1. BUSINESS MATHEMATICS & STATISTICS

2. LECTURE 6 Review Lecture 5 Discount Simple and compound interest Average due date, interest on drawings and calendar

3. Revision Lecture 5 A chartered bank is lowering the interest rate on its loans from 9% to 7%. What will be the percent decrease in the interest rate on a given balance?

4. A chartered bank is increasing the interest rate on its loans from 7% to 9% What will be the percent increase in the interest rate on a given balance?

5. Investors Stock Quotation Calculations Earnings per share? PE Ratio? Stock Yield? Closing price per share Annual dividend per share = 10 41.125 =.3% PE Ratio Stock Yield Closing price per share Annual earnings per share = 41.125 1.11 = 37 Earnings per share Total # of shares outstanding Annual earnings = 100,000 1,000,000 = $0.10

6. BUYING SHARES If you buy 100 shares at Rs. 62.50 per share with a 2% commission, calculate your total cost

7. CALCULATION 100 * Rs. 62.50 = Rs. 6,250.02 * Rs. 6,250 = 125 Rs. 6,375

8. RETURN ON INVESTMENT Suppose you bought 100 shares at Rs. 52.25 and sold them 1 year later at Rs. 68. With a 1% commission rate buying and selling the stock and a current Rs 10 dividend per share in effect, what was your return on investment?

9. Bought 100 shares at Rs. 52.25 = 5,225.00 Commission at 1% = 52.25 Total Costs = 5,277.25

10. Sold 100 shares at Rs. 68 = 6,800.00 Commission at 1% = - 68.00 Total Costs = 6,732.00

11. Gain Net receipts = 6,732.00 Total cost =- 5,277.25 Net Gain = 1,454.75 Dividends (100*1) = 100.00 Total Gain = 1,554.75 Return on investment = 1,554.75/ 5277.25*100 = 29.46 %

12. Discount Rebate or reduction in price Expressed as %

13. Discount List price = 2200 Discount Rate = 155 Discount? = 2200 x 0.15= 330

14. Net Cost Price = List price - Discount List price = 4,500 Rs. Discount = 20 % Net cost price = 4,500 – 20 % of 4,500 = 4,500 – 0.2 x4,500 =4,500 – 900 = 3,600 Rs.

15. Simple Interest I = P. R. T / 100 P = Principal R = Rate percent per annum T = Time in years I = Simple interest

16. Find interest P = Rs. 500 T = 4 years R =11% I = P x T x R /100 = 500 x 4 x 11/100 = Rs. 220

17. Compound Interest Also attracts interest P = 800 Interest year 1= 0.1 x 800= 80 New P = 800 + 80 = 880 Interest on 880 = 0.1 X 880 = 88 New P = 880 + 88 = 968

18. Compound Interest Formula S= Money accrued after n years P= Principal R= Rate N= Number of years S = P(1 + r/100)^ n

19. Example Calculate interest on Rs. 750 invested at 12% per annum for 8 years. S= P(1+r/100)^8 = 750(1+12/100)^8 = 1957

20. BUSINESS MATHEMATICS & STATISTICS