Exercises
Course Number:
Undergraduate Core, BCO 126
Course Name:
Mathematics of Finance
Course Dates:
Summer Semester II. 2014
Professor:
Karl Grandl
Professor contact:
karl.grandl@euruni.edu
1. Principal $5,000, Interest rate 6%, 5 years. What is the te

BCO 126 Mathematics of Finance
Spring Semester 2016
Karl Grandl
karl.grandl@euruni.edu
1
3/14/2016
Course outline and structure
1. Introduction to Maths of Finance
2. Percentages and simple interest
3. Compounding and present value of future cash flows
Mi

US inflation rate
inflation calculator
from
to
Year
Price
1914 (1914-2013)
$ 154.00
Year
Price
1921 (1915-2014)
$ 311.08
nflation Rates by Month and Year (1914-2014)
Year
Jan
Feb
Mar
1914
2
1
1
1915
1
1
0
1916
3
4
6.1
1917
12.5
15.4
14.3
1918
19.7
17.5
16

BCO 126 Mathematics of Finance
Spring Semester 2016
Karl Grandl
karl.grandl@euruni.edu
1
2/15/2016
Course outline and structure
1. Introduction to Maths of Finance
2. Percentages and simple interest
3. Compounding and present value of future cash flows
Mi

BCO 126 Mathematics of Finance
Spring Semester 2016 I
Karl Grandl
karl.grandl@euruni.edu
1
2/1/2016
Why Mathematics of Finance?
vs.
2/1/2016
-2-
Which job doesnt require math?
consultant
nurse
2/1/2016
bank clerk
-3-
student
Nurse and Math?
Youre consult

1st Homework
The Principal is set individually.
4900
1) Simple interest
a) Interest rate is 6% p.a. paid out quarterly
S=(1+/4)
or
4900*(1+0.06/4) = 4973.5
4973.5-4900 = 73.5
x= (/4)
4900*(0.06/4) = 73.5
b) How much do you get after 3 years and 6 Month in

Homework
Calculate a loan with 5% intereset, 5 years duration
Annuity is paid monthly
Loan amount is set individually
(the principal that youve choosen for your 1st homework)
Please calculate
- Monthly annuity
- The repayment at the end of year 4
- How mu

Homework
Calculate a loan with 5% intereset, 5 years duration
Annuity is paid monthly
Loan amount is set individually
(the principal that youve choosen for your 1st homework)
Please calculate
- Monthly annuity
- The repayment at the end of year 4
- How mu

BCO 126 Mathematics of Finance
Spring Semester 2016
Karl Grandl
karl.grandl@euruni.edu
1
2/8/2016
Simple Interest
$7,000 for 4,5% (monthly) for two years
1.
2.
3.
How much is the monthly interest
compute total amount after two years
compute total amount