## Math 160: Study Guide - Chapter 3

1. Stock transaction problem. Find the amount of principal and commission at buying and selling time. Identify the duration of the investment and compute the annual rate of return for the investment.
2. Future value: Find the future value.
3. Compound interest: Find the effective rate, find the amount after a certain time period. Then, for a future value problem, the number of periods before an amount is reached.
4. Retirement: Find the present value needed to retire, then find the payment needed under a future value to reach that goal.
5. Future value: Find the future value. Find the future value and then let that amount sit in the account as a compound interest problem. Similar to the Jane / John problem worked in class.
6. Find the effective rate. Find the present value. Similar to a retirement problem in that a certain annuity is to be paid each year, but the compounding time and the payment times are not the same so you need to work with effective rates.
7. Home loan: Find the down payment, how much is financed, what the monthly payment will be, what the total payments are, what the interest is, the remaining balance after a fixed time, the equity in the house after so many years, the time to pay off the loan if extra is paid, amount of money saved by paying extra.
8. Identify which type of problem (simple interest, compound interest, future value annuity, or present value annuity) is applicable.

### Notes:

• Make sure the compounding period is the same as the deposit period for present value and future value problems. If it's not, you need to adjust one to the other by finding some an equivalent rate (effective rate if it's annually).
• The test is individual, there are no groups allowed.
• Make sure the compounding period is the same as the deposit period for present value and future value problems. If it's not, you need to adjust one to the other by finding some an equivalent rate (effective rate if it's annually).
• Have you act together when you come in to take the test. Know your material. Go through and work the easiest problems first. Don't get bogged down on the first problem, it's one of the longer ones (work wise).
• Make sure the compounding period is the same as the deposit period for present value and future value problems. If it's not, you need to adjust one to the other by finding some an equivalent rate (effective rate if it's annually).
• Show enough work so that I can give partial credit if you're wrong. That may mean just writing down what your looking for and what you entered into the calculator for some problems, but if there's nothing but an answer, you better make sure it's right.
• Make sure the compounding period is the same as the deposit period for present value and future value problems. If it's not, you need to adjust one to the other by finding some an equivalent rate (effective rate if it's annually).

Did I tell you to make sure the compounding period is the same as the deposit period for present value and future value problems? There are at least three problems on the test you will miss if you don't. There is usually a question asking for the effective rate preceding such questions. However, not every question that asks for an effective rate is such a problem.

 # 1 2 3 4 5 6 7 8 Total Points 12 6 12 8 16 12 18 16 100