Financial Mathematics In Tutorial Library

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TITLE: Financial Mathematics



1. Given that f(x) = -4,500(1.50?). Answer the following.
a. What is the growth factor?
b. What is the growth rate?

2. What is the correct factor if your money is earning 5.6% compounded quarterly?

3. What is the correct factor if your car's depreciating at a rate of 12.5% per year?

4. If my car is valued this year at 83% of the value from last year, what is my annual depreciation rate?

5. Given that f(x) = 6,340 (1.65 ?), what is the value of f(12)?

6. You invest $28,000 in a mink farm on a promise that you will realize an annual profit of 13% per year. How much will your investment be worth in 15 years, if your rate return stays the same throughout the years?

7. From problem #6, how much money did you make off your investment?

8. Your dear Aunt Sally has just passed away and has bequeathed some funds to you. She has indicated in her will that you can either take $25,000 and invest it at 9% compounded quarterly for 10 years in her bank, or take $18,000 and invest it in a Swiss Bank that will pay you 8.5% with continuous compounding for 10 years. If you choose the wrong amount (the one that does not make the most amount of money) you will get nothing. Which do you choose, and why?

9. You need to bury some very dangerous wastes in your backyard and you need to figure out how much will be around after 785 years. You bury 15,453 pounds of muck that has a half-life of 3,567 years.

10. You need to have $10,000 in your account for your new boat. You can put $7,500 to start the account growing and you will be earning 6.5% per year. How long will you have to let your money to get to the amount you need?

11. You invest $5,000 every year for 3 years at an annual rate of 7.5%. From year 4 to year 20 you just let your money accrue interest without adding anymore to it. How much will be in your bank account on the 20th year?

12. From problem #9, what percentage of the original amount is left after 1,250 years?

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