promoted property manager of Eddies Wholesale and her

superiors have put her in charge of drawing up a financial proposal on a new location

which they want to open. With the task at hand, Ms. Jones must consult various

lending institutions in order to attain the most cost-effective means to open the new

department store. Included in this proposal, she must look for appropriate loans on

both the prospective land and property. After doing so, she must also include in her

proposal how she will acquire the tiles to use in the new building, the painting of the

inside and fencing needed around the property. Her superiors inform her that they

simply want the most cost effective means for the long term financial path of the

company. Ms. Jones must now use this directive in making her decisions on planning

out this business venture.

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 Chapter 2

The Lending Institutions

The first step in opening up this branch of this department store was to review the

various financial institutions to see which ones would be suitable for our

circumstances. At this point Ms. Jones already knows the land she is buying is priced

at $120,000 and the desired property on the land is $400,000. With these prices in

mind she consulted many lending institutions but found that Royal Bank of Canada,

Scotia bank and First Caribbean had the best deals. Even so, we needed a bit more

time to thoroughly understand each offer and to calculate which one would be the best

choice.

Royal Bank of Canada

The terms for the Royal Bank of Canada were as follows:

For the land price:

A simple interest loan of

Interest Rate: 10%

Repayment Period: 9 years

In this case, Ms. Jones was more concerned with the long term viability of such a

contract so she decided to calculate the interest on this offer using the formula:

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I = P R T /100

Her calculations produced the following:

I = 120,000 x 10 x 9 / 100

The total interest paid over the 9 years = $108,000

If repaying monthly, $108,000 / 9 / 12 = $1000

The total money needed would be: $120,000 + $108,000 = $228,000

For the property:

A mortgage of

Deposit: 20%

Interest Rate: 5% per year compounded monthly

Repayment Period: 30 years

With this property mortgage, Ms. Jones decided to calculate the interest and the

monthly repayments.

To calculate these, she used the equation, a = P r / 1 – (1 + r)-n

Deposit = 20 / 100 x 400,000 = $80,000

Number of periods (n) = 30 x 12 =360

Interest Rate per period (r) = 5 / 100 /12 = 0.0042

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Amount of Loan (P) = $400,000 - $80,000 = $320,000

Monthly Repayment (a) = $320,000 x 0.0042 / 1 – 1.0042-360

= 1344 / 0.7788322162

= $1725.66

The total interest paid over the 30 years to RBC would be:

$1725.66 x 360 - $320,000 = $301,237.60

In total, for both land and property, Ms. Jones calculated that she would have to pay

an interest of:

$108,000 + $301,237.60 = $409,237.60 to the Royal Bank of Canada

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Scotia Bank

Ms. Jones then reviewed the second offer from Scotia bank. They proposed that both

land and property could be put on one mortgage, instead of two different contracts.

The agreement is as follows:

For BOTH Land and Property:

Deposit: 50%

Interest Rate: 15% per year compounded semi- annually

Repayment Time: 15 years

Calculations using the mortgage formula gave the following results:

Deposit: 50 / 100 x $520,000 = $260,000

Number of Periods (n) = 15 x 2 = 30

Interest Rate per period (r) = 15 / 100 / 2 = 0.075

Amount of Loan (P) = $520,000 - $260,000 = $260,000

Monthly Repayment (a) = $260,000 x 0.075 / 1 – 1.075-30

= 19500 / 0.8857789699

= $22,014.52

The total interest paid over the 15 years for BOTH land and property to Scotia bank

would be:

$22,014 x 30 - $260,000 = $400,420 to Scotiabank

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First Caribbean

Ms. Jones then considered her last offer from First Caribbean. They told her that she

would have to apply for two separate mortgages on the land and property. The

specific values of these agreements are stated below:

For the land:

A mortgage of

Deposit: 10%

Interest Rate: 7% per year compounded quarterly

Repayment Period: 16 years

Her calculations using the mortgage formula were as follows:

Deposit: 10 / 100 x 120,000 = $12,000

Number of Periods (n) = 16 x 4 = 64

Interest Rate per period (r) = 7 / 100 / 4 = 0.0175

Amount of Loan (P) = $120,000 - $12,000 = $108,000

Monthly Repayment (a) = $108,000 x 0.0175 / 1 – 1.0175-64

= 1890 / 0.6705441264

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 = $2818.61

The total interest paid to First Caribbean for the land over the next 16 years:

$2818.61 x 64 - $108,000 = $72,391.04

For the property:

A mortgage of

Deposit: 15%

Interest Rate: 4% per year compounded monthly

Repayment Period: 25 years

Using the mortgage formula, she had worked out the following:

