Math116Chap10MathOfMoneyPart2Done.notebook March 01, 2012
|
|
- Prosper Mason
- 5 years ago
- Views:
Transcription
1
2 Chapter 10: The Mathematics of Money PART 2 Percent Increases and Decreases If a shirt is marked down 20% and it now costs $32, how much was it originally? Simple Interest If you invest a principle of $5000 and a bond pays 2% annual simple interest, how much does it pay you each year? Compound Interest If you invest a principle of $5000 in a bank account that offers 2% annual compound interest, how much is the account worth after 10 years? Fixed Deferred Annuity If you invest $500 each year into an account that offers 6% annual (compound) interest, how much will the account be worth in 10 years? Fixed Annuity A sequence of equal payments made or received over regular time intervals. When payments are made to make a lump sum at a point in the future, it is called a "deferred annuity" We are interested in the "future value" of each of the payments. When a lump sum is paid and a series of regular payments later, it is called an "installment loan". In this case, we are interested in the "present value" of each of the payments. Example: Suppose you decide to put $100 in a "college fund" account every month. The account earns 6% annual interest compounded monthly. How much will this account be worth in 18 years? What is the Future Value of the account?
3 Example: Suppose you decide to put $100 in a "college fund" account every month. The account earns 6% annual interest compounded monthly. How much will this account be worth in 18 years? What is the Future Value of the account? How much is the first $100 worth after 18 years? (216 months) What about the second installment? How much is it worth at the end of the 18 years? What about the third installment? What about the sum total of all 216 payments? Factor out the original $100 dollars?
4 We need to figure out a formula for the sum of all those terms with exponents.
5
6 Factor out the original $100 dollars? Fixed Deferred Annuity Formula Future Value F of a fixed deferred annuity consisting of T payments of $P dollars with a periodic interest rate of p% where L is the value of future value of the last payment.
7
8 Installment Loans: Installment loans have a present value (The amount of the loan you are given "now".) Each of the payments (made in the future) have a present value. The sum of those present values shoud be equal to the amount of the loan. Example: I take out a loan for $20,000. The bank offers 6 percent annual interest (compounded monthly). Suppose I make monthly payments of $F dollars for 10 years. How much are each of the payments? One month after I get the cash, I owe a payment of $F. What was the value of that payment one month earlier? Its present value? Find the present value of the second payment I make (after two months). Find the sum of all the present values of all the payments I make over 120 months. That should add up to $20,000.
9 The book writes the formula using "q" which is 1 / (1 + p) So how much is my monthly payment on the $20,000 loan?
10
11 1. There is a great sale this weekend at the local store. They are offering 20% off everything in the store. You have exactly $85.50 in your pocket. What is the most expensive item you can afford? You also have to pay 6% sales tax (applied to the sale price).
12
13
Chapter 10: The Mathematics of Money
Chapter 10: The Mathematics of Money Percent Increases and Decreases If a shirt is marked down 20% and it now costs $32, how much was it originally? Simple Interest If you invest a principle of $5000 and
More informationMA162: Finite mathematics
MA162: Finite mathematics Paul Koester University of Kentucky December 4, 2013 Schedule: Web Assign assignment (Chapter 5.1) due on Friday, December 6 by 6:00 pm. Web Assign assignment (Chapter 5.2) due
More informationAnnuities and Income Streams
Annuities and Income Streams MATH 151 Calculus for Management J. Robert Buchanan Department of Mathematics Summer 212 Objectives After completing this lesson we will be able to: determine the value of
More informationMath 1324 Finite Mathematics Chapter 4 Finance
Math 1324 Finite Mathematics Chapter 4 Finance Simple Interest: Situation where interest is calculated on the original principal only. A = P(1 + rt) where A is I = Prt Ex: A bank pays simple interest at
More informationMA 162: Finite Mathematics
MA 162: Finite Mathematics Fall 2014 Ray Kremer University of Kentucky December 1, 2014 Announcements: First financial math homework due tomorrow at 6pm. Exam scores are posted. More about this on Wednesday.
