QABEBook_2011 - ECON 1202 & ECON 2291 Quantitative...

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Unformatted text preview: ECON 1202 & ECON 2291 Quantitative Analysis for Business and Economics Lecture Book 2011 u1D465 u1D466 u1D467 b u1D453 u1D465 ( u1D465 , u1D466 ) School of Economics The University of NSW ii Based on Quantitative Methods A: Lecture Book , first edition written and produced by Simon Angus, School of Economics, University of NSW, FebruaryMay 2006. Revisions and additional materials prepared by Christopher Bidner, Loretti Isabella Dobrescu, Kevin Fox and Judith Watson. Typeset in L A T E X2 u1D700 , a document preparation language, using typeface Computer Modern. Significant packages supporting this document in- clude beamer and pstricks . c 2010 by the School of Economics, UNSW; Sydney, Australia. All rights reserved. No part of this document may be reproduced, stored in a re- trieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without written per- mission from the School. Contents 1 Introducing QABE 1 1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2 Learning in QABE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.3 Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.4 Miscellany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.5 Functions of One Variable . . . . . . . . . . . . . . . . . . . . . . . . 6 1.6 What is a Function? . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.7 Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1.8 Special Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2 Time Value of Money 15 2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.2 A Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.3 Option 1: Simple Interest . . . . . . . . . . . . . . . . . . . . . . . . 16 2.4 Option 2: Compound Interest . . . . . . . . . . . . . . . . . . . . . . 17 2.5 Option 3: Continuously Compounded Interest . . . . . . . . . . . . . 19 2.6 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 2.7 Present Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 3 Evaluating Time-Money Choices 23 3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 3.2 Equations of value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 3.3 Net Present Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 3.4 Internal Rate of Return . . . . . . . . . . . . . . . . . . . . . . . . . 27 3.5 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 4 Geometric Progressions and Annuities 31 4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 4.2 Geometric Progressions . . . . . . . . . . . . . . . . . . . . . . . . . 31 4.3 Annuities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 4.4 Annuities Due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Annuities Due ....
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This note was uploaded on 09/23/2011 for the course ECON 1202 taught by Professor Lorettiisabelladobrescu during the One '11 term at University of New South Wales.

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QABEBook_2011 - ECON 1202 & ECON 2291 Quantitative...

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