writing_style - APR is 10%, which is also the EAR due to...

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Writing Style Required for ADMS3530 Assignments Many of you may have some questions regarding the writing style required for your assignments. For example, when answering a numerical question, do you need to write formulas down? Can you just show a sequence of your financial calculator keystrokes? The purpose of this short note is to explain to you the writing style required for the assignments. In general, you should first write down formulas used and show substitutions of parameter values into the formulas before reaching final answers . To illustrate, we will use Example 3.12 (slightly modified) on page 87 in the textbook. Example : You will retire in 45 years from today. You believe you will need $500,000 by your retirement date in order to support your desired standard of living. How much you have to save each year to meet that future goal? Assume that the APR is 10%, compounded annually. The future value of this 45-year annuity of $ C per year is $500,000. The
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Unformatted text preview: APR is 10%, which is also the EAR due to annual compounding. So we can use the formula for the future value of an annuity to solve for the value of C . You should write the following in order to receive the full mark of this question. ] 1 . 1 ) 1 . 1 ( [ $ 000 , 500 $ ] 1 ) 1 ( [ $ 45-+ =-+ = C r r C FV t C = $695.50 Writing down formulas even when you are using a financial calculator is certainly to your advantage. In case you write down formulas but get final answers wrong, you will still receive partial marks for the question because of the formulas written. In contrast, if you do not write down formulas and get final answers wrong, you will receive a mark of zero for the question. (Strictly speaking, a sequence of financial calculator keystrokes is not formulas.) In summary, please write down formulas used and show substitutions of parameter values into the formulas before giving your final answers. 1...
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