COMMERCIAL ARITHMETIC II MARKING SCHEME

(a) HIRE PURCHASE

1 Cost price Institution Y; ksh
100 x 3240 = sh 27,00
60,000 x 25 x 1 +( )
120
Deposit = 10 of 2700 = 270 Difference
100 = ksh (1,881,600 – 1,837,500)
= 3240 – 270 = ksh 44,100
= Sh.2970
1989Q23 2011Q17

2. Interest
= (13800-2280) x 20/100 x 2 M1
= 11520 x 0.2 x 2
=4608 M1
A1
Monthly instalments 3M
= 11520 + 4608
24
= Kshs. 672
2007Q6

3. (a) (i) the cost M1

= ksh (7,500 + 11 x 6 ,000) M1
= ksh 73,500 A1
M1
(ii) the amount % increase
A1
=
= 22.5% M1
A1
(b) the amount paid M1
= 60,000 x 25 x 0.95
= ksh 1,425,000 M1

(c) institution x ksh 73,500 x 25 M1

= Ksh 1,837,500 A1
10
SIMPLE AND COMPOUND INTEREST
1. A=P(1+ )n 2M 1500(1+ )
=1500x1.15=1725
=4500(1+ )2 End of second year
=4500(1.12)2 1725+1500=3225
=5644.81 3225x1.15=3708.75
=Sh.5644.80
1989Q7 End of third year
3708.75+1500=5208.75
2. x 500000 =450000 4M 5208.75x1.15=5990.0625
Repays 6500x15x12=1170000 End of forth year
Interest=1170000-450000 5990.0625+1500=7490.0625
Sh.720,000 7490.0625x1.15=8613.571875
1990Q22a
End of fifth year
3. End of first year 8M 8613.571875+1500=10113.571875
x 30,000=34,500 10113.571875x1.15=11630.60766
=Sh.11630.60 1993Q17
End of second year
34500+30000=64500 6. A=P(1+ )n 3M
x 64500=74175 67845=P(1+ )3
67845=P(1.25)3
End of third year 67845=1.953125P
74175+30000=104175 P=34736.64
x 104175=119801.25 =Sh.34,736.60
1994Q6
Exceeds target by 7. I=PxRxT 4M
119801.25-100000 P=25000-3750=21250
=Sh.19,801.25
1991Q20 I=21250 x x 2=17000

4. A=P(1+ )n 4M 17000+21250=38250

=21000(1+ )5
=1593.75
=21000(1.15)5
=Sh.1593.75 1995Q15
=42238.50
42238.50-21000
8. (a)end of first year 4M
=Sh.21,238.50
1992Q10 10000(1+ )
=10000x1.2=12000
End of second year
5. 12000+10000=22000
A=P(1+ )n
22000x1.2=26400
End of first year
8M End of third year
 26400+10000=36400 No Log
36400x1.2=43680 48000 4.6812
=Sh.43,680 (1.12)4 0.1968
7.55 x 104 4.8780
(b)A=P(1+ )n Amount payable = shs.75510
2000Q12
=43680(1+ )8
=43680(1.12)8 13. a). i). 750,000 x 90
=187816.00 100 M1
= 675,000 A1
Deposit=3x10000=30000 ii). 675,000(1.1)3=898.425 M1
187816-30000 898,425+75,000 = 973 425 A1
=Sh157,816
1995Q17 b). 675,000 (1-1)n=816 750
9. (a) 21000 x 48 – 560000 M1 (1.1) n =1.21 M1
10080000 – 560000 A1
= Sh.448,000 A1 n= 0.828 8m
0.0414
(b) 448000 – M1 n=2 years
A1 2002Q17
r= 4M 14. i). I = PRT
= 20% 100
1996Q7 = 5/100 x 2 x p
10. 1600 (1 + r = 25000
)2 M1 = 0.1p
100 M1
(1 + r )2 = 25000 ii). A = P(1+0.05)2 M1
100 16000 M1 = 1.1025p
Interest = 0.1025p
1+ =√
M1 M1
= 0.25 4M Different in interest
r =25% = 0.1025p-0.1p A1
1998Q13 210= 0.0025
Therefore P =
11. a). by 30th june, 1996 = 82,000/=
A =12000 x 1.09 B1 2005Q15
= shs 13080
M1
b). By 30th June 1997
A = 12000 x 1.09 + 12000 x 1.092
=13080 + 14257.20
= shs 27337.20 M1

