Rounding of unit price

[Aditi]

When the question says round upto three decimals when calculating the unit prices, should we round up or round down or look at the 4th digit post decimal and decide whether to round up or not.

For eg, if the appropriation price is 14.10345, the final answer upto three decimal points should be 14.103 or 14.104?
similarly if the expropriation price is 13.6557, the final answer upto three decimal points should be 13.656 or 13.655?

 

[Mark Willder]

When the question says round upto three decimals when calculating the unit prices, should we round up or round down or look at the 4th digit post decimal and decide whether to round up or not.

For eg, if the appropriation price is 14.10345, the final answer upto three decimal points should be 14.103 or 14.104?
similarly if the expropriation price is 13.6557, the final answer upto three decimal points should be 13.656 or 13.655?

Hi Aditi

If the unrounded price is 14.10345, then rounding up (to three decimal places) we have 14.104, rounding down is 14.103 and rounding to the nearest is 14.103.

If the unrounded price is 13.6557, then rounding up we have 13.656, rounding down is 13.655 and rounding to the nearest is 13.656.

Best wishes

Mark

 

[Aditi]

Hi Aditi

If the unrounded price is 14.10345, then rounding up (to three decimal places) we have 14.104, rounding down is 14.103 and rounding to the nearest is 14.103.

If the unrounded price is 13.6557, then rounding up we have 13.656, rounding down is 13.655 and rounding to the nearest is 13.656.

Best wishes

Mark

Thanks Mark.

To further add on in Sept 2021 Q8 (ii), the question states round offer and bid prices upto three decimal points.

So the bid price is equal to the appropriation price (14.103452). So using the logic you explained, rounding to nearest should be 14.103. Whereas in the ASET solution it states it should be 14.104.

Same is the case for offer price. The appropriation price comes to 14.103448 whereas ASET has considered 14.103452. Because of this the offer price varies. using 14.103448/ (1-0.025) it comes to 14.46507. So rounding to nearest three decimals should be 14.465. The ASET solution states 14.466 (the answer comes to 14.4651)

Because of the difference in the third decimal point the examiner didn't give me full marks and deducted 1 mark for rounding error in offer and bid price.

 

[Mark Willder]

Thanks Mark.

To further add on in Sept 2021 Q8 (ii), the question states round offer and bid prices upto three decimal points.

So the bid price is equal to the appropriation price (14.103452). So using the logic you explained, rounding to nearest should be 14.103. Whereas in the ASET solution it states it should be 14.104.

Same is the case for offer price. The appropriation price comes to 14.103448 whereas ASET has considered 14.103452. Because of this the offer price varies. using 14.103448/ (1-0.025) it comes to 14.46507. So rounding to nearest three decimals should be 14.465. The ASET solution states 14.466 (the answer comes to 14.4651)

Because of the difference in the third decimal point the examiner didn't give me full marks and deducted 1 mark for rounding error in offer and bid price.

Hi Aditi

Yes, the figures you have quoted above are a rounding error. You have rounded to the nearest third decimal place, but the question asks for the price to be rounded up (as has been done in ASET).

In many branches of maths, it is standard practice to round to the nearest decimal place. However, unit prices follow strict legal rules and must be rounded in the way stated in the documentation. Different companies round in different ways, so it is important in the exam to do exactly what it says in the question. Note that the rounding process could be different for different prices, eg offer prices could be rounded up and bid prices rounded down. So reading the question carefully is important here.

Best wishes

Mark

 

[Aditi]

Hi Aditi

Yes, the figures you have quoted above are a rounding error. You have rounded to the nearest third decimal place, but the question asks for the price to be rounded up (as has been done in ASET).

In many branches of maths, it is standard practice to round to the nearest decimal place. However, unit prices follow strict legal rules and must be rounded in the way stated in the documentation. Different companies round in different ways, so it is important in the exam to do exactly what it says in the question. Note that the rounding process could be different for different prices, eg offer prices could be rounded up and bid prices rounded down. So reading the question carefully is important here.

Best wishes

Mark

Thanks Mark, i missed the rounded up in the question.

So, if the question states the rounding should be three decimals points but in favour of customer. So, this means offer price will be rounded down and bid price will be rounded up.

e.g. if offer price = 7.35678 (unrounded) the offer price will be 7.356 after rounding
bid price = 7.26546 (unrounded) the bid price post rounding will be 7.266

is my understanding correct?

 

[Mark Willder]

Thanks Mark, i missed the rounded up in the question.

So, if the question states the rounding should be three decimals points but in favour of customer. So, this means offer price will be rounded down and bid price will be rounded up.

e.g. if offer price = 7.35678 (unrounded) the offer price will be 7.356 after rounding
bid price = 7.26546 (unrounded) the bid price post rounding will be 7.266

is my understanding correct?

Hi Aditi

Yes, that's exactly right.