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# Numeracy

#### Reflective log

From the above self analysis it can be analysed that I know numeracy regarding to the interest rate and interest mount calculation. I aware with mainly two types of interest calculation methods which are such as simple interest as well as compound interest rate. There are different formulas for both the calculation and helps to determine that how much some of money will be generated by the investor after making investment for particular period of time. I can easily derive time, principle amount as well as interest rate for annual, semi-annual and quarterly basis. Hence, it can be said that I have good command on the simple and compound interest rate calculation.

Moreover, it can be said that I am able to analyse future value of any kind of investment with the help of net present value. From this I clearly understand that when future value of potential investment will be positive then should put money in that. On the other hand side, when value of NPV comes negative then there is no chance to make investment in that. Further, criteria about which I am not that much aware and needs more practice which is such as linear equation. I can make the scatter graph but unable to derive linear equation which lead to influence proper decisions as well as analysis. According to the frequency distribution I am able to make the table of frequency distribution easily and in an appropriate manner. There is a problem related to respective thing that for make the histogram and interpret it I need more practice.

On the other side in terms of probability distribution I am not aware about it as well as unable to calculate probability of any occurrence which may happen in the future. I can understand about probability after analysing and researching on that but not able to compute any kind of calculated if calculator provided then as well. In regarding to this, I cannot do calculation of exchange rate if they give training they it may be possible but not sure.

#### Two examples of real life

I have applied my ability of interest rate calculation in the real life when I made an investment in an avenue. The person at where I make investment, he provides me less money in comparison to real interest amount. Further, I show to him proper calculation about that and take all the calculated and proper money along with principle amount.

Another example relies with the future value calculation using net present value tool. When my father going to purchase a new equipment in their business then they have two mutually exclusive equipments. Further, by using NPV method I derive future value of both the equipments and by comparing he choose one equipment which has higher future value of its initial cost.

### SECTION 1

#### QUESTION 1

A. One power law

In the numeracy criteria, there are different kinds of laws and regulations are to be use by the analyser. Among them one power law is describes that a particular number having multiplications up to which how many levels. There are mainly three types of powers on any number such as zero, negative as well as positive. In the one power only one digit is there for a number.

B. One root law

Apart from the above mentioned law of one power there are another law used in the numeracy is such as law of one root which is identified as square root as well. The value of square root is fractional value or index in the actual manner. Further it denotes by symbol which is such as“”.

C. Simplification of one power law

The power law simplify by three ways which are such as zero, positive and negative which is along with example described below:

Zero = 6^0 = 1. Value of digit comes always one when there is zero power.

Positive = 6^2 = 36. Value of positive power is multiplications of same digit.

Negative = 6^-2 = 0.028. When there is negative power then value of digit reduce from original.

D. Simplification of one root law

Law of one root is to be simplified with the help of below given example:

16 = 4. Value of income digit is power of the outcome digit where power remains same of the respective digit.

### QUESTION 2

#### A. Simple interest amount

 Principle amount £17500 Interest rate per annum 8% Time 3 years Simple interest P*R*T / 100 = 17500 * 8 * 3 / 100 = £4200

In the present case when A invest amount worth of £17500 for 3 year on the rate of 8% then return in terms of simple interest will be worth of £4200. Further, total amount after three years will become £17500+£4200 = £21700.

#### B. Compound interest yearly

C = P [(1+r)n – 1]

= 17500 [(1+0.08)3 – 1]

= 17500 * 0.2597

= £4544.75

Total amount after 3 years will be worth of £17500 + £4544.75 = £22044.75.

#### C. Compound interest semi-annually

C = P [(1+r/2) 2*n – 1]

= 17500 [(1+0.08 / 2) 2*3 – 1]

= 17500 * 0.2653

= £4642.75

Total amount after 3 years will be worth of £17500 + £4642.75 = £22142.75.

#### D. Compound interest quarterly

C = P [(1+r/4) 4*n – 1]

= 17500 [(1+0.08 / 4) 4*3 – 1]

= 17500 * 0.2682

= £4693.5

Total amount after 3 years will be worth of £17500 + £4693.5 = £22193.5.

### QUESTION 3

#### A. Amount which she should invest

 Total value £250000 Time 10 years Rate of interest 3% p.a. Principle amount needs to invest C = P [(1+r)n] 250000 = P (1+0.03)10 = £186025.75

#### B. Computation of interest rate

 Principle £4500 Time 10 years Balance £7686.65 Interest rate C = P [(1+r)n] 7686.65 = 4500 (1+r)10 = 5.5%

#### C. Calculation of number of years

 Principle £12500 Interest rate 6% p.a. Balance £50000 Time C = P [(1+r)n] 50000 = 12500 (1+0.06)n = 23.8 years

#### D. Rule of 72

In the numerical world there are various kinds of calculations are needs to calculate to derive appropriate data or outcomes. In context to this, there is a rule of 72 is used by the firm or investor when it going to make an investment. As per the rule of 72 it helps to determine time value that within how many years potential investment amount will become double. For determine time value interest rate as well as 72 both the values are used. In the present case the annual interest rate is 6% where number of years will be shown which taken to get double amount of initial investment with help of respective rule which is calculated as below:

72 / 6% = 12 years. Further, in order to get double sum of money of £12500 i.e. £25000 total 12 years will be taken.

### QUESTION 4

#### A. Scatter Plot

 Time (hours) Height (cm) 0 8.8 1 11.4 2 17.6 3 18.4 4 21.3 5 24.2

Scatter graph on the basis of above data

#### C. Finding of values

From the above mentioned analysis it can be determined that as the time in terms of hours increase then height as well. Value of the the variable is like as below:

f(x) = 3.071x + 9.271

f(2.5) = (3.071 * 2.5) + 9.271

2.5 = 86.046

Value of the x is assumed which is 2.5 and on the basis of these value of the depended variable will be 86.046. It shows that when on variable fluctuate then another as well from the 86.046.

#### D. Estimation of age of plant

From the above analysis age of the plan can be estimated as below:

= (86.046 * 5) / 24.2

= 430.23 / 24.2

= 17.78.

### QUESTION 5

#### A. Net present value of the machine

 Years Cash flow of machine (Amount in £) Discounting factor @ 8% Present value of machine Initial investment 57500 1 10000 0.926 9259 2 12000 0.857 10288 3 20000 0.794 15877 4 20000 0.735 14701 Summation £50125 Less: initial investment £57500 NPV -£7375

#### B. Suggestions to MGS manufacturing

From the above calculation of NPV it can be analysed that the machine provides negative future value at the end of four year which is worth of -£7375. Hence, it can be suggested to the management of MGS manufacturing company is that, it should not purchase the machine in the firm. If it purchases then can reduce return of investment as well as financial performance.

### QUESTION 6

#### A. Frequency distribution table

 Frequency distribution table Data range Frequency 0-10 1 10-20 0 20-30 1 30-40 1 40-50 1 50-60 2 60-70 7 70-80 3 80-90 2 90-100 7

#### C. Analysis of marks distribution

 Data range Frequency (F) Middle value (X) F*X 0-10 1 5 5 10-20 0 15 0 20-30 1 25 25 30-40 1 35 35 40-50 1 45 45 50-60 2 55 110 60-70 7 65 455 70-80 3 75 225 80-90 2 85 170 90-100 7 95 665 Summation ∑F = 25 ∑FX = 1735

Mean = ∑FX / ∑F

= 1735 / 25

= 69.4

From the above calculation it can be analysed that marks are distributed on the average value such as 69.4 marks.

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