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