## Section 3.6 - Mathematics of Finance

**Essential Question(s):**

How are exponential functions and equations used to solve finance application problems?

**Follow**__these three steps__to complete this "flip" lesson.**STEP 1: Preparation**

__Title__your spiral with the heading above and

__copy__the essential question(s).

**STEP 2: Vocabulary & Examples**

__Copy__and

__define__the following of vocabulary. This can be any tables, properties, theorems, terms, phrases or postulates listed.

__Review__the following examples and

__copy__what is necessary for you. Use the guiding questions for your cornell notes.

__Interest Compounded Annually__

- What is compound interest and it's formula? (Pg 334)
- How do you compute compound interest? (Ex 1 pg 334)

__Interest Compounded k Times Per Year__

- What is the formula if interest is compounded k times per year instead of annually? ( pg 335)
- How would you compute interest compounded monthly? (Ex 2 pg 335)
- How could you find the time period of an investment? (Ex 3 pg 335)

__Interest Compounded Continuously__

- What does it mean for when to be compounded continuously? (Pg 337)
- How do you compute interest compounded continuously? (Ex 5 pg 337)

__Annual Percentage Yield__

- What is the annual percentage yield and what does it not depend on? (pg 337-338)
- How do you compute annual percentage yield? (Ex 6 pg 337)
- How do you compare Annual Percentage Yields? (Ex 7 pg 338)

__Annuities - Future Values__

- What is an annuity and when is it ordinary? (pg 338)
- What is the future value of an annuity? (pg 339)
- How do you calculate the value of an annuity? (Ex 8 pg 339)

__Loans and Mortgages - Present Values__

- What is present value? (pg 339)
- What is the present value of an annuity formula? (pg 339-340)
- What is the annual percentage rate? (pg 340)
- How do you calculate loan payments? (Ex 9 pg 340)

**STEP 3: Reading**

__Read__the following page(s) and take any extra notes as needed.

- Read pages 334 - 340.
- Make sure to read the paragraphs between the examples.