How to do Business related math questions? Tony buys a block of land for $120 50

Question

How to do Business related math questions?

Tony buys a block of land for $120 500 and sells it within the same financial year for $135 800. A car worth $20 000 can be bought using a hire purchase contract for a deposit of $2500, with the balance being paid off over 5 years via monthly repayments. The simple interest rate applying to the contract is 8% pa. a How much profit does he make on the land? 0.5 mark a Find the balance (principal) still owed after the deposit has been paid. 0.5 mark Now using the following tax table: ub division T axable income %) of tax able Nil 19% 32.5% 37% 45% S18,200 18,201 -S37 7,001-580,000 b Find the interest which will be paid on the deal. 1.5 marks 001 -$180,000 1& Over b If Tony's other salary for the financial year is $76 850, how much capital gains tax will he pay on the profit he makes on the block of land? 2 marks Find the monthly repayments. 1.5 marks c Calculate total tax payable by Tony for the financial year 2.5 marks d Find the effective interest rate applicable to this contract, correct to one decimal place. 1.5 marks END OF TEST PAPER

Explanation / Answer

a) Balance of principal left = Cost of asset - Deposit = 20,000 - 2,500 = 17,500

b) Interest to be paid = Total monthly repayments + Deposit - Cost of asset

= (354.8226*60) + 2,500 - 20,000

= 21289.36 + 2500 - 20,000

= 3789.357

c) Monthly repayment = (8%/12 * 17,500) / [1- (1+ 8%/12)^ -60]

= (0.006667 * 17,500) / [1- 1.006667^-60]

= 116.6667 / [1 - 0.671197]

= 116.6667 / 0.328803

=354.8226

D) Effective rate of interest = 3789.357/ (17,500 * 5)

= 4.33%

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