MAT10706(Assignment(2( S2(2016( 1( ( MAT10706 QUANTITATIVE METHODS WITH ECONOMICS ASSIGNMENT 2 Due Week 7 midnight 11pm Sunday 28th August Value 30% Topics 1 to 6 Please follow these guidelines for the assignment •! The assignment must be submitted online as a SINGLE Word file with Excel output copied and pasted (use paste special – Excel object). •! All submissions should be typed including the mathematics in A4 page size •! All written descriptions must be in correctly structured sentences using appropriate mathematical, business, and English language. •! Descriptions should be in formal language (e.g. third person – no use of I or me throughout) •! Figures and tables must be fully labelled and include titles You are not required to find any other references to use in this assignment. All the information you need is given in the question or in your study material. However, if you happen to use other resources, ensure that they are referenced using Harvard conventions. All submitted work must be your own. Using others’ work as if it is your own can be deemed to be plagiarism. Remember your assignment must be submitted online in a single word file. MAT10706(Assignment(2( S2(2016( 2( ( W’ght in % Criterion Excellent (HD) Very Good (D) Good (C) Satisfactory (P) Unsatisfactory (F) Not Present 40 Calculations •! Relevant to question •! Accurate •! Correctly set out •! Appropriate rounding includes units with measurements. The calculations are highly related to the task; Excellent calculations with high level of mathematical setting out, rounding and measurements The calculations are closely related to the task; Advanced calculations, advanced setting out, rounding, and measurements. The calculations are related to the task; Competent calculations; competent setting out; rounding, and measurements The calculations are partially related to the task; Adequate calculations with some errors, basic setting out, rounding and measurements. The calculations are not related to the task; Calculations are incorrect. Poor mathematical setting out, rounding, and measurements. Calculations are absent. 25 Use of Excel •! Correct tables •! Correct graphs •! Graphs relevant to the question •! Graphs fully labelled Highly advanced use of excel to draw graphs, graphs are fully labelled and relevant to the question. Advanced use of Excel to draw graphs, graphs are fully labelled with minor errors and relevant to the question. Effective use of Excel to draw graphs, graphs are labelled with some errors and relevant to the question. Basic use of Excel to draw graphs, graphs are partially labelled and partially relevant to the question. Poor use of Excel to draw graphs, graphs have no relevant labels and are not relevant to the question. No graphs. 15 Communication •! Effective and relevant •! Logically sequenced •! Appropriate structure •! Use of mathematical, business, and English language Exemplary logic, structure, and use of mathematical, business and English language Advanced logic, structure, and use of mathematical, business, and English language. Effective logic, structure, and use of mathematical, business, and English language Satisfactory logic, structure and use of mathematical, business, and English language Unsatisfactory logic, structure, and use of mathematical, business, and English language. No logic or structure; Little use of mathematical, business, and English language. 20 Conclusion •! Clear and relevant concluding statement •! Assumptions Clear statement of conclusion with all questions answered appropriately; excellent statement of assumptions and limitations Statement of conclusion with majority of questions answered appropriately; very clear statement of assumptions and limitations Statement of conclusion with questions answered appropriately; clear statement of assumptions and limitations. Basic statement of conclusion with some questions answered appropriately; sound statement of assumptions and limitations. Statement of conclusion not relevant to the task. Assumptions included but not relevant. No conclusion present. MAT10706(Assignment(2( S2(2016( 3( ( Question 1 Calculation of Superannuation. Superannuation is a way to save for your retirement. The money comes from contributions made into your superannuation fund by your employer and ideally, added to with your own money. Sometimes the government will add to it through co-contributions and a low income contribution. Your employer must pay 9.5% of your salary into a superannuation fund. In Australia this is the law. (https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works) An Australian worker aged 35 and currently earning $65,000 per annum, has an established superannuation account, into which her employer pays 9.5% of her salary each year but she does not contribute any extra money to the fund (a co-contribution). She has calculated that she needs her superannuation fund to earn $35,000 per annum on retirement and she expects to live for another 20 years after retirement. Assume: 1.! She will retire at 65 and can access her superannuation immediately. 2.! Her Superannuation fund will generate 5% return (compounded annually), over the long term. 3.! Her income remains $65,000 per annum. Steps to complete to undertake the investigation Calculate: a.! How much money will be in the Superannuation account by the time she retires at 65? b.! What will her income be if the account generates 5% return? c.! How much money should be in the superannuation account if she wants to earn $35,000 per year from the account after her retirement? d. What age would she have to work till in order to generate $35,000 p.a as a pension after her retirement? e. Using excel or similar, graph the Total amount (V) against time in years (n). In a short statement of no more than 300 words, use your findings to provide advice for young people entering the workforce, concerning the accumulation of superannuation. •! Specifically address the issue of co contribution. •! The limitations evident in your calculations. •! Any assumptions that you have made. Further information about superannuation is available at the following url: •! https://www.ato.gov.au/Individuals/Super/ •! http://www.smh.com.au/money/super-and-funds/budget-2016-super-strategies-for-the-average-aussie20160504-golvtz.html MAT10706(Assignment(2( S2(2016( 4( ( Question 2 Impact of company tax A small business produces work boots for sale in Australia. They produce 23,500 pairs of boots per year and sell then for $50 a pair. In the 2014-2015 financial year they paid company tax on their earnings at 28.5%. The company’s total fixed costs are $125,000 per year and the total variable costs are $14 per pair of boots. The price demand function for q number of boots in thousands, is !=50-& (p is the price in dollars). Company taxes are to be reduced to 25% for the next financial year. 1.! What is the amount of tax (in $) paid at: a.! 28.5% (rate in 2014-2015) b.! 25% (rate in 2015-2016) 2.! Should the company reduce the price per pair of boots by the amount of reduced tax paid or retain the extra profit? Justify your answer by showing all working.