Lecture 35

Question 3: Marks: 5

A teacher must choose five monitors from a class of 12 students. How many
different ways can the teacher choose the monitors?

Solution:

12C5 = 12! / [5! * (12-5)!] = 12! / {5!*7!} = 12*11*10*9*8*7!/[5!*7!]

=12*11*10*9*8 / 5*4*3*2*1 = 792

Lecture 7

Example

If interest rate is 11% compounded quarterly and the number of payments are 24, then calculate
the Accumulation Factor?

Solution:

Here we have

Interest Rate = 11% compounded quarterly (quarterly means each of 4 equal parts into which
something is divided)

Interest Rate = i = (11/4)% = 0.0275.

Number of payments = n = 24.

((1 + i ) n ) - 1
Accumulation factor =
i

((1 + 0.0275) 24 ) - 1
= =
0.0275
((1.0275) 24 - 1) 1.917626 - 1 0.917626
= = = = 33.36822.
0.0275 0.0275 0.0275
 Lecture # 33

Questions of Marks 3

Question:
From the data below:
Week no. Actual sales Forecast
3 7000 7500
Given that a = 0.3 , find the forecast for the 3rd week.
Answer:
Forecast week 4 = 7350
Solution:
New forecast = old forecast + α (old actual – old forecast)

Forecast week 4 = Week 3 forecast + a (week 3 actual sale - week 3 forecast)

= 7500 + 0.3(7000-7500) = 7500-150 = 7350

Lecture 8:

A home mortgage loan of Rs 225,000 is taken for 25 years with monthly payment. If the interest rate is
12% per annum, then calculate total interest paid in the second year of the payments for period 13 to 24.
(Payments are made at the end of each month).

=CUMIPMT(12%/12,25*12,225000,13,24,0)

-26725.6

For the following data, how much will you accumulate at the end of given time period?

Present Value = 5000, Years = 6 and annual rate = 5%.

=FV(5%,6,0,5000)

($6,700.48)
Calculate the Interest Rate per period of an annuity in MS-Excel for the following data:

Years of loan = 4, Monthly payment = -500 and Amount of Loan = 5000

=RATE(4*12,-500,5000)

10%

Lecture 18:

Calculate the internal rate of return from the data given in scenario. (Here schedule of
cash flows occurring at irregular intervals).

Values Dates
-50000 1-Mar-07
10000 10-Jun-07
7000 18-Aug-07
2000 5-Jan-08
500 15-May-08

=XIRR(D7:D11,E7:E11)

-0.85637

Find Net Present Value (NPV) if return from 1st ,2nd and 3rd years are 5000,6500 and 7000 respectively and
initial cost from today is -10000.Assume that the annual discount rate is 20%. You can use MS Excel to
solve this question but copy only the cells and paste them here. Do not copy whole sheet. (Formulae of
the answer should be viewed.)

=NPV(20%,-10000,5000,6500,7000)

$2,276.23

Lecture 19:

Calculate the straight-line depreciation of an asset whose cost is Rs. 20,000, salvage value is Rs. 5000 and
the years of usefulness are 6 by Using MS Excel.

=SLN(20000,5000,6)

$2,500.00
 Lecture # 32

Questions of Marks 2

Question:

If Y = 7 + b X find the value of when = 12 and = 3

Solution:

Put y=12 and x=3 in

Y=7+bX
12 = 7 +b (3)
12-7 = b (3)
5 = b (3)
B = 5/3 = 1.67

Lecture # 32

Questions of Marks 5

Question:

The estimated regression line of on is

Y = a + b X , it passes through two points (7,9) and (0,0).Find the value of and .

Answer:
 = 9/7

Solution:
Y = a +b X Putting the value of B(0,0)
0 = a + b. 0
a= 0
Hence Y = bX Putiing A(7,9) we get
9 = b(7)
b = 9/7

Question:

To calculate the intercept of the regression line we use equation when the slope of

the line is 0.5. Determine whether intercept is positive or negative.

