Business Calculus : Time Value of Money
Not what you're looking for?
There are 3 sheets in the file with approx 21 questions. Most of them are mathematical, but there are also some that are subjective type questions.
I have also attached the tutorials with the problem sets in the same file.
In the problem sets on sheet one, I will answer number 9.
Chapter 3: Project 3 Mortgages: Principal and Interest
This project is based on Group Activity 2 at the end of chapter 3.
A computer technician receives annual bonuses for 4 years, which are listed in
Table 1.
Year Bonus
1 $2,500
2 $6,500
3 $4,000
4 $7,500
Each time he gets a bonus, he immediately invests it in a mutual fund. From
year to year, the interest varies on this fund.
One year after making the last investment, the salesman closes out the fund
and receives a payment of $40,000. He would like to find a compound interest
rate that represents the interest his investments earned over the entire 4 year
period. This rate is known as the yield to maturity.
If r is the yield to maturity, then the compound interest formula expresses the
value of each investment at the end of the 4th year in terms of r.
1. What would the formula for the value of the first investment (year 1) be
at the end of the 4th year? (Hint: use the compound interest formula as discussed
in Section 2.2).
2. Repeat part (1) for the investments in the second, third, and fourth year.
3. If you add all your answers from parts (1) - (2), you will have a function of r,
which is the yield to maturity. What should this function equal?
4. Your function in part (3) should be equal to $40,000. Why?
Using Goal seek, find an appropriate value of r.
5. Fill in the following table for r, f(r), g(r), where r ranges from -7 to 7,
f(r) = 40,000, and g(r) is your function from part (3).
r f(r) g(r)
-7 $40,000
6. Using the table above, graph the function with makeplot. Graphically
estimate a value for r.
7. How do your answers from (4) and (6) compare?
Purchase this Solution
Solution Summary
Interest is investigated. The solution is detailed and well presented. The response was given a rating of "5/5" by the student who originally posted the question.
Solution Preview
The attached Excel file was created from your original file with solutions and explanations added in various colors.
In project 3, there were a couple of ...
Purchase this Solution
Free BrainMass Quizzes
Probability Quiz
Some questions on probability
Geometry - Real Life Application Problems
Understanding of how geometry applies to in real-world contexts
Graphs and Functions
This quiz helps you easily identify a function and test your understanding of ranges, domains , function inverses and transformations.
Solving quadratic inequalities
This quiz test you on how well you are familiar with solving quadratic inequalities.
Multiplying Complex Numbers
This is a short quiz to check your understanding of multiplication of complex numbers in rectangular form.