Tute wk 2
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Flinders University *
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BUS101
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Mathematics
Date
Jan 9, 2024
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1 MATH 1053 Quantitative Methods for Business Tutorial Week 2 (Simple and Compound Interest) Please note:
You should review Week 1 topic videos, work through the background reading from the textbook and attempt the questions before coming to the tutorial. Bring a calculator (not one on your mobile phone!) From Topic 2 p. 99 [12.1 Exercises] 31. LAWN MOWERS
The Green Care Company needs to borrow $7000 to buy new lawn mowers. The firm wants to pay no more than $560 in interest. If the interest rate is 12%, what is the longest time for which the money may be borrowed? From Topic 2 p. 100 [12.1 Exercises] 43. HOME ADDITION
Ricky and Gina Hardin borrow $49,800 to add a den to their home. They finance the loan at 10% simple interest for 4 months. They hope to pay the loan off then, using proceeds from the sale of a rental house. Find the interest. From Topic 2 p. 140 [14.1 Exercises] 26. BANK CD
Brenda Gilliam deposits $8000, earned from testing elementary school students for learning disabilities, in a bank CD paying 4% compounded semi-annually. Find the future value in 3 years. From Topic 2 p. 94 [14.4 Exercises] 10. CANDY STORE
A candy store owner needs $85,000 in 1 year to open a branch in a mall. Find the lump sum that could be invested today at 5% compounded monthly to produce the needed funds. Find the interest earned. From Topic 2 p. 161 [14.4 Exercises] 19. CAFE OF MODERN ART The owner of Cafe of Modern Art signs a note for $16,800
at 10% simple interest for 4 years. Find the maturity value of the note. What should the holder of the note be willing to accept in payment for the note today if funds can be invested for 4 years at 6% per year compounded quarterly? Additional Exercises: 1.
Glenn invested $300 in an account that paid interest compounded semi-annually. After 5 years the investment had an accumulated value of $390. What annual rate was Glenn paid? 2.
Ingrid can sell her boat for $8,500 at the end of September. Alternatively, she can pay $500 in advance for 6 months’ insurance and storage charges and then sell the boat at the end of next March for $9,300. Which alternative is to her financial advantage if she can earn 6.6% per year compounded quarterly on short-term investments? How much is the advantage in current dollars? Online Assessable Test 1 –
Simple and Compound Interest
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