ZAMBIA INSTITUTE OF CHARTERED ACCOUNTANTS

CHARTERED ACCOUNTANTS EXAMINATIONS

TECHNICIAN LEVEL
T3: MATHEMATICS AND STATISTICS
SERIES: DECEMBER 2012
TOTAL MARKS 100 TIME ALLOWED: THREE (3) HOURS
INSTRUCTIONS TO CANDIDATES
1.

You have fifteen (15) minutes reading time. Use it to study the examination paper
carefully so that you understand what to do in each question. You will be told when
to start writing.

2.

This paper is divided into TWO sections:

Section A:

Ten (10) Multiple Choice Compulsory Questions.

Section B:

Five questions. Attempt any four (4).

3.

Enter your student number and your National Registration Card number on the front
of the answer booklet. Your name must NOT appear anywhere on your answer
booklet.

4.

Do NOT write in pencil (except for graphs and diagrams).

5.

The marks shown against the requirement(s) for each question should be taken as
an indication of the expected length and depth of the answer.

6.

All workings must be done in the answer booklet.

7.

Formulae are provided at the end of the question paper.

8.

Graph paper (if required) is provided at the end of the answer booklet.

SECTION A: (MULTIPLE CHOICE QUESTIONS)

Attempt all TEN sub questions in this section.
QUESTION ONE
Each of the following questions has only one correct answer. Write the LETTER of the
correct answer you have chosen in your answer booklet. Marks are indicated against each
question.
1.1

The nth term of a sequence is Tn=n2+3. What are the first four terms of this
sequence?
A.
B.
C.
D.

1.2

NPV.
Discount factor.
Internal rate of return.
None of the above.

(2 marks)

K 6,000
K 8,000
K 20,000
K 18,000

(2 marks)

Express as a fraction 0.00225 in its lowest term :

A.
B.
C.
D.

1.5

(2 marks)

A sum of money is divided in the ratio 4:3. The largest part is K24,000.What is the
smaller part?
A.
B.
C.
D.

1.4

4, 7, 12.
12, 19, 28.
7, 12, 19
12, 19, 28.

The discount rate at which the net present value is zero is called:
A.
B.
C.
D.

1.3

3,
7,
4,
4,

9
4000
225
1000
9
100000
25
100000

(2 marks)

Which one is the odd one out?

A.
B.
C.
D.

Standard deviation
Range
median
variance

(2 marks)

1.6

The sampling method in which each data item has an equal chance of being selected
and it is mostly applicable to homogeneous population is called :
A.
B.
C.
D.

1.7

Random sampling method

Quota sampling method
Multi-stage sampling method
Convenience sampling method

(2 marks)

The following table show the scores of a group of students in a test question :
Mark
Frequency

0
10

1
5

2
8

3
y

4
3

Required:
What is the value of y if the mean of these marks is 1.5?
A.
19
B.
4
C.
2
D.
8
1.8

(2 marks)

Mrs Banda wants to have K20, 000,000 in five years time. How much should she
deposit monthly in the account at 12% compounded monthly for her to raise the
required amount?
A.
B.
C.
D.

1.9

K244,888.95
K11, 348, 537.11
K10, 559, 432.45
K354, 753.12

(2 marks)

Given the equation of a straight line as y = 3x 5, the intercept and gradient are:
A.
B.
C.
D.

1.10

5, 3
3, 5
5, 3
3, 5

(2 marks)

The following is the binomial probability distribution:

X
P(X=x)

0
1
2
3
4
0.134 0.245 0.341 0.202 0.280

Required:
Find P(X 2):
A.
0.341
B.
0.379
C.
0.621
D.
0.720

(2 marks)
[Total: 20 marks]

SECTION B
Attempt any FOUR questions in this section.
QUESTION TWO
(a)

Solve the simultaneous equation below for x and y, by substitution method

(b)

x + 2y = 3
2y=x7
The age distribution of an international company is shown below:
Age group
21-25
26-30
31-35
36-40
41-45
46-50

(4 marks)

Number of staff
600
100
500
300
150
50

Required:

(c)

(i)

Construct and label a histogram of these data

(ii)

Find the mean, median and mode of these data

(2 marks)
(2+4+4 marks)

The Board of Directors of Euro Africa has warned that there is a 70% probability that
the company will be closed down unless its workforce improves its productivity. The
Company Manager has estimated that the probability of success in agreeing a
productivity deal with the workforce is only 20%. Determine the probability that the
company will be closed.
(4 marks)
[Total: 20 marks]

QUESTION THREE

3
1

x5 x2

(a)

Solve the following linear equation

(b)

Solve the following quadratic equation by factorization method 2 x 2 x 3

(4 marks)

(c)

The distribution of prices and quantities of blankets, shirts and shorts of 2007 and
2008 of Kwathu ntemba is shown in the table below:
ITEM

2007
PRICE
QUANTITY
K 40 000/
50
blanket
K 25 000/shirt
100
K 10 000/ short
95

BLANKET
SHIRT
SHORT

(4 marks)

2008
PRICE
K 45 000/blanket
K 30 000/shirt
K 15 000/short

QUANTITY
35
70
80

Required:
Calculate the weighted quantity index number taking 2007 as the base year.
(7 marks)
(d)

A sales agent visits three shops daily. The probability of making a successful sale at
each shop is 0.75. Find the probability that on a particular day;
(i) No successful sale is made.

