In Class Review:
Trade Discounts:
1. The list price of canned foods at a wholesalers outlet is $65 and the net price
is $48. What is the trade discount rate?
2. The net price of an item is $630 and its list price is $12600. What is the trade
discount on t
BMTH 100 Practice In Class October 20th
Warm Up:
1. How much did Alexis deposit every month into her savings account if she has $15,000
after 24 month-end deposits? The money in her account was growing at 4.8%
compounded monthly.
2. Edwin wants to set up
BMTH 100 Practice November 29th
Warm Up:
1. A trade discount of 15% on a product resulted in a trade discount amount of
$18,200.
a. What was the list price of the product?
b. What was the net price of the product?
2. Skis are listed by a manufacturer for
BMTH 100 Practice
Warm Up:
1. Samantha and Baxter start a business that manufactures cutting tools. They sell the
tools for $80 each. Their monthly fixed costs are $3800 for the building lease and utilities
and $2800 for salaries. The cost of supplies for
BMTH 100 April 1st/4th Practice
Warm Up:
1. Harris owns a DVD manufacturing factory that produces DVDs and sells them for
$0.30 each. The fixed costs are $8640 per month and variable costs are $0.05 per
unit. Calculate the number of DVDs he needs to produ
BMTH 100/120 Review Test 2A
1)
A truck valued at $22 300 was bought for $6100 down and equal payments at the
end of each month for 4 years. If interest was 8.5% compounded semi-annually,
what was the monthly payment? How much interest was charged?
2)
How
BMTH 100 Review Test 1 Form A
1.
Find the maturity value and the compound interest if $3600.00 is invested at 6%
compounded semi-annually for 5 years 7 months.
2.
How many years will it take for $2000.00 to earn interest of $1 000.00 at 3.7%
compounded mo
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Definition of Duration in financial mathematics Notes
The average time taken by a bond, on a discounted basis, to
pay back the original investment.
(Macaulay) Duration of a bond is the weighted average of
the maturity of individual cash flows, with the we
Future Value of a Lump Sum Notes
The future value in 2 years of $1,000 earning 5% annually is
an example of computing the future value of a lump sum.
We can compute this in any one of three ways:
Using a calculator programmed for financial math
Solve the
Multiple or unique yield rate Notes
Often when solving for the yield rate, we may be left with a
polynomial equation.
The problem with polynomial equations is that they are liable
to have several roots.
In Example 7.3, we have two possible answers for the
Effective Annual Rate Notes
An effective annual rate is an annual compounding rate.
When compounding periods are not annual, the rate can still
be expressed as an effective annual rate using the following:
A bank offers a certificate of deposit rate of 6%
Ordinary Annuity Versus Annuity Due Notes
The PV of an ordinary annuity is located one period before
the first annuity payment.
The PV of an annuity due is located on the same date as
the first annuity payment.
The FV of an ordinary annuity is located on
Discounted cash flow analysis Notes
So far, we have analyzed the present value of a regular
series of payments, such as coupon bonds, annuities
This approach can be extended to any pattern of cash
returns.
By obtaining the present value of any pattern of
Yield Curve and Term structure of interest rates Notes
Investor prefer short term investments, so must be
coerced into buying longer term rates with higher
interest rates.
A graphical depiction of the relationship between the
yield on bonds of the same cr
Spot Interest Rates Notes
Spot interest rate, rt, is the (annualized) interest rate for a
transaction between today, 0, and a future date, t.
rt is for payments only on date t.
rt is the average rate of interest between now and
date t.
rt is different for
PV of a Series of Non-Constant Cash Flows Notes
The PV of a series of non-constant cash flows is just the
sum of the individual PV equations for each cash flow.
Where the Cfis are a series of non-constant cash flows from
year 1 to year n.
Suppose some new
Perpetuity An Infinite Annuity Notes
A perpetuity is essentially an infinite annuity.
An example is an investment which costs you $1,000 today
and promises to return to you $100 at the end of each
forever!
What is your rate of return or the interest rate?