Section 3.6 - Mathematics of Finance

Essential Question(s): 

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

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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.