More informationChapter 3 Mathematics of Finance
Chapter 3 Mathematics of Finance Section R Review Important Terms, Symbols, Concepts 3.1 Simple Interest Interest is the fee paid for the use of a sum of money P, called the principal. Simple interest
More informationSection 5.1 Simple and Compound Interest
Section 5.1 Simple and Compound Interest Question 1 What is simple interest? Question 2 What is compound interest? Question 3 - What is an effective interest rate? Question 4 - What is continuous compound
More informationChapter 5 Finance. i 1 + and total compound interest CI = A P n
Mat 2 College Mathematics Nov, 08 Chapter 5 Finance The formulas we are using: Simple Interest: Total simple interest on principal P is I = Pr t and Amount A = P + Pr t = P( + rt) Compound Interest: Amount
More informationc) George decides to make $80 payments into the account. How much money would he have?
Pay serious attention to this section. This is the one that will most likely be useful in real life. Def: An annuity is a sequence of payments made at regular time intervals. Def: A sinking fund is an
More information3.1 Simple Interest. Definition: I = Prt I = interest earned P = principal ( amount invested) r = interest rate (as a decimal) t = time
3.1 Simple Interest Definition: I = Prt I = interest earned P = principal ( amount invested) r = interest rate (as a decimal) t = time An example: Find the interest on a boat loan of $5,000 at 16% for
More informationWeek in Review #7. Section F.3 and F.4: Annuities, Sinking Funds, and Amortization
WIR Math 166-copyright Joe Kahlig, 10A Page 1 Week in Review #7 Section F.3 and F.4: Annuities, Sinking Funds, and Amortization an annuity is a sequence of payments made at a regular time intervals. For
More information6.1 Simple and Compound Interest
6.1 Simple and Compound Interest If P dollars (called the principal or present value) earns interest at a simple interest rate of r per year (as a decimal) for t years, then Interest: I = P rt Accumulated
More informationInstallment Loans. Lecture 7 Section Robb T. Koether. Hampden-Sydney College. Wed, Sep 7, 2016
Installment Loans Lecture 7 Section 10.4 Robb T. Koether Hampden-Sydney College Wed, Sep 7, 2016 Robb T. Koether (Hampden-Sydney College) Installment Loans Wed, Sep 7, 2016 1 / 14 1 Installment Loans 2
More informationInstallment Loans. Lecture 6 Section Robb T. Koether. Hampden-Sydney College. Fri, Jan 26, 2018
Installment Loans Lecture 6 Section 10.4 Robb T. Koether Hampden-Sydney College Fri, Jan 26, 2018 Robb T. Koether (Hampden-Sydney College) Installment Loans Fri, Jan 26, 2018 1 / 14 1 Installment Loans
More informationThe three formulas we use most commonly involving compounding interest n times a year are
Section 6.6 and 6.7 with finance review questions are included in this document for your convenience for studying for quizzes and exams for Finance Calculations for Math 11. Section 6.6 focuses on identifying
More informationMath 147 Section 6.4. Application Example
Math 147 Section 6.4 Present Value of Annuities 1 Application Example Suppose an individual makes an initial investment of $1500 in an account that earns 8.4%, compounded monthly, and makes additional
More informationCHAPTER 3. Compound Interest
CHAPTER 3 Compound Interest Recall What can you say to the amount of interest earned in simple interest? Do you know? An interest can also earn an interest? Compound Interest Whenever a simple interest
More informationInvestigate. Name Per Algebra IB Unit 9 - Exponential Growth Investigation. Ratio of Values of Consecutive Decades. Decades Since
Name Per Algebra IB Unit 9 - Exponential Growth Investigation Investigate Real life situation 1) The National Association Realtors estimates that, on average, the price of a house doubles every ten years
More informationPart 2. Finite Mathematics. Chapter 3 Mathematics of Finance Chapter 4 System of Linear Equations; Matrices
Part 2 Finite Mathematics Chapter 3 Mathematics of Finance Chapter 4 System of Linear Equations; Matrices Chapter 3 Mathematics of Finance Section 1 Simple Interest Section 2 Compound and Continuous Compound
More informationLesson 39 Appendix I Section 5.6 (part 1)
Lesson 39 Appendix I Section 5.6 (part 1) Any of you who are familiar with financial plans or retirement investments know about annuities. An annuity is a plan involving payments made at regular intervals.