1999Q10

12. 12% used –n = 4

A - 4800 (1.12) substituting
15. a). i). principal M1
=358400 – (12800 x 3) A1 17 (a) (i) 180 000 ( )x M1
= 320000 M1 = 288 000 A1
(ii) r = 12800 x 100% M1 10x= 108 000
320000 x = 10 800
= 4% M1
b). i). Deposit = x 56000 A1 A1
(ii) Sn = ( )
M1
= 14000
M1
Instalments = 56000 – 14000
M1 = 2574000
2625
10
= 16 M1
M (a) A1
ii). Cash price =
100 – 12.5 x 4000 = 35000 = 32 422 or 32425 (use of tables)
100
%Difference = [ ( )] M1
56000 – 35000 x 100% (b) (i) ( ) A1
35000
= 60% = 2779675
2006 Q17 P2

16. Amount for Kago (ii) M1

M1
A1
= 30000 + 30000 5
= 1558
= 48,000 2012 Q17 P2 10
Compound interest rate for Nekesa
=
M1
30000 ( ) = 48 000

( ) = = 1.6

1+ = √ A1
r = 100 (1.098560543 1)

= 9.9 % 4

2012 Q7 P2
APPRECIATION AND DEPRECIATION

1. = Shs 526535
(a) A = P( )
M1
( ) = =0.6926
= 110000( ) A1
= 110000 x 0.853 = √ M1
= sh 67553.75
M1
1 – r/100 = 1 √
(b)A =P( ) r/
100 = 1- √ A1
55000 = 110000 ( ) =1-06926
=0.0062 8m
55000 = 110000(0.85n)
r= 0.62%
55000 = 0.85n
1999Q17
110000
0.5 = 0.85n 6. P (1 – 0.09)3 = 150700 M1
P = 150700 =199,981
Log 0.5 = nlog 0.85 (0.91)3 M1
n = log 0.5 No. Log
Log 0.85 150 700 5.1781 M1
0.913 ̅ 9590 x 3
n = 4.265yrs
1989Q21
̅ .8770 A1
2.0 x 105 5.3011 4m
2.
A =P( ) 2002Q9

= 24000 ( ) 7. Value at end of 2nd year M1

= 24000 (0.95)3 21600 x 75 x 80
= sh 20,577 100 100
1990Q9 Value at end of 4th year M1

3. A1
A =P( ) 21600 x ( )
=9369.60 3M
= 40000 ( ) 2003Q4
= 40000 (0.95)4 8. (a)Interest periods
3/2 x 4 = 6 M1
= Sh.26244
1991Q9 450 000(1+6/100)6 A1
450 000x1.066
4. 1995 value = 50,000 x 1x 1.2 Shs 638 550
= 60,000 A1 M1
1997 value – 60,000 x (1.1)3 B1 (b)500x280 x3 A1
= 79860 M1 Shs=1,260, 000
1998Q5 3m M1
c). value
5. M1 9000 (1-16/100)3 M1
a). 950000 ( ) 450 000(0.84)3
M1 450 000(0.5927)
Shs = 266, 715
92000 ( ) ( )
A1
 A1 ii). 4th year value A1
Total profit = = 121800 (1+ 6/100)9 M1
(1,260,000+266715) 8M = 205779
- 638 300 A1
=Shs 888 415 c). % Gain = 10 M
2003Q23 205779 -126875 x 100
126875
9. 480 000 x 100 =500 00 = 62.19%
96
800000 ( ) = 500 000 2008Q23

( ) = = 0.625
= =√

= 9.103 x 10-1
= = I – 0.9103

r = 8.97%
2004Q10

10. a). Interest =

109375 x 8/100 x 2 M1
= 17500 M1
Amount = 109375+17500 A1
= shs. 126875 M1

b). i). 1st year value A1

= 96/100 x 126875 B1
= shs 121 800 M1

INCOME TAX
1. 2300 x 2 = 4600
2300 x 3 = 6900 (c) other deductions
(5520 – 4600) x 5 = 4600 100 + 280 +2624 + 3004

