About this Book
Business and Financial Mathematics introduces students to the ideas, concepts, and applications of the mathematics of business and finance. Topics include the mathematics of merchandising, cost-volume-profit analysis, simple and compound interest, annuities, loans, bonds, and business investment decisions. The book is written at an introductory level, designed for students studying business, finance, or other related areas. The text emphasizes the understanding and application of technology, in the form of a financial calculator, to solve problems, but some knowledge of algebra is required.
Although the text focuses on concepts and applications, every effort has been made to provide both information essential to understanding a topic and sound methodological development. Generally accepted terminology and notation for each topic is used throughout without becoming overly focused on technical details.
In place of most manual calculations, especially those related to compound interest and annuities, the text utilizes the Texas Instrument BAII Plus financial calculator. Because of the prevalence and use of technology like financial calculators, it is important for students to understand how to leverage a financial calculator’s capabilities. Throughout the text, information is provided on how to use the BAII Plus calculator to perform calculations and the solutions to examples illustrate the required information need to solve problems using the calculator.
The text is organized into eight chapters, and then divided into sub-chapters by concept or topic. The chapters are as follows:
| Chapter 1: Mathematics of Merchandising | Chapter 1 covers the calculations involved in the merchandising chain, including discounts, markup, and markdown. |
| Chapter 2: Cost-Volume-Profit Analysis | Chapter 2 examines the concepts associated with break-even analysis through revenue and cost functions, the contribution margin, and the contribution rate. |
| Chapter 3: Simple Interest and its Applications | Chapter 3 introduces simple interest and the application of simple interest to short-term GICs, treasury bills and commercial papers, and demand loans. |
| Chapter 4: Compound Interest | Chapter 4 extends the concept of interest to compound interest, including the calculation of future value, present value, the interest rate, and term. |
| Chapter 5: Annuities | Chapter 5 explores the calculation of future value, present value, payment, interest rate and term to both ordinary annuities and annuities due, as well as deferred annuities and perpetuities. |
| Chapter 6: Loans and Mortgages | Chapter 6 extends annuity calculations to loans and mortgages, focusing on the amortization schedule, calculations associated with mortgage renewal, and calculations related to a mortgage’s pre-payment options. |
| Chapter 7: Bonds and Sinking Funds | Chapter 7 covers the concepts of bonds, including calculating the purchase price of a bond, the quotation of a bond, bond schedules, and sinking funds. |
| Chapter 8: Business Investment Decisions | Chapter 8 examines the use of net present value and internal rate of return in making a business decision. |
For the Student
Each sub-chapter in this text begins with a list of relevant learning objectives and concludes with a concept review that highlights the key topics in the sub-chapter. Where appropriate, videos are included to review, enhance, and extend the material covered in the text. At the end of each chapter, a series of exercises are included to check retention and asses understanding
Accessibility Statement
We are actively committed to increasing the accessibility and usability of the textbooks we produce. Every attempt has been made to make this OER accessible to all learners and is compatible with assistive and adaptive technologies. We have attempted to provide closed captions, alternative text, or multiple formats for on-screen and off-line access.
The web version of this resource has been designed to meet Web Content Accessibility Guidelines 2.0, level AA. In addition, it follows all guidelines in Appendix A: Checklist for Accessibility of the Accessibility Toolkit – 2nd Edition.
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