Results 1 to 6 of 6

Thread: Financial Maths

  1. #1
    Member
    Joined
    Aug 2017
    From
    England
    Posts
    91
    Thanks
    1

    Financial Maths

    Financial Maths-29831361_602722983410950_1873941014_o-1-.jpg

    Hi, could somebody help me with part 1 of this sheet. I attempted it and would like to know if my answers are correct.
    My answers for part 1(i) 5.66%, (ii) 5.81 (iii) 5.87 (iv) and i couldn't get an answer for this part

    Thanks
    Phelim Neenan.
    Follow Math Help Forum on Facebook and Google+

  2. #2
    MHF Contributor
    Joined
    Feb 2015
    From
    Ottawa Ontario
    Posts
    2,070
    Thanks
    413

    Re: Financial Maths

    On part 4: 12,849.00 is the required present value.
    In bank statement format, looks like:
    Code:
    YEAR  PAYMENT  INTEREST  BALANCE
      0                      12849.00
      1   -1000.00  1284.90  13133.90
      2   -1057.69  1313.39  13389.60
      3   -1118.71  1338.96  13609.85
    ...
     18   -2594.82   680.81   4894.07
     19   -2744.52   489.41   2638.96
     20   -2902.85   263.89       .00
    Need anything else on that one?
    Follow Math Help Forum on Facebook and Google+

  3. #3
    Member
    Joined
    Aug 2017
    From
    England
    Posts
    91
    Thanks
    1

    Re: Financial Maths

    Can you do part iv of question 1?
    Follow Math Help Forum on Facebook and Google+

  4. #4
    MHF Contributor
    Joined
    Feb 2015
    From
    Ottawa Ontario
    Posts
    2,070
    Thanks
    413

    Re: Financial Maths

    Sorry, thought you meant question #4...

    Your problem states: "for a rate of interest of 6% per annum
    effective, calculate the following equivalent rates".

    6% effective means 100 is worth 106 after 1 year,
    no matter how often the interest is paid.
    An equivalent rate is calculated and used to achieve
    this; as example, 1.467% per quarter.

    Please explain what you mean by "equivalent".

    Also, what is the difference between "rate of interest"
    and "rate of discount"?
    Last edited by DenisB; Apr 2nd 2018 at 09:37 AM.
    Follow Math Help Forum on Facebook and Google+

  5. #5
    Member
    Joined
    Aug 2017
    From
    England
    Posts
    91
    Thanks
    1

    Re: Financial Maths

    Thanks a million, could you show me the workings of how you got question 4?

    thanks again
    Phelim
    Follow Math Help Forum on Facebook and Google+

  6. #6
    MHF Contributor
    Joined
    Feb 2015
    From
    Ottawa Ontario
    Posts
    2,070
    Thanks
    413

    Re: Financial Maths

    Look at it as 2 bank accounts:
    one in which the payments are deposited
    one where the initial amount is deposited
    Their values in 20 years must equal each other: OK?

    i = .10 (annual rate)
    j = .057692 (payment annual increase)
    n = 20 (number of years)
    f = 1000 (first payment)
    p = present (or purchase) value (?)
    u = future value of p (?)
    v = future value of payments (?)

    u = p(1+i)^n

    v = f[(1+i)^n - (1+j)^n] / [(1+i) - (1+j)]

    Since u = v:
    p = v / (1+i)^n

    Substitute the values in there: result will be p = 12849.005132....
    Last edited by DenisB; Apr 2nd 2018 at 01:15 PM.
    Follow Math Help Forum on Facebook and Google+

Similar Math Help Forum Discussions

  1. Financial Maths - Future Value Calculation
    Posted in the Algebra Forum
    Replies: 3
    Last Post: Mar 11th 2012, 02:22 PM
  2. Financial Maths: Nominal Interest Rate conundrums!
    Posted in the Business Math Forum
    Replies: 1
    Last Post: Mar 4th 2012, 11:27 AM
  3. Need help with financial maths
    Posted in the Business Math Forum
    Replies: 3
    Last Post: Jul 3rd 2011, 09:06 PM
  4. financial maths greeks
    Posted in the Business Math Forum
    Replies: 1
    Last Post: May 29th 2011, 10:36 AM
  5. Replies: 9
    Last Post: Jul 4th 2008, 02:14 PM

/mathhelpforum @mathhelpforum