Tax payable 1996Q18

= 4600 + 6900 + 4600 = 16,100
Basic salary 4. (a) taxable pay x x M1
= 5520 x 20 = 110,400 M1
(16100 + 120 + 100 -220) 1000 x - 35
= 16100 1150 – 35 = £1115
110 -16100 M1
= sh94300 Taxable income M1
94300 342 x 2 + 342 x 3 + 89 x 5 M1
12 = sh7858.33 684 + 1026 + 1368 + 445 – 600 A1
3523 – 600 = sh. 2923
Sh.7858.30(to the nearest B1
10cents) 1992Q17 Net tax = 35.23 – 600 8M
Sh. 2923 (£146.15)
2. 7500 + 2500 = 10,000 1998Q18
Basic salary = 10000 x 12
= 120,000 5. a) total earnings M1
39600 x2 = 3960 40480 = £ 2024
20 20 M1
39600 x 3 = 5940 435 x 2 = 870 M1
20 435 x 3 = 1305
39600 x 5 = 9900 435 x 4 = 1740
20 435 x 5 = 2175 A1
1200 x 7 = 420 284 x 6 = 1704
20 7794 B1
3960 + 5940 + 9900 + 420
= 20,220 Net tax shs.7794 - shs 800
= shs 6994
20220 = 1685 New earnings. M1
12
1685 – 200 = 1485 15 x 2024 = 3036 M1
Income tax per month £ 3036 - £ 2024 = 1012
= sh 1485 Excess tax = 1012 x 6 A1
Shs.6072
1993Q1
%age excess = 6072 x 100% 8M
3. (a) 13120 + 3000 = 16420 sh per 7794
month = 77.91%
= £821 2001Q17

(iii) 325 x 2 = 650

325 x 3 = 975 6. a). 16510 x 12 M1
171 x 4 = 684 20 = 9906 A1
2309 before relief b). taxation ; 4512 x 2 = 9024
(i) 2309 – 455 = 1854
 4512 x 3 = 13536 M1 100 – 12.5 x 4000 = 35000
M1 100
(9906 – 9024) = 882 x 4 M1 Difference =
= 3528 A1 56000 – 35000 x 100% = 60%
9024 + 13536 + 3528 M1 35000
12 A1 2006Q17
= 26088 ÷ 12 = 2174 10 a). Tax on 1st Kshs 9680 M1
8M = 9680 x 10/100 = 968
c). Tax due: 2174 – 960 = 1214 M1
2002Q18 Tax on next (18800-9680) M1
= 9120 x 15/100 A1
7. a). Total monthly income =1368
shs (20600+1200+2880+340) Tax on next (24,200-18800)
= shs 35820 M1 = 5400 x 20/100 = 1080
Total tax
b). 1st 9680: 10/100 x9680 A1 = Kshs. 9968 + 1368 + 1080) M1
= 968 M1 = Kshs 2000 A1
2nd 9120 ; 15/100 x 9120 M1 M1
=1824 M1 b). Tax paid
3rd 9120 ; 20/100 x 9120 M1 = 3416 – (1056 + 2400 x 5/100) M1
= 1824 M1 = Kshs. 2000
4th 7900 25/100 x7900 A1
= 1975 A1 c). Increase in tax paid
Total tax - Less relief 8M = 2000 x 36.3/100 = 726 10 M
= 6135 - 1056 Increase = 3630 x 100
Monthly tax paid 2400
= shs. 5079 = 15%
2004Q17 2009Q21
8. Tax on 1st 9680 11. (a) (i) July salary = M1
10/100 x 9680 M1 17 000 1.02 = 17 340
= 968 M1
Monthly income (shs) M1 (ii) Total taxable income M1
(1916 -968) 100+9680 17340 + 6 000 + 2 500 + 1800 A1
15 = 27 640
=6320+ 9680 A1 (a) Gross tax M1
=16000 3m A1
2006Q8 M1

9. a). i). principal M1 M1

=358400 – (12800 x 3) A1
= 320000 M1 A1
Gross tax = 10
M1
968+ 1368+1768
(ii) r = 128000 x 100%
= 4104
32000
Net tax = 4104 1056
= 4% A1
= 3048
b). i). Deposit = 25/100 x 56000 M1
2012 Q20 P2
= 14000 M1
Instalments = M1
56000 – 14000 10 M
2625 = 16
ii). Cash price =