(2 marks)

(ii)

(3 marks)

At least one successful sale is made.

[Total: 20 marks]
QUESTION FOUR
(a)

A firm has the following total revenue and total cost functions:
TR = 100,000 + 160x x2
TC = 40,000 100x + x2
Where x is the number of units of the products, (in thousands).
Required:
Find:
(i)

The profit function

(2 marks)

(ii)

The level of output at the breakeven point

(4 marks)

(iii)

The actual amount of profit at the breakeven point

(2 marks)

(b)

(c)

A bowl contains 7 balls, 3 blue and 4 yellow. Two balls are drawn successively
without replacement. What is the probability that
(i)

Both are yellow

(2 marks)

(ii)

The balls are of different colours

(2 marks)

Consider the following simple sample data set: 3, 2, 4, 6, 1.

(i)

Find the median and the variance

(5 marks)

(ii)

Suppose we add the same number to all the values of the data set. Which of
the two quantities (median and variance) will remain the same? Explain briefly.
(3 marks)
[Total: 20 marks]

QUESTION FIVE
(a)

6 weeks after planting, the heights of 30 bean plants were measured correct to the
nearest cm. The frequency distribution is given below:
Height (cm)

3-5

6-8

9-11

12-14

15-17

18-20

Frequency

11

10

Required:

(b)

(i)

Construct the cumulative frequency table with lower and upper boundaries
clearly shown.
(5 marks)

(ii)

Construct the ogive (Cummulative frequency curve) on the graph paper

provided.
(5 marks)

(iii)

Using the ogive drawn in (ii), estimate the number of plants that were less
than 10cm tall.
(3 marks)

(iv)

Estimate the median using the ogive.

(2 marks)

Mr Chanda estimates that he needs K20,000,000 in five years time for his University
education. How much must he invest quarterly at 4% compounded quarterly to
achieve his aim.
(5 marks)
[Total: 20 marks]

QUESTION SIX
(a)

Mongu in Western province has more annual rainfall than any other place in Zambia.
The Meteorological department wishes to analyze data showing weekly hours of
sunshine (X-data) and weekly millimeters of rain (Y- data) during the rain season:
The observations for that period are shown in the following table.
Week number
1
2
3
4
5
6
7
8
9
10
11
12
13

Sunshine
(hours per week X)
22.82
68.53
51.95
14.87
81.19
60.67
70.40
6.38
58.60
13.31
68.90
36.25
70.33

X 624.2, X

Rainfall (millimetres Y)
97.10
42.15
73.25
67.85
55.45
46.85
72.30
75.90
64.70
72.05
58.05
58.75
53.15

38025.26, Y 837.55, XY 37454.94

Required:

(b)

(i)

Calculate the least squares regression line.

(7 marks )

(ii)

Predict the rainfall for week 14 when X=6.90.

(3 marks)

The net cash flows for two project A (fast foods) and B (amusements), is as follows:

Year
Project A
Project B

0
-420,000
-95,000

1
-5000
-10,000

2
120,000
110,000

3
130,000
200,000

4
148,000
110,000

5
150,000
50,000

Required:
(i)

Compute the NPV at discount rate of 10%.

(ii)

Which project is worthwhile? Explain briefly.

END OF PAPER

(9 marks)
(1 mark)
[Total: 20 marks]

STATISTICAL FORMULAE
1.

I=

PRT
100

(i)

Simple Interest

(ii)

Compound interest (Values and Sums)

Future Values of S, of a sum of , invested for n periods, compounded at r%
interest:
R n
n
S = 1 r OR A = P (1
)
100

A
(1 i ) n

(iii)

Present Value (PV) =

(iv)

Ordinary Annuity Amount

where i

R
100

(1 i ) n 1

A P
i

where

P Annuity

(1 i) n 1 1
P
A P
i

(v)

Due Annuity Amount

(vi)

The Present Value of an Annuity

Present value of an annuity of K1 per annum receivable or payable for n years,
commencing in one year, discounted at r% per annum:
1
1
PV = 1

r 1 r n

(vii)

Present Value of a perpetuity is:

Pv

R
i

Where R is a perpetuity payable at the end of each interest period worth i per interest
period.