More information5= /
Chapter 6 Finance 6.1 Simple Interest and Sequences Review: I = Prt (Simple Interest) What does Simple mean? Not Simple = Compound I part Interest is calculated once, at the end. Ex: (#10) If you borrow
More informationOrdinary Annuity. S.Y.Tan. Ordinary Annuity
Annuity a sequence of equal payments made at equal time intervals Examples: daily wages, periodic payments of installment purchases, monthly rent, annual insurance premiums Payment interval the time between
More informationInterest: The money earned from an investment you have or the cost of borrowing money from a lender.
8.1 Simple Interest Interest: The money earned from an investment you have or the cost of borrowing money from a lender. Simple Interest: "I" Interest earned or paid that is calculated based only on the
More informationInstallment Loans. Lecture 6 Section Robb T. Koether. Hampden-Sydney College. Fri, Sep 7, 2018
Installment Loans Lecture 6 Section 10.4 Robb T. Koether Hampden-Sydney College Fri, Sep 7, 2018 Robb T. Koether (Hampden-Sydney College) Installment Loans Fri, Sep 7, 2018 1 / 16 1 Installment Loans 2
More information7-4. Compound Interest. Vocabulary. Interest Compounded Annually. Lesson. Mental Math
Lesson 7-4 Compound Interest BIG IDEA If money grows at a constant interest rate r in a single time period, then after n time periods the value of the original investment has been multiplied by (1 + r)
More informationSimple Interest: Interest earned on the original investment amount only. I = Prt
c Kathryn Bollinger, June 28, 2011 1 Chapter 5 - Finance 5.1 - Compound Interest Simple Interest: Interest earned on the original investment amount only If P dollars (called the principal or present value)
More informationFinal Study Guide MATH 111
Final Study Guide MATH 111 The final will be cumulative. There will probably be a very slight emphasis on the material from the second half of the class. In terms of the material in the first half, please
More informationSOLUTION METHODS FOR SELECTED BASIC FINANCIAL RELATIONSHIPS
SVEN THOMMESEN FINANCE 2400/3200/3700 Spring 2018 [Updated 8/31/16] SOLUTION METHODS FOR SELECTED BASIC FINANCIAL RELATIONSHIPS VARIABLES USED IN THE FOLLOWING PAGES: N = the number of periods (months,
More informationSection 5.2 Future Value of an Annuity. Geometric Sequence. Example 1. Find the seventh term of the geometric sequence 5, 20, 80, 320,
Section 5.2 Future Value of an Annuity Geometric Sequence a 1, a 1 r, a 1 r 2, a 1 r 3,, a 1 r n 1 n th term of the sequence: a n = a 1 r n 1 Common Ratio: r = a term the preceding term Example 1. Find
More informationF.3 - Annuities and Sinking Funds
F.3 - Annuities and Sinking Funds Math 166-502 Blake Boudreaux Department of Mathematics Texas A&M University March 22, 2018 Blake Boudreaux (TAMU) F.3 - Annuities March 22, 2018 1 / 12 Objectives Know
More informationKey Terms: exponential function, exponential equation, compound interest, future value, present value, compound amount, continuous compounding.
