Page 9 - Mathematics of Business and Finance
P. 9

Contents ix

                               Power of Compound Interest ...................................................................................394
                               Exercises .................................................................................................................395

                        9.3  Calculating Present Value (PV) ..................................................................................397
                               Exercises .................................................................................................................399
                        9.4  Calculating Equivalent Payments ..............................................................................401

                               Exercises .................................................................................................................407
                        9.5  Calculating Periodic Interest Rate (i ) and Nominal Interest Rate ( j ) ...................409
                               Exercises .................................................................................................................411
                        9.6  Calculating Number of Compounding Periods (n ) and Time Period (t ) ................413
                               Exercises .................................................................................................................415

                        9.7  Calculating Equivalent Interest Rate .........................................................................416
                               Calculating Effective Interest Rate (f ) .......................................................................418
                               Exercises .................................................................................................................421
                            Review Examples ..........................................................................................................424
                            Review Exercises ..........................................................................................................428
                            Self-Test Exercises ........................................................................................................430
                            Spreadsheet Solutions ..................................................................................................434


                      Chapter 10

                        Annuities                                                                       440
                               Introduction ...............................................................................................................441
                        10.1  Notation and Types of Annuities................................................................................441
                               Notation ....................................................................................................................441
                               Types of Annuities Based on Payment Dates ...........................................................443
                               Types of Annuities Based on Compounding Periods ...............................................444
                               Exercises .................................................................................................................446

                        10.2  Future Value and Present Value of an Ordinary Simple Annuity .............................446
                               Future Value of an Ordinary Simple Annuity .............................................................446
                               Using the Financial Calculator to Solve Problems....................................................449
                               Using Spreadsheets to Solve Problems ...................................................................450
                               Present Value of an Ordinary Simple Annuity ...........................................................453
                               Exercises .................................................................................................................457
                        10.3  Future Value and Present Value of an Ordinary General Annuity ...........................459
                               Exercises .................................................................................................................462

                        10.4  Future Value and Present Value of a Simple Annuity Due .......................................465
                               Future Value of a Simple Annuity Due ......................................................................465
                               Present Value of a Simple Annuity Due ....................................................................469
                               Leases ......................................................................................................................470
                               Lease Terminology ....................................................................................................470
                               Exercises .................................................................................................................472

                        10.5  Future Value and Present Value of a General Annuity Due .....................................475
                               Planning Ahead .........................................................................................................478
                               Exercises .................................................................................................................479

                        10.6  Calculating Periodic Payment (PMT) ........................................................................482
                               Exercises .................................................................................................................485
   4   5   6   7   8   9   10   11   12   13   14