Mathematics for Business and Finance - Problems

Running head: MATHEMETICS FOR BUSINESS AND FINANCE
Mathematics for Business and Finance
Name of the Student:
Name of the University:
Author’s Note:

MATHEMATICS FOR BUSINESS AND FINANCE2
Table of Contents
Answer to question 1:......................................................................................................................3
Answer to question 2:......................................................................................................................4
Answer to question 3:......................................................................................................................5
Answer to question 4:......................................................................................................................6
Part a:...........................................................................................................................................7
Part b:...........................................................................................................................................7
Answer to question 5:......................................................................................................................8
Bibliography:.................................................................................................................................10

MATHEMATICS FOR BUSINESS AND FINANCE3
Answer to question 1:
Periodic withdrawals = $3,000 at the beginning of every 6 months
Present balance in the fund = $25,000
Interest rate = 6.36% compounded semi-annually
Applying the present value formula of annuity due,
25000=3000+3000×
[ 1−( 1+ 6.36 %
2 )
−(n ×2−1)
6.36 %
2 ]
25000−3000
3000× 1
0.0318
=1− (1.0318 )−(n × 2−1)
0.2332−1=− ( 1.0318 )−(n ×2−1)
0.7668= ( 1.0318 )−(n × 2−1)
Taking log in both the sides,
log 0.7668=−( n× 2−1)× log 1.0318
−0.11532=− ( n ×2−1 ) ×0.013596
n ×2= 0.11532
0.013596 +1
n ×2=9.482049