4.2 Exponential Functions Exponents and Properties Exponential Functions Exponential Equations Compound Interest The Number e and Continuous Compounding Exponential Models Section 4.3 Logarithmic Functions
More informationA Formula for Annuities
A Formula for Annuities We ve seen that, with a bit of work, an annuity can be priced by summing geometric sequence. If we apply the geometric sum to a general annuity, we get a formula for annuities:
More informationCapstone Design. Cost Estimating and Estimating Models
Capstone Design Engineering Economics II Engineering Economics II (1 of 14) Cost Estimating and Estimating Models Engineering economic analysis involves present and future economic factors It is critical
More informationChapter 1. 1) simple interest: Example : someone interesting 4000$ for 2 years with the interest rate 5.5% how. Ex (homework):
Chapter 1 The theory of interest: It is well that 100$ to be received after 1 year is worth less than the same amount today. The way in which money changes it is value in time is a complex issue of fundamental
More informationQuantitative Literacy: Thinking Between the Lines
Quantitative Literacy: Thinking Between the Lines Crauder, Noell, Evans, Johnson Chapter 4: Personal Finance 2013 W. H. Freeman and Company 1 Chapter 4: Personal Finance Lesson Plan Saving money: The power
More informationFinance 197. Simple One-time Interest
Finance 197 Finance We have to work with money every day. While balancing your checkbook or calculating your monthly expenditures on espresso requires only arithmetic, when we start saving, planning for
More informationQuantitative Literacy: Thinking Between the Lines
Quantitative Literacy: Thinking Between the Lines Crauder, Evans, Johnson, Noell Chapter 4: Personal Finance 2011 W. H. Freeman and Company 1 Chapter 4: Personal Finance Lesson Plan Saving money: The power
More informationI. Warnings for annuities and
Outline I. More on the use of the financial calculator and warnings II. Dealing with periods other than years III. Understanding interest rate quotes and conversions IV. Applications mortgages, etc. 0
More informationSection 8.1. I. Percent per hundred
1 Section 8.1 I. Percent per hundred a. Fractions to Percents: 1. Write the fraction as an improper fraction 2. Divide the numerator by the denominator 3. Multiply by 100 (Move the decimal two times Right)
More information4: Single Cash Flows and Equivalence
4.1 Single Cash Flows and Equivalence Basic Concepts 28 4: Single Cash Flows and Equivalence This chapter explains basic concepts of project economics by examining single cash flows. This means that each
More informationChapter 4. Discounted Cash Flow Valuation
Chapter 4 Discounted Cash Flow Valuation Appreciate the significance of compound vs. simple interest Describe and compute the future value and/or present value of a single cash flow or series of cash flows
More informationCopyright 2015 Pearson Education, Inc. All rights reserved.
Chapter 4 Mathematics of Finance Section 4.1 Simple Interest and Discount A fee that is charged by a lender to a borrower for the right to use the borrowed funds. The funds can be used to purchase a house,
More informationTime Value of Money. Ex: How much a bond, which can be cashed out in 2 years, is worth today
Time Value of Money The time value of money is the idea that money available now is worth more than the same amount in the future - this is essentially why interest exists. Present value is the current
More informationChapter 9, Mathematics of Finance from Applied Finite Mathematics by Rupinder Sekhon was developed by OpenStax College, licensed by Rice University,
Chapter 9, Mathematics of Finance from Applied Finite Mathematics by Rupinder Sekhon was developed by OpenStax College, licensed by Rice University, and is available on the Connexions website. It is used
More informationMathematics for Economists
Department of Economics Mathematics for Economists Chapter 4 Mathematics of Finance Econ 506 Dr. Mohammad Zainal 4 Mathematics of Finance Compound Interest Annuities Amortization and Sinking Funds Arithmetic
More informationAnnuities: Present Value
8.5 nnuities: Present Value GOL Determine the present value of an annuity earning compound interest. INVESTIGTE the Math Kew wants to invest some money at 5.5%/a compounded annually. He would like the
More informationCHAPTER 4. The Time Value of Money. Chapter Synopsis
CHAPTER 4 The Time Value of Money Chapter Synopsis Many financial problems require the valuation of cash flows occurring at different times. However, money received in the future is worth less than money
More informationThe Time Value of Money
Chapter 2 The Time Value of Money Time Discounting One of the basic concepts of business economics and managerial decision making is that the value of an amount of money to be received in the future depends
More information1. Math richard/math101. M = monthly payment P = principal r = i/12 = monthly interest rate n = number of months
1. Math 101 Mortgages and Annuities Professor Richard Blecksmith richard@math.niu.edu Dept. of Mathematical Sciences Northern Illinois University http://math.niu.edu/ richard/math101 M = where 2. Monthly
More informationWhat is the value of $200 after 5 years invested at (a) 12% per annum, (b) 3% a quarter, and (c) 1% a month?