2.

Correlation and regression:

(i)

Product moment correlation coefficient:

n xy x y

(ii)

Spearmans rank correlation coefficient:

rs 1
(iii)

n 2

4.

(i)

a y bx

OR

n
Standard error for a proportion:
pq
p
n
Arithmetic mean (grouped data):

5.

y
x
b
n
n

Z-test statistic:

z
(ii)

n(n 2 1)

n
a

(i)

6 d 2

Least square regression line:

b=

3.

[n x 2 ( x) 2 ][n y 2 ( y ) 2 ]

f
f

(ii)

Arithmetic mean (ungrouped data):

(i)

Sample standard deviation (grouped):

fx 2

SD =
(ii)

f 1

Sample standard deviation (ungrouped):

SD =
(iii)

( fx ) 2

( x ) 2

n 1
Mean deviation:

(iv)

6.

(i)

n
Mean deviation(Grouped data)
f

f
n th term of geometric series:
Tn ar n1
(ii)
Sum of the first n terms of a geometric series:
a r n 1
a 1 rn
OR
Sn
Sn
r 1
1 r
Where a is the first term and r is the common ratio; r 1

(iii)

n th term of an arithmetic progression.

Tn a (n 1)d
(iv)

7.

Sum of the first n term of an arithmetic progression:

n
n
2a n 1d
S n (a L) OR
2
2
Where a is the first term, L is the last term and d is the difference.

Probability distribution:
(i)

Binomial

P( x) n CxP X q n x
(ii)

OR

n x n x
p q
x

where q 1 p

Poisson

m x e m
P(x)
x!
Where x = 0,1,2,3, ; and where m is Mean Value.
(iii)

Normal Distribution

Z=

A
](b a)%
A B

8.

IRR a% [

9.

Quadratic formula:

b b 2 4ac
x
2a

10

10.

Index Numbers:
Price Relative = 100 * P1/P0

Weighted average price relative:

Quantity Relative = 100*Q1/Q0

P
w P1
0 100
w

Weighted average quantity relative :

11.

Coefficient of skewness:

Psk

3( x median)
X Mode
OR Psk
S
5

11

Q1

0 100
w

w Q

T3: MATHEMATICS AND STATISTICS

SUGGESTED SOLUTIONS

12

SECTION A
SOLUTION ONE
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10

C
C
D
A
C
A
B
A
B
D

SECTION B
SOLUTION TWO

(a)

Solving for x and y, by substitution method

Let x + 2y = 3 be equation 1
Let

2y=x7 be equation 2

Substituting 2y in equation 1 by x7, equation 1 changes to

x + (x7) = 3, implying
2x7 = 3, implying
2x=10, implying
x=5.
Next, since x=5, we substitute x in equation 1 by 5, implying
5+ 2y = 3, implying
2y=2, implying
y=1.
Therefore x=5 and y=1
Q2(b)(i)
Age group
21
26
31
36
41
46

25
30
35
40
45
50

Mid-point x

Frequency f

23
28
33
38
43
48
total

600
100
500
300
150
50
1700

Sketch Histogram here:

13

Cumulative
frequency
600
700
1300
1600
1750
1800

fx
13800
2800
16500
11400
6450
2400
53350

(ii)

Mean( x)

fx 53350 31.38
f 1700

2 F
850 700
5 31 2 32.5
Median= L
h 31
500
f

D1
600
5 21 2.7272 23.7272
Mode= L
h 21
500 600
D1 D2
(b) If outcome A is the shutdown of the company and the outcome B is he failure to
improve productivity;

P( A B) P( B) P( A / B)
= 0.80 x 0.70
= .560

14

SOLUTION THREE
(a)

3
1
, implying

x5 x2
(1)

3 x 2 1 x 5,
implyig
3x 6 x 5
Like terms together, we have

3x x 5 6
2 x 11
therefore , x

11
2

(b)

2 x2 -x = 3
Implying
2 x2 -x 3=0
a = 2 b= 1 c = -3
product = 2x(1)=-6
sum=-1.
The two numbers that gives us the product equal to -6 and sum equal to -1 are -3
and 2.
Implying,
x2 3x+2x 3=0
implying
x(2x 3)+1(2x 3)=0
implying
(x+1)(2x3)=0
implying
(x+1)=0 or (2x3)=0
Therefore,
x=1 or x=3/2

(c)

PQIN

P x100
P
q1 1

q1 1

q0
50
100
95

q1
35
70
80

PQIN =

p1
45 000
30 000
15 000

q0 p1
2 250 000
3 000 000
+ 1 425 000
q0 p1= 6 675 000

4,875,000
x 100
6,675,000

= 0.7303 x 100
= 73.03%

15

q1 p 1
1 575 000
2 100 000
1 200 000
q1 p1= 4 875 000

(d) (i) P(S) = 0.75 P( S ) = 0.25

P(No sale) = 0.25 x 0.25 x 0.25 = 0.015625
(ii)