Deposit: 15 /100 x $400,000 = $60,000

Number of Periods (n) = 25 x 12 = 300

Interest rate per period (r) = 4 /100 / 12 = 0.0033

Amount of Loan (P) = $400,000 - $60,000 = $340,000

Monthly Repayment (a) = $340,000 x 0.0033 / 1 – 1.0033-300

= 1122 / 0.6278171767

= $1787.14

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The total interest paid for the property to First Caribbean over the next 25 years would

be :

$1787.14 x 300 - $340,000 = $196,142.00

In total, for both land and property, Ms. Jones would have to pay First Caribbean:

$72,391.04 + $196,142.00 = $268,533.04 to First Caribbean

In examining the results of these calculations, it was noted that First Caribbean had

the lowest interest of all three lending institutions at $268,533.04 over a 25 year

period. On the other hand, while Scotia bank had higher interest to be paid, the total

repayment period was much lower, standing at only 15 years. If Ms. Jones did go with

Scotia bank she would also have to consider that they would require a considerable

deposit on the agreement, 50%! In the end, Ms. Jones decided to go with First

Caribbean as presented the most cost-effective choice over the long term, having

fairly low interest rates coupled with ample time to repay.

It also must be noted that even though Royal Bank of Canada had the highest interest

of all three lending institutions it had the lowest overall monthly repayment. $1000

per month for the land and $1725.66 per month for the property. If Ms. Jones did

choose this it would represent the lowest cost in the short term cycle. Regardless Ms.

Jones thought that this would be too costly for the long term profitability of the

department store seeing that it had the highest interest at $409,237.60.

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Internal Renovations

Tiling
The next aspect of the job would the tiling, painting and fencing of the department

store.

Firstly was the tiling of the inside of the facility. After reviewing the design plans of

the building she knew that the floor dimensions were approximately 218 ft by 170 ft.

She was told by a close friend that Tiles Bargain had high quality tiles as well as

beautiful designs. Having taken that advice, she found herself liking two tiles. Ms.

Jones then decided that she would purchase the one which gave the most value for

money.

The first tile was a square tile of 17 inches at 3.95 per tile.

17 in.

17 in.

The second tile was a rectangular tile of 24 inches by 20 inches for 5.25 per tile.

24 in.

20 in.

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In order to determine which option was less expensive, Ms. Jones had to calculate the

area of the floor as well as the area of the tiles.

Area of the Floor: 218 ft. x 170 ft.

As 1 ft. = 12 inches

(218 x 12) x (170 x 12) = 2616 in. x 2040 in.

= 5336640 in2.

Area of one 17 in. square tile = 17 in. x 17 in.

= 289 in2.

Area of one 24 in. by 20.in tile = 24 in. x 20 in.

= 480 in2.

Number of Square Tiles required = 5336640 / 289 = 18466

After adding in 5% extra tiles (923), the total would be 19389 tiles

Number of Rectangular Tiles required = 5336640 / 480 = 11118

After adding in 5% extra tiles (556), the total would be 11674 tiles

Total cost using square tiles = 19389 x $3.95 = $76,586.55

Total cost using rectangular tiles = 11674 x $5.25 = $61,288.50

On doing these calculations one notices that the rectangular tiles (24 in. x 20 in.) are

more expensive per tile but choosing this option would work out to be less costly.

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A larger tile covers more space on the floor and therefore less tiles would need to be

bought. By choosing the rectangular tile, a savings of $15,298.05 (i.e. $76,586.55 -

$61,288.50) was made.

Painting
Ms. Jones decided that she would call on the already existing employees to do the

tiling and painting instead of hiring an outside company. Subsequently, she now had

to determine which paint to buy.

Again, on the recommendation of a close friend, Ms. Jones considered buying one

gallon of Harris Paint for $60 which would cover 90 ft2 of wall. On the other hand

she could buy one gallon can of paint for $28 from Berger Paint which would cover

80 ft2 of wall. Further consultation with her friend revealed that if she did indeed use

Berger Paint, she would have to use two coats of paint instead of one. She had to

factor this in in her calculations.

Harris Paint: Value for Money $60 / 90 ft2 = $0.67 per square foot

Berger Paint: Value for Money ($28 x 2) / 80 ft2 = $0.70 per square foot

N.B. It would be $28 x 2 because TWO coats of paint are required to cover the 80

square feet of wall if Berger Paint is chosen.

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From these calculations, Harris Paint came up to be less money per square foot; the

option gave better value for money so Ms. Jones chose this paint.

In order to determine how much paint to use, the area of the walls had to be

calculated. Two of the walls had measurements of 170 ft. by 90 ft. (each). The other

two walls had measurements of 218 by 115 ft. (each).

90 ft.

170 ft.

Area of Wall A = 170 ft. x 90 ft. = 15300 ft2

Therefore the two Wall A’s have a total surface area of 15300 x 2 = 30600 ft2

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 B 115 ft.

218 ft.