Corporate finance, Module 2: How to Calculate Present Values Practice Problems (The attached PDF file has better formatting.) Exercise 2.1: Compounding Intervals What is the value of $200 after 5 years
More informationTime Value of Money. Part III. Outline of the Lecture. September Growing Annuities. The Effect of Compounding. Loan Type and Loan Amortization
Time Value of Money Part III September 2003 Outline of the Lecture Growing Annuities The Effect of Compounding Loan Type and Loan Amortization 2 Growing Annuities The present value of an annuity in which
More informationPerpetuity It is a type of annuity whose payments continue forever.
Perpetuity It is a type of annuity whose payments continue forever. Something to think about... How does an equal payment at an equal interval continue forever? Example: An individual might, for example
More information7-3 Exponential Review I can apply exponential properties and use them I can model real-world situations using exponential functions Warm-Up 1. Find the next three terms in the sequence 2, 6, 18, 54,,,
More informationUsing the Finance Menu of the TI-83/84/Plus calculators
Using the Finance Menu of the TI-83/84/Plus calculators To get to the FINANCE menu On the TI-83 press 2 nd x -1 On the TI-83, TI-83 Plus, TI-84, or TI-84 Plus press APPS and then select 1:FINANCE The FINANCE
More informationChapter 6. Learning Objectives. Principals Applies in this Chapter. Time Value of Money
Chapter 6 Time Value of Money 1 Learning Objectives 1. Distinguish between an ordinary annuity and an annuity due, and calculate the present and future values of each. 2. Calculate the present value of
More informationFuture Value Sinking Fund Present Value Amortization. P V = P MT [1 (1 + i) n ] i
Math 141-copyright Joe Kahlig, 14B Page 1 Section 5.2: Annuities Section 5.3: Amortization and Sinking Funds Definition: An annuity is an instrument that involves fixed payments be made/received at equal
More informationP+I= Simple Interest : I Prt I= /2. =$z048. part. Complex. Bought F- $ =19. invested at the beginning. Simple.
One Chapter 6 Finance 61 Simple Interest and Sequences Review: I Prt (Simple Interest) What does Simple mean? Simple - Complex Compound part than More Ex: (#10) If you borrow $1600 for 2 years at 14% annual
More informationMath Week in Review #10
Math 166 Fall 2008 c Heather Ramsey Page 1 Chapter F - Finance Math 166 - Week in Review #10 Simple Interest - interest that is computed on the original principal only Simple Interest Formulas Interest
More informationInflation. Lecture 8. Robb T. Koether. Hampden-Sydney College. Fri, Sep 9, 2016
Inflation Lecture 8 Robb T. Koether Hampden-Sydney College Fri, Sep 9, 2016 Robb T. Koether (Hampden-Sydney College) Inflation Fri, Sep 9, 2016 1 / 17 1 Inflation 2 Increase in Prices 3 Decrease in Purchasing
More informationDescribe the importance of capital investments and the capital budgeting process
Chapter 20 Making capital investment decisions Affects operations for many years Requires large sums of money Describe the importance of capital investments and the capital budgeting process 3 4 5 6 Operating
More informationDay 3 Simple vs Compound Interest.notebook April 07, Simple Interest is money paid or earned on the. The Principal is the
LT: I can calculate simple and compound interest. p.11 What is Simple Interest? What is Principal? Simple Interest is money paid or earned on the. The Principal is the What is the Simple Interest Formula?
