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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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Business Math2


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example
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

example1
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

example2
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

example3
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
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$
examples1
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?
examples2
Examples
  • Ahmad borrowed 500$ from a bank in April 3, when the loan matured, he repaid 530$. If you know that the interest rate in this bank was 8%, at what day Ahmad repaid the loan?
examples3
Examples
  • Ali borrowed 20,000$ 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$, What was the interest rate in that bank?
examples4
Examples
  • Omar invested a principal P in bank A for a year. The interest was 50$ 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?
examples5
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
example4
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
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
examples6
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
Uniform Payment Series

Sum of interest =

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

N: number of payments

uniform payment series1
Uniform Payment Series

Value of payments (Future value)=

sum of payments + sum of interests

Future value of payments =

examples7
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

examples8
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
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
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