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[01:640:106] - Final Exam Guide - Ultimate 58 pages long Study Guide!


Department
Mathematics
Course Code
01:640:106
Professor
Professor Ullman
Study Guide
Final

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Rutgers
01:640:106
FINAL EXAM
STUDY GUIDE

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Wednesday, September 7, 2016
Mathematics of Money
-Get a calculator that does exponents and logs, that can show a lot of decimal places
-There will be weekly homework (usually due on Thurs by 11 p.m.) (H/W is due when
Sakai says its due)
-Weekly quizzes (usually on Wednesday)
-No late homework is accepted
-Submit homework on Sakai - assignments
-No make-up quizzes or tests (2 midterms and a final)
Why do we take it as given that whenever one person or institution borrows from
another, the lender will demand that the borrower pay interest? Because otherwise the
lender would have no reason to lend. We will assume in this course that all
transactions are business transactions as such, and not, for example, interest free
loans from family members.
Consequence: If you owe money, then the passage of time in and of itself causes you
to owe even more money. Just because time passes, even if nothing else happens
(even if you don’t borrow any additional money), your level of debt increases.
Interest is what a borrower pays a lender for the temporary use of the lender’s money
Principal of a loan is the amount borrowed
term of a loan is the amount of time for which the loan is made
Interest rates are expressed in annual terms unless otherwise stated
Simple interest is if it computed based solely on the principal, no mater how long the
term of the long
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Wednesday, September 7, 2016
Ex: suppose you rent a $300,000 house. The rent for a full year is $15,000 and the
landlord never raises the rent; the annual amount of rent due remains the same from
one year to the next.
If you stay for one year, you will “give back” the $300,000 house and pay $15,000 in
rent
If you stay for 2 years, you will “give back” the $300,000 house and pay $30,000
If you stay for 10 years you will “give back” the $300,000 house and pay $150,000
Ex: if you borrow $2,500 for 2 years on 12.3% simple interest, how much interest must
you pay?
$2,500(0.123)=$307.50 (per year) so $307.50(2)= $615 or $2500(0.123)(2)=$615
Simple interest formula is I=PRT
I = Interest in dollars
P= Principal in dollars
R=Interest rate, expressed as decimal
T=term (amount of time) in years
!2
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