More informationMeasuring Interest Rates
Measuring Interest Rates Economics 301: Money and Banking 1 1.1 Goals Goals and Learning Outcomes Goals: Learn to compute present values, rates of return, rates of return. Learning Outcomes: LO3: Predict
More informationAQR Write- up: 6.B.5- #1-9 (Honors one part of #10)
AQR Write- up: 6.B.5- #1-9 (Honors one part of #10) Vanessa is a financial planner specializing in retirement savings. She realizes the importance of using mathematical formulas and the appropriate tools
More informationSection Compound Interest
Section 5.1 - Compound Interest Simple Interest Formulas If I denotes the interest on a principal P (in dollars) at an interest rate of r (as a decimal) per year for t years, then we have: Interest: Accumulated
More informationMIDTERM EXAMINATION Fall 2008 MTH302- Business Mathematics & Statistics (Session - 2)
MIDTERM EXAMINATION Fall 2008 MTH302- Business Mathematics & Statistics (Session - 2) Question No: 1 ( Marks: 1 ) - Please choose one Store A marked down a $ 50 perfume to $ 40 with markdown of $10 The
More information5.1 Simple and Compound Interest
5.1 Simple and Compound Interest Simple Interest Principal Rate Time Ex 1) Simple Interest Future Value Ex 2) Maturity Values Find the maturity value for each loan at simple interest. a. A loan of $2500
More informationInterest Rates: Inflation and Loans
Interest Rates: Inflation and Loans 23 April 2014 Interest Rates: Inflation and Loans 23 April 2014 1/29 Last Time On Monday we discussed compound interest and saw that money can grow very large given
More informationSections F.1 and F.2- Simple and Compound Interest
Sections F.1 and F.2- Simple and Compound Interest Simple Interest Formulas If I denotes the interest on a principal P (in dollars) at an interest rate of r (as a decimal) per year for t years, then we
More informationThe Theory of Interest
The Theory of Interest An Undergraduate Introduction to Financial Mathematics J. Robert Buchanan 2010 Simple Interest (1 of 2) Definition Interest is money paid by a bank or other financial institution
More informationInflation. Lecture 7. Robb T. Koether. Hampden-Sydney College. Mon, Sep 4, 2017
Inflation Lecture 7 Robb T. Koether Hampden-Sydney College Mon, Sep 4, 2017 Robb T. Koether (Hampden-Sydney College) Inflation Mon, Sep 4, 2017 1 / 18 1 Inflation 2 Increase in Prices 3 Decrease in Purchasing
More informationExcelBasics.pdf. Here is the URL for a very good website about Excel basics including the material covered in this primer.
Excel Primer for Finance Students John Byrd, November 2015. This primer assumes you can enter data and copy functions and equations between cells in Excel. If you aren t familiar with these basic skills
More informationJanuary 29. Annuities
January 29 Annuities An annuity is a repeating payment, typically of a fixed amount, over a period of time. An annuity is like a loan in reverse; rather than paying a loan company, a bank or investment
More informationFinding the Sum of Consecutive Terms of a Sequence
Mathematics 451 Finding the Sum of Consecutive Terms of a Sequence In a previous handout we saw that an arithmetic sequence starts with an initial term b, and then each term is obtained by adding a common
More informationInflation. Lecture 7. Robb T. Koether. Hampden-Sydney College. Mon, Jan 29, 2018
Inflation Lecture 7 Robb T. Koether Hampden-Sydney College Mon, Jan 29, 2018 Robb T. Koether (Hampden-Sydney College) Inflation Mon, Jan 29, 2018 1 / 18 1 Inflation 2 Increase in Prices 3 Decrease in Purchasing
More information3. Time value of money. We will review some tools for discounting cash flows.