Area of Wall B = 218 ft. x 115 ft. = 25070 ft2

Therefore the two Wall B’s have a total surface area of 25070 x 2 = 50140 ft2

Therefore total area of all four walls = 30600 + 50140 = 80740 square feet

Afterwards the number of gallons of paint needed to be bought is calculated.

If one gallon of paint covers 90 square feet then:

80740 / 90 = 897.11 = 898 gallons of paint are needed

The money needed to buy all of the paint would be equivalent to

898 x $60 = $53,880

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Fencing

Finally, there is the issue of fencing the entire property. Ms. Jones again referenced

the property plans and decided that she would fence the department store as shown in

the diagram below.

Department Store

200 m

In the diagram the diameter of the circular fencing is 200 metres. Using the equation

Circumference = TTd, we can find the length of fencing needed for the land.

C = 3.14 x 200 = 628.32 m of fence would be required to fence the land.

Ms. Jones then determined where she had to buy the fence from, sadly there was only

one source in the island, BRC, and they sold fencing at $80 per 100 metres. Her

calculation for this is as follows:

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628.32 / 100 = 6.28 which would round up to be = 7

Therefore 7 x $80 = $560 to be spent on 700 metres of fencing.

Ms. Jones was satisfied with this, especially since she had extra fencing left over but

she did not consider that she may have gotten a better deal if she looked outside the

country.

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Financial Proposal

Nevertheless with all of the financial planning complete, she presented to her

superiors, her estimate of how much money would be needed for the:

- The Purchasing of Land....

Monthly Repayments x Periods + Deposit = Total for Land

$2818.61 x 64 +$12,000 = $192,391.04

- The Purchasing of Property....

Monthly Repayments x Periods + Deposit = Total for Property

$1787.14 x 300 + $60,000 = $596,142

- The Purchasing of Tiles....

Number of Tiles x Cost of One Tile = Total for Tiles

11674 x $5.25 = $61,288.50

- The Purchasing of Paint.................................

Gallons of Paint x Cost of One Gallon = Total for Painting

898 x $60 = $53,880

- The Purchasing of Fence................................

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 Number of 100m fencing x Cost for Each 100 m = Total for Fencing

7 x $80 = $560

Ms. Jones then presented the total funds needed for the opening of this department

store which came up to be:

$596,142 + $192,391.04 + $61,288.50 + $53,880 + $560 = $904,261.54

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 Chapter 3

Summary
In recap, Ms. Jones was chosen as the property manager of a new branch of a

department store. Her responsibilities included seeking out land and property for the

department store and finding corresponding financial assistance from lending

institutions. After reviewing three options, Royal Bank of Canada, Scotia Bank and

First Caribbean, Ms. Jones then decided upon First Caribbean being the best cost-

effective option. Afterwards she then had to choose tiles for the inside of the

department store. For the tiling she considered two options and in the end chose the

rectangular tiles which saved $15,298.05 for the company. Moreover she then had to

decide upon the type of paint and how much paint there needed to be to complete

painting. Ms. Jones selected Harris Paint because it gave the most value for money at

$0.67 per square foot. Finally she then determined how much fence is needed for the

entire perimeter of the property. She calculated this to be $560 for the entire fence

needed. With all of this decided upon, she then presented the total cost to her

superiors in her Financial Proposal.

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Recommendations
1) Looking back on acquiring land and the property for the department store, Ms.

Jones chose the most cost effective means in the long term, First Caribbean at

$268,533.04 interest over a 25 year period. In spite of this, you may not have

the short term resources to repay the monthly installments of $2818.61 for the

land and $1787.14 for the property so you may want to go with RBC which

had a total monthly repayment of $1000 per month for the land and $1725.66

per month for the property; the lowest monthly fee of all three options. The

trade-off in this case would be higher overall interest with RBC having

$409,237.60 in interest over a 30 year period. Any potential businessman must

weigh his short term resources against the long term profitability of the

business and make an appropriate decision.

2) Again when it comes to acquiring land and property, a prospective buyer

might also not care so much about the interest but instead be thinking about

the shortest repayment period possible. In this case, Scotia Bank would be the

best alternative as its agreement only had 15 years to repay. If you do go with

this option, you must be wary that this requires a hefty 50% deposit on the

loan which may not be financially wise in the short term. Moreover the

interest on this option is $400,420, a $131886.96 increase in interest in

comparison to First Caribbean. It must be emphasized that if you as the

prospective buyer can handle these purchases then you are well on your way

to fully owning the land and property in the shortest time possible.

3) For the Tiling of the building, it is recommended that you may want to shop

around a bit more to acquire a variety of options before purchasing the right

one, this principle also applies to the purchase of paint and fencing.

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 4) In this case, Ms. Jones could only find one local supplier of fencing, BRC and

she did not stop to consider that she could look overseas for a more cost

effective solution. It would be wise that you should also consider foreign

products, if they are of reputable quality, and if the importation fees and taxes

are not too high.

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