1. Business Mathematics 5 types of transactions / questions
Simple Interest – flat rate of interest
Compound Interest – invest a single amount and see what it will grow to – PV Present value grows to FV Future Value
Compound Interest – the reciprocal of (2) above – someone promises to give you a single amount at a future date FV – what is it’s value today – PV – present value
Compound Interest – Deposit a regular amount – annuity and see what it will grow to FV
Compound Interest – Receive a single amount today (Loan) what future income payments will be the equivalent of this loan amount OR Invest a single amount today what future income stream (annuity) should I expect to receive from this investment

4. Using the Formula

5. Using the Financial Calculator

6. Using Tables

8. Opening 8%
Closing
Year
Balance
Interest 1
1000 80
1080 2 86
1166 3 93
1260 4
101
1360 5
109
1469

13. Note 1/ = from
the table below
So 1000 / or 1000 x will give us the right answer

17. Try this now

22. Just showing the advantages of the Financial Calculator

26. Just showing the advantages of the Financial Calculator

27. The only reason you would need the following is if your calculator broke in an exam – I can’t see that happening – and anyway I would lend you mine…… I have two

39. Note 4, xy, 10.38, 2nd F , APR (PMT) = approximately 10% since we rounded 10.38%

41. 2, xy, 12, 2nd F , EFF (PV) = 12.36
4, xy, 12, 2nd F , EFF (PV) = 12.55
12, xy, 12, 2nd F , EFF (PV) = 12.68