1 3. Time value of money We will review some tools for discounting cash flows. Simple interest 2 With simple interest, the amount earned each period is always the same: i = rp o where i = interest earned
More informationIE463 Chapter 2. Objective. Time Value of Money (Money- Time Relationships)
IE463 Chapter 2 Time Value of Money (Money- Time Relationships) Objective Given a cash flow (or series of cash flows) occurring at some point in time, the objective is to find its equivalent value at another
More informationMath 147 Section 6.2. Application Example
Math 147 Section 6.2 Annual Percentage Yield Doubling Time Geometric Sequences 1 Application Example Mary Stahley invested $2500 in a 36-month certificate of deposit (CD) that earned 9.5% annual simple
More informationA central precept of financial analysis is money s time value. This essentially means that every dollar (or
INTRODUCTION TO THE TIME VALUE OF MONEY 1. INTRODUCTION A central precept of financial analysis is money s time value. This essentially means that every dollar (or a unit of any other currency) received
More informationInterest Rates: Credit Cards and Annuities
Interest Rates: Credit Cards and Annuities 25 April 2014 Interest Rates: Credit Cards and Annuities 25 April 2014 1/25 Last Time Last time we discussed loans and saw how big an effect interest rates were
More informationSection10.1.notebook May 24, 2014
Unit 9 Borrowing Money 1 Most people will need to take out a loan sometime in their lives. Few people can afford expensive purchases such as a car or a house without borrowing money from a financial institution.
More informationFINAN303 Principles of Finance Spring Time Value of Money Part B
Time Value of Money Part B 1. Examples of multiple cash flows - PV Mult = a. Present value of a perpetuity b. Present value of an annuity c. Uneven cash flows T CF t t=0 (1+i) t 2. Annuity vs. Perpetuity
More informationFinance 402: Problem Set 1
Finance 402: Problem Set 1 1. A 6% corporate bond is due in 12 years. What is the price of the bond if the annual percentage rate (APR) is 12% per annum compounded semiannually? (note that the bond pays
More informationc) (3 pts.) Based on this Balance Sheet, what is the Current Ratio on 1/1/2010?
AAE 320 Spring 2010 Exam #2 Name: 1) (16 pts. total) a) (5 pts.) Use the information given and your knowledge of the relationships among Balance Sheet entries to fill in the five missing cells and then
More informationChapter 02 Test Bank - Static KEY
Chapter 02 Test Bank - Static KEY 1. The present value of $100 expected two years from today at a discount rate of 6 percent is A. $112.36. B. $106.00. C. $100.00. D. $89.00. 2. Present value is defined
More informationChapter 10 - Term Structure of Interest Rates
10-1 Chapter 10 - Term Structure of Interest Rates Section 10.2 - Yield Curves In our analysis of bond coupon payments, for example, we assumed a constant interest rate, i, when assessing the present value
More informationCHAPTER 4 DISCOUNTED CASH FLOW VALUATION
CHAPTER 4 DISCOUNTED CASH FLOW VALUATION Answers to Concepts Review and Critical Thinking Questions 1. Assuming positive cash flows and interest rates, the future value increases and the present value
More information3. Time value of money
1 Simple interest 2 3. Time value of money With simple interest, the amount earned each period is always the same: i = rp o We will review some tools for discounting cash flows. where i = interest earned
More informationThese terms are the same whether you are the borrower or the lender, but I describe the words by thinking about borrowing the money.
