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# Business Math2 - PowerPoint PPT Presentation

Business Math2. Revision. Example. Christina Jones paid the bank \$44 interest at 11% for 120 days. How much did she borrow?. Principal = Interest Rate x Time. \$44 . P = .11 x (120/360) = \$1,200. Example.

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Revision

Example

Christina Jones paid the bank \$44 interest at 11% for 120 days. How much did she borrow?

Principal = Interest

Rate x Time

\$44 .

P = .11 x (120/360) = \$1,200

Example

Christina Jones borrowed \$1,200 from the bank. Her interest is \$44 for 120 days. What rate of interest did Christina pay?

\$44 .

R = \$1,200 x (120/360) = .11

Example

Christina Jones borrowed \$1,200 from the bank. Her interest is \$44 for 11%. How much time does Christina have to repay the loan?

\$44 .

T = \$1,200 x .11 = .33

.33 x 360 = 120 days

Example

Let's say you decided to start a candle-making business for some extra income. You already had several orders, but because you let customers pay once they got their candles, you needed \$2,000 startup money to purchase supplies and equipment. You borrowed the \$2,000 for two years at a simple interest rate of 10%.

At the end of the two years, how much interest would be paid?

If you sold the candles for \$6.00 each, how many candles (sold) would cover the interest?

Examples
• What is the interest rate for the investment of a person who deposits 500\$ in a bank for 5 months and 600\$ for 8 months and 700\$ for 12 months knowing that the total maturity value =2000\$
Examples
• A person invested a principal P in bank A for 5 months, the bank offers an interest rate of 10%, and invested the same amount in bank B that offers a rate of 8% for 7 months
• If the man had a total amount of 3000\$ at the end of the periods, what was P?
Examples
• Ahmad borrowed 500\$ from a bank in April 3, when the loan matured, he repaid 530\$. If you know that the interest rate in this bank was 8%, at what day Ahmad repaid the loan?
Examples
• Ali borrowed 20,000\$ from a bank for 219 days, If the difference between the exact interest and the ordinary interest at the end of the period was 10\$, What was the interest rate in that bank?
Examples
• Omar invested a principal P in bank A for a year. The interest was 50\$ at the end of the year. He invested the same amount in bank B which its interest rate increases 1% than the first bank. The interest in the second bank was 165\$ after 3 years. What was P and the interest rate in the two banks?
Examples
• A person borrowed three loans
• 1000\$ in 25 March 1980
• 2000\$ in 17 June 1980
• 3000\$ in 28 August 1980
• In 30 November 1980 the bank informed him that the total maturity in that date is 6216\$. What was the interest rate in that bank
Example
• find the future value and compound interest on \$2,000 invested for four years compounded semiannually at 8%.
• FV = \$2,737.14
• CI = \$737.14
• What would the simple interest be for the same loan?
• \$640
Examples compound interest
• Calculate the amount of money needed now to purchase a laptop computer and accessories valued at \$2,000 in a year if you invest the money at 6%.
• \$1,886.79
• John wants to replace a tool valued at \$150 in a year. How much money will he have to put into a savings account that pays 3% annual interest?
• \$145.63
Examples
• How much money would you have to invest for 5 years at 6% paid semi-annually to make a down payment of \$20,000 on a house?
• \$14,881.80
• How much money would you have to invest for 3 years at 10% paid semi-annually to purchase an automobile that costs \$20,000?
• \$14,924.40
Uniform Payment Series

Sum of interest =

Where A : the payment at the end (or start) of the period

N: number of payments

Uniform Payment Series

Value of payments (Future value)=

sum of payments + sum of interests

Future value of payments =

Examples

A person deposits 100\$ in a bank at the end of the month for 2 years. Find the future value of these payments at the end of the years if you know that interest rate is 10%

Period of the first payment= 23 months

Period of the last payment= 0

A = 100\$

n= 24 payments

R = 10 % yearly

Examples

A person deposits 300\$ in a bank every 3 months for one year. Find the future value of these payments at the end of the year if you know that interest rate is 6%

Two solutions:

If the payments paid at the start of the three months

If the payments paid at the end of the three months

Solution 1

If the payments paid at the start of the three months

Period of the first payment= 12 months

Period of the last payment= 3 months

A = 300\$

n= 4 payments

R = 6 % yearly

Solution 2

If the payments paid at the end of the three months

Period of the first payment= 9 months

Period of the last payment= 0

A = 300\$

n= 4 payments

R = 6 % yearly