P(at least one sale) = 1 P(no sale)

= 1 0.015625 = 0.984375

SOLUTION FOUR
(a)

(i) Profit = TR TC
= (100,000+160x-x2) (40,000-100x+x2)
60,000+260x-2x2

(ii) At breakeven point TR = TC

i.e 100,000+160x-x2=40,000-100x+x2, implying
60,000+260x-2x2=0
Solve for x by formula method, we have

b b 2 4ac
2a

260 260 2 4(2)(60000)

x
2(2)
260 67600 480000
4
260 547600
x
4
260 720
x
4
x

x= -120 or x=250
Level of output at breakeven point is x=250
(iii) Actual amount of Profit = 60,000+260x-2x2.
60,000+260(250)-2(250)2= 0
(b)

Let
Let
Let
Let

B1 be
B2 be
Y1 be
Y2 be

(i)

the event of
the event of
the event of
the event of

Both are yellow

P(Y1)P(Y2)=

(ii)

choosing the first ball that is blue

choosing the second ball that is blue
choosing the first ball that is yellow
choosing the second ball that is yellow

4 3 4 2

0.2857
7 6 14 7

The balls are of different colours

P(B1)P(Y2) or P(Y1)P(B2)=

3 4 4 3 2 2 4
0.5714
7 6 7 6 7 7 7

16

(c)

To find the median, arrange data set to size order

i.e 1, 2, 3, 4, 6
therefore, the median (middle value)=3
To obtain the variance, we first come up with the table below.
x2
1
4
9
16
36

x
1
2
3
4
5

Variance=

x2

x 16
x

n 1

66
=

162

5
5 1

66

66 51.2 14.8

3.7
4
4

The variance changes.

SOLUTION FIVE
(a) (i)
Height (cm)
3-5
6-8
9 - 11
12 - 14
15 - 17
18 - 20

x
4
7
10
13
16
19

f
1
2
11
10
5
1

17

fx
cf
LCB
4
1
2.5
14
3
5.5
110
14 8.5
130
24 11.5
80
29 14.5
19
30 17.5
f=30 fx=357

UCB
5.5
8.5
11.5
14.5
17.5
20.5

(ii)

18

(iii)

Estimating the number of plants that were less than 10cm tall is 7.5 or less
(iv)

Estimating the median using the ogive. Median Q2 is 12 cm

19

(b)

(1 i ) n 1

A P
i

Ordinary Annuity Amount

A = K 20, 000, 000 P = ?

n = 20

where

P Annuity

i = 0.01

(1 i ) 1

A P
i

20
(1 0.01) 1

20,000,000 P
0.01

20,000,000 P22.0190039
Therefore P 908,306.30

SOLUTION SIX
(a) (i)

Least square regression line is given by y=a+bx, where

b=

n
n 2

y
x
b
n
n
n
a

Now, b=

n 2

, implying

13(37454.94) (624.2)(837.55)
13(38025.26) (624.2) 2
35,884.49
=
104,702.74
0.342668415
Therefore b=-0.343

y
x
b
n
n
837.55
624.2

(0.342668415)
13
13
64.42692308 16.45335574
80.88
a

Therefore y=80.88-0.343x
(ii)

When x=6.90 in week 14,

y=80.88-0.343(6.90)
=80.88-2.3667
=78.51.
Therefore, when we there is 6.90 hours per week of sunshine, there is 78.51 millimetres of
rainfall.

20

(b)
YEAR
1
2
3
4
5

PROJECT A.
R = 10%
CASHFLOW
-5 000
120 000
130 000
148 000
150 000

DF(1.1)-n
0.90909
0.82645
0.751315
0.68301
0.62092

DF(CASH)
0.90909(-5 000)
0.82645(120 000)
0.751315(130 000)
0.68301(148 000)
0.62092(150 000)

(1 mark)

PV
-4545.45
99174
97670.95
101085
93138
PV=386522

NPV = PV - COST
= 386522-420 000 = K-33478
PROJECT B
R = 10%
YEAR
1
2
3
4
5

CASHFLOW
-10 000
110 000
200 000
110 000
50 000

DF(1.1)-n
0.90909
0.82645
0.751315
0.68301
0.62092
(1)

DF(CASH)
0.90909(-10 000)
0.82645(110 000)
0.751315(200 000)
0.68301(110 000)
0.62092(50 000)

PV
-9090.9
90909
150263
75131
31046
PV=338258

NPV = PV - COST
= 338258 95 000 = K243258
INTERPRETATION: Project B is more profitable because its NPV is positive or NPV is greater
than zero.

21