Simple and compound interest NAME: These terms are the same whether you are the borrower or the lender, but I describe the words by thinking about borrowing the money. Principal: initial amount you borrow;
More informationIntroduction 7 WORKSHEET 1 9 The History Of Money 11 WORKSHEET 2 13 History Of Banking 15 WORKSHEET 3 17 Budgeting 21 WORKSHEET 4 23 WORKSHEET 5
Introduction 7 WORKSHEET 1 9 The History Of Money 11 WORKSHEET 2 13 History Of Banking 15 WORKSHEET 3 17 Budgeting 21 WORKSHEET 4 23 WORKSHEET 5 27 WORKSHEET 6 29 Increasing Your Income 33 WORKSHEET 7
More informationChapter 9: Consumer Mathematics. To convert a percent to a fraction, drop %, use percent as numerator and 100 as denominator.
Chapter 9: Consumer Mathematics Definition: Percent To convert a percent to a decimal, drop % and move the decimal two places left. Examples: To convert a percent to a fraction, drop %, use percent as
More information5.1 Compound Amounts. 5: Uniform Series. Uniform Series Compound Amount Factor. Observations. Example 5.1 Uniform Series CA. Example 5.
5: niform Series Cash flows of uniform series Equal Occur each compounding period Also known as annuities, even if not yearly se one series factor instead of several single payment factors Two situations
More informationChapter 03 - Basic Annuities
3-1 Chapter 03 - Basic Annuities Section 3.0 - Sum of a Geometric Sequence The form for the sum of a geometric sequence is: Sum(n) a + ar + ar 2 + ar 3 + + ar n 1 Here a = (the first term) n = (the number
More informationINSTITUTE AND FACULTY OF ACTUARIES EXAMINATION
INSTITUTE AND FACULTY OF ACTUARIES EXAMINATION 18 April 2017 (pm) Subject CT1 Financial Mathematics Core Technical Time allowed: Three hours INSTRUCTIONS TO THE CANDIDATE 1. Enter all the candidate and
More informationMathematics Department A BLOCK EXAMINATION CORE MATHEMATICS PAPER 1 SEPTEMBER Time: 3 hours Marks: 150
Mathematics Department A BLOCK EXAMINATION CORE MATHEMATICS PAPER 1 SEPTEMBER 2014 Examiner: Mr S B Coxon Moderator: Mr P Stevens Time: 3 hours Marks: 150 PLEASE READ THE INSTRUCTIONS CAREFULLY 1. This
More informationActivity 1.1 Compound Interest and Accumulated Value
Activity 1.1 Compound Interest and Accumulated Value Remember that time is money. Ben Franklin, 1748 Reprinted by permission: Tribune Media Services Broom Hilda has discovered too late the power of compound
More informationInflation. Lecture 7. Robb T. Koether. Hampden-Sydney College. Mon, Sep 10, 2018
Inflation Lecture 7 Robb T. Koether Hampden-Sydney College Mon, Sep 10, 2018 Robb T. Koether (Hampden-Sydney College) Inflation Mon, Sep 10, 2018 1 / 19 1 Inflation 2 Increase in Prices 3 Decrease in Purchasing
More information4.1 Exponential Functions. Copyright Cengage Learning. All rights reserved.
4.1 Exponential Functions Copyright Cengage Learning. All rights reserved. Objectives Exponential Functions Graphs of Exponential Functions Compound Interest 2 Exponential Functions Here, we study a new
More informationTexas Credit Opening/Closing Date: 7/19/08 08/18/08
Anatomy of a Credit Card Statement The following is a monthly statement from a typical credit card company. Parts left out intentionally are denoted by??? and highlighted in gray. Texas Credit Opening/Closing
More informationIn a growing midwestern town, the number of eating establishments at the end of each of the last five years are as follows:
Name: Date: In a growing midwestern town, the number of eating establishments at the end of each of the last five years are as follows: Year 1 = 273; Year 2 = 279; Year 3 = 302; Year 4 = 320; Year 5 =
More informationBefore How can lines on a graph show the effect of interest rates on savings accounts?
Compound Interest LAUNCH (7 MIN) Before How can lines on a graph show the effect of interest rates on savings accounts? During How can you tell what the graph of simple interest looks like? After What
More information