Business Math Essay - 3364 Words

Chapter 5 Interest Rates 5-1. Your bank is offering you an account that will pay 20% interest in total for a two-year deposit. Determine the equivalent discount rate for a period length of a. Six months. b. One year. c. One month. a. Since 6 months is [pic] of 2 years, using our rule [pic] So the equivalent 6 month rate is 4.66%. b. Since one year is half of 2 years [pic] So the equivalent 1 year rate is 9.54%. c. Since one month is [pic] of 2 years, using our rule [pic] So the equivalent 1 month rate is 0.763%. 5-2. Which do you prefer: a bank account that pays 5% per year (EAR) for three years or a. An account that pays 2[pic]†¦show more content†¦Now that you realize your best investment is to prepay your student loan, you decide to prepay as much as you can each month. Looking at your budget, you can afford to pay an extra $250 per month in addition to your required monthly payments of $500, or $750 in total each month. How long will it take you to pay off the loan? The timeline in this case is: and we want to determine the number of monthly payments N that we will need to make. That is, we need to determine what length annuity with a monthly payment of $750 has the same present value as the loan balance, using the loan interest rate as the discount rate. As we did in Chapter 4, we set the outstanding balance equal to the present value of the loan payments and solve for N. [pic] We can also use the annuity spreadsheet to solve for N. |N |I |PV |PMT |FV | |30.02 |0.75 % |20,092.39 |–750 |0 | So, by prepaying the loan, we will pay off the loan in about 30 months or 2  ½ years, rather than the four years originally scheduled. Because N of 30.02 is larger than 30, we could either increase the 30th payment by a small amount or make a very small 31st payment. We can use the annuity spreadsheet to determine the remaining balance after 30 payments. |N |IShow MoreRelatedBusiness Math1006 Words   |  5 PagesSimple interest is the interest that is computed on the original principal only. If I denotes the interest on a principal P (in dollars) at an interest rate of r per year for t years, then we have I = Prt The accumulated amount A, the sum of the principal and interest after t years is given by and is a linear function of t. A= P + I = P + Prt = P(1 + rt) A bank pays simple interest at the rate of 8% per year for certain deposits. a. If a customer deposits $1000 and makes no withdrawalsRead MoreBusiness Maths977 Words   |  4 PagesGST Including gst = 111x item costing. | Without GST= 111x item Calculate the amount on which capital gains tax must be paid for a house that is sold for $345,000 after having been bought as an investment property 5 years ago for $298,000 345,000-298,000=47000 0.5=47000 equals $23500 tax to be paid Simple Interest Calculate the interest earned on $1500 invested at 9% p.a for 6 years. PrT100 P=Principal r=Rate T=Time 1500x9x6100=$810 Find the total amount returned when $850 is investedRead MoreImportance of Business Math in Business1333 Words   |  6 PagesWhat is business mathematics: Business mathematics is mathematics used by commercial enterprises to record and manage business operations. Commercial organizations use mathematics in accounting, inventory management, marketing, sales forecasting, and financial analysis. Mathematics typically used in commerce includes elementary arithmetic, elementary algebra, statistics and probability. Business management can be made more effective in some cases by use of more advanced mathematics suchRead More business math paper986 Words   |  4 Pagesyield). To find the amount of interest you would use this formula: P (principle) x R (rate) x T (time) = I (interest) Example: $1000 x 3% x 1 year. = $30 nbsp;nbsp;nbsp;nbsp;nbsp;Interest is the fee paid for borrowing money. Most individuals or business owners pay simple interest on a short-term loan, which is usually a loan of up to 1 year. The amount of interest charged by a bank depends on three factors: 1. The amount borrowed is called the principal. 2. The length of time the money is borrowedRead MoreBusiness Maths Statistics Assignment 11214 Words   |  5 PagesBMS11 Business Maths and Statistics ASSIGNMENT 1 DESCRIPTIVE STATISTICS USING EXCEL PART B. QA). The pie charts show that a higher percentage of the male gender has tried the product in comparison to the female gender. Over 50% of both genders have tried the product. However, the fact that the percentage of males who tried the product is higher, suggests that gender does play a role in whether the people will try the product. Yet the role genders play is small, because the difference betweenRead MoreBusiness Maths Statistics Assignment 11208 Words   |  5 PagesBMS11 Business Maths and Statistics ASSIGNMENT 1 DESCRIPTIVE STATISTICS USING EXCEL PART B. QA). The pie charts show that a higher percentage of the male gender has tried the product in comparison to the female gender. Over 50% of both genders have tried the product. However, the fact that the percentage of males who tried the product is higher, suggests that gender does play a role in whether the people will try the product. Yet the role genders play is small, because the differenceRead MorePractical Business Math Procedures Chapter 7 Challenge Problems and Summary Practice Set844 Words   |  4 PagesChallenge Problems 7-49 I. Given a) Honda Insight Original Price $17,995.00 b) Honda Insight Dealer Price $16,495.00 c) Terms: 1/15 n/30 II. Unknown a. How much is the rebate? b. What percent is the rebate? c. What is the amount of the discount if the dealer pays within 15 days? d. What is the dealer’s final price? e. What is the dealer’s total savings? III. Equation a. Rebate = Original Price – Dealer Price b. % Rebate = (Rebate / Original Price) x 100% IV. Solving and Solution Read MoreRole of Mathematics in Business Economics1407 Words   |  6 PagesRole Of Mathematics in Business amp; Economics Introduction: Mathematics have been one of the primary elements of business and economics since ancient times, when farmers had to count the animals in their possession and merchants had to have a clear picture of their goods value. With the introduction of money as the universal legal tender, all goods acquired a numerical value, making math calculations even more important. Furthermore, in the competitive global market environment of today, businessesRead MoreBusiness Administration Essay1690 Words   |  7 PagesAchieve Towards A Business Administration Major Every person has the power to achieve short term and long term goals. Without some type of roadmap, people may get lost or never reach their destination. Gathering Information and building a plan is key before starting a college major. College is to be admired and fun, but also challenging so that students may be better prepared for their future, both career and in life. First year students need every beneficial information possible before startingRead MoreWhy College Can Be A Hard Choice1126 Words   |  5 PagesDeciding to go to college can be a hard choice. College is not meant for everyone but it can be very helpful when it comes to finding a good job. Although not all degrees can be helpful, a business degree allows good job opportunities. The University of New Mexico believes that â€Å"Business, Finance and Economic employment rates are the fastest growing in the nation and by majoring in one of these fields at UNM, you will surely have a successful future.† For those who are not made for college, it is