QTB – May 2016 – L1 – SB – Q4b – Mathematics

This question covers estimating the value of a house with compound growth and determining a feasible tableau using the Least Cost Method in a transportation problem.

Question

i. A house built in Ikoyi increased in value by 8% in year 1, 25% in year 2, 35% in year 3, 43% in year 4, and 22% in year 5.

Required:
If the house cost N10,000,000 to build, estimate its value at the end of 5 years.
(3 marks)

ii. Calculate the average growth rate over the 5-year period.
(3 marks)

iii. A company’s Demand/Supply situations together with unit transportation costs are as shown below:

Supply	Factory A	Factory B	Factory C	Demand
400	3	6	7	400
550	7	5	3	550
500	5	4	6	500
700	3	2	4	700
Total	2150

Required:
Identify the initial feasible tableau using the Least Cost Method.

Answer

(i) – This obeys the Geometric Mean property.
∴Its value at the end of 5 years
= N10,000 x 1.08 x 1,25 x 1.35 x 1.43 x 1.22
= N31,795,335

The average growth rate over the 5-year period

The average growth rate over the 5 – year period is 26%.

(ii) The initial feasible tableau using the least cost method