4 6 11 9
5 10 9 12
Solution:
a = 5.73
Answer:

X Y XY X2
4 5 20 16
6 10 60 36
11 9 99 121
9 12 108 81
= 30 = 36 = 287 =254

The equation for the intercept of the regression line is:

Formula =

b= 0.5 given (slope)

 = ∑x / n = 30 / 4 = 7.5

= ∑y / n = 36 / 4 = 9

b = 0.5
= 9 - (0.5) (7.5)
= 9 – 3.75
= 5.25 Answer

Lecture # 32
Questions of Marks 2
Question:

If find the value of when = 12 and = 3

Solution:
b = 1.67
Answer:

12 = 7 + b (3)
12-7 = b*3
5 = b*3
5/3 = b
b=5/3=1.67

Question:

If a point (5, 6) lie on the regression line Y = -4 + b X , find the slope of the line

Solution:
b=2
Answer:

Y = -4 + bX

Put (5,6) i.e. x=5 and y=6

6 = -4 +b 5

6+4 = b*5

10 = b*5

10/5 = b

b=2

Questions of Marks 5
Question:

The estimated regression line of on is

Y = a + b X , it passes through two points (7,9) and (0,0). Finds the value of and .

Solution:
Y = a +b X

Put (0,0) i.e. x=0 and y=0

0 = a+0

0=a

Again take
Y = a +b X

Put (7,9)

9= a+b * 7

Put a= 0

9 = 0+ 7b

9=7b
9/7 = b

b=1.29

Lecture#26

1. Find the mean using the empirical relationship if median=15 and mode=22.
Answer: Mean=11.5

Solution:

Mean – Mode = 3(Mean – Median)

Mean – 22 = 3(Mean – 15)

Mean – 22 = 3Mean – 45

45 – 22 = 3Mean – Mean

23 = 2Mean

Mean = 23/2 = 11.5

Lecture#28

1. Team A scored the following number of goals in their last 20 matches:

3, 0, 1, 5, 4, 3, 2, 6, 4, 2, 3, 3, 0, 7, 1, 1, 2, 3, 4, 6.
Calculate the mean deviation about the mean.
 Answer: Mean deviation=1.5

Solution:

Mean = = Sum of x / n = 60 /20 = 3

x
3 0 0
0 -3 3
1 -2 2
5 2 2
4 1 1
3 0 0
2 -1 1
6 3 3
4 1 1
2 -1 1
3 0 0
3 0 0
0 -3 3
7 4 4
1 -2 2
1 -2 2
2 -1 1
3 0 0
4 1 1
6 3 3

60 30

Mean deviation from mean =∑ /n = 30/20 = 1.5

Lecture # 31
 Questions of Marks 3

Question:

Given �XY = 400, X = 5,Y = 4,S X = 4,SY = 3, n = 15 . Compute the coefficient of correlation

between and .

Answer : r = 0.55

r=
�XY - (�X )(�Y ) / n
[�X - (�X ) / n][�Y - (�Y )
2 2 2 2
/ n]
1
Multiplying the numerator and denominator by .
n

�XY - (�X )(�Y )

Solution: n n2
r=
[ � X 2

-
(�X ) �Y 2 (�Y ) 2
2

][ - ]
n n2 n n2

�XY - (�X )(�Y )

n n2 Cov ( x, y )
r= or r =
S x .S y S x .S y

Given �XY = 400, X = 5,Y = 4,S X = 4,SY = 3, n = 15

X =5
�X =5 Since n=15
n
�X =5
15
�X = 15*5 = 75
Y =4
�Y = 4 Since n=15
n
�Y =5
15
�Y = 15* 4 = 60
�XY - (�X )(�Y ) 400 75*60
-
r= n n 2
= 15 225 = 26.67 - 20 = 0.56
S x .S y 4*3 12

Lecture 39
Question 2: Marks: 5

A company makes electric motors. The average number of defectives in 300 motors is μ = 3. The
probability an electric motor is defective is 0.01. What is the probability that a sample
of 300 electric motors will contain exactly 5 defective motors?

Solution:

Here

The probability of getting 5 defectives =0.10082