SOLUTIONARY FUNDAMENTALS OF FINANCIAL MATHEMATICS

CHAPTER VI
GRADIENTS OR SERIES
VARIABLES

Industrial engineering students | 5th Semester 2012

 SOLUTIONARY [FUNDAMENTALS OF FINANCIAL MATHEMATICS]

2. You are going to deposit $50,000 in 6 months, and $100,000 in 9 months.

within 1 year $150,000, and so on until the last deposit is made
In 4 years. How much will he have accumulated by then, if the deposits
They earn an interest of 8% quarterly? A/. $ 8,952,676.90.

The total future value of this increasing arithmetic gradient series is determined with
the following expression:

F= $ 8.952.676,90

Industrial Engineering Students | Fifth Semester 2012

 SOLUTIONARY FOUNDATIONS OF FINANCIAL MATHEMATICS

4.10 new students plan to associate and create a savings fund

monthly so that upon completing their 5 years of study they have capital
of $10,000,000 with the purpose of starting their own company. Their income will
allow an increase in monthly savings by 2% and the financial institution
It offers a monthly interest of 2.5%. How much should the initial monthly savings be?
of each of the students? A/. $ 4,469.24.

We have that the value of the sum of all the fees of the 10 students is 10k
so:

The total future value of this increasing geometric gradient series is determined with
the following expression:

K = $ 4.469,24

Industrial engineering students | Fifth Semester 2012

 [FUNDAMENTALS OF FINANCIAL MATHEMATICS]
SOLUTION MANUAL

You are an investor with an annual opportunity rate of 33% and in

This moment needs $15,000,000, which can be obtained from an institution.
banking under the following conditions: loan term 3 years, amortization in
equal quarterly installments and an interest rate of 36% NTA, paying the interest
at the beginning of each quarter. How much does what is owed to you today amount to?
Will he pay the bank over the three years? A/.16,623,900.

Industrial engineering students | Fifth Semester 2012

 SOLUTIONARY FUNDAMENTALS OF FINANCIAL MATHEMATICS

Finance $6 million today, for three years with increasing monthly payments.
at 3% each month until the end of the second year and from there onwards
remain constant. The interest rate will be 2.5% per month during the
the first two years and of 36% per year thereafter. R/. $ 167,123 the first
quota.

We have a financing of six (6) million in installments that grow 3% monthly.

the first two years and remain constant from there

We do

The value of the first installment is $167,123.4

Industrial engineering students | Fifth Semester 2012

 SOLUTIONARY [FUNDAMENTOS DE MATEMÁTICAS FINANCIERAS]

A project involves investing $3,000,000 to receive back one year later.

$2,125,000, 2 years later $1,750,000 and 3 years later $1,375,000. If in the
time to invest the $3,000,000 the consumer price index is 600, a
a year later 750, two years later 937.5 and three years later 1,171.875, what
What will be the project's profitability in current pesos and in constant pesos? A/
Pesos corientes: i= 37,5% ; Pesos constantes: i = 10%.
2125000
1750000
1675000

1 2 3

3,000,000

For current weights we have that:

For current weights i = 37.51%

For constant pesos:

For constant weights i = 10%

Industrial Engineering Students | 5th Semester 2012

 Solution manual FUNDAMENTALS OF FINANCIAL MATHEMATICS

12. Financing a debt of $8,000,000 today, in 36 monthly installments knowing

that the first payment must be made within 6 months and from there onwards the installments
they will increase by 3% each month until the twentieth payment, and from that
the installments will remain constant. The interest rate on the balance
it will be 3% monthly for the first 6 months and 4% monthly thereafter
forward. R/. First installment: $ 341,494.

J=3% A= a1(1.03)19
a1

6 25 26 41

8000000

i = 3% i = 4%
We do

The first installment is $341,494.8

Industrial engineering students | Fifth Semester 2012

 SOLUTIONARY FUNDAMENTALS OF FINANCIAL MATHEMATICS

14. Substitute an obligation that consists of three promissory notes as follows: $2,000,000 for
within three months; $2,850,000 within 8 months and $3,200,000 for
in a year and a half, all with an interest of 32% NMV, for its equivalent
in monthly installments that decrease by 5% each month, to be paid
first within 6 months and the last within 28 months, knowing that for
In this case, an interest of 3.3% per month will be charged. R/. $ 702.728 the first
quota.
3200000
2850000
2000000

0 3 8 18

i = 32%NMV
We transform the interest rate

We determine the present value of all the installments.

We created a graph for the new financing.

ff
P

5 6 28

J = 5%
We do a1

Industrial Engineering Students | 5th Semester 2012

 SOLUTIONARY [FUNDAMENTALS OF FINANCIAL MATHEMATICS]

The value of the first installment is $702,782.5

Industrial engineering students | 5th Semester 2012

 ANSWER KEY [FUNDAMENTALS OF FINANCIAL MATHEMATICS]

16. Determine the cash value of an appliance if financed

acquire with the following plan: an initial fee equivalent to 40% of the value of
paid in full and the rest in 24 monthly installments of $8,000, $7,900, $7,800 and so on
subsequently, knowing also that the first installment must be paid within
two months; and finally, after these installments, twelve monthly payments of $
2.000 cada uno. La tasa de interés sobre saldo es del 30% NT.R/. $ 222.800.

2 3 4 25 26 37

A = 2000
0.4 P G =100

a2 a3
a1 ff

i = 30%NT
We have to:

a1= 8000

a2=7900

a3= 7800

Therefore G= 100

We determine the interest rate

We do

Industrial Engineering Students | Fifth Semester 2012

 ANSWER KEY FUNDAMENTALS OF FINANCIAL MATHEMATICS

The present value of the financed item is $ 222,800

Industrial engineering students | 5th Semester 2012

 SOLUTIONARY FUNDAMENTALS OF FINANCIAL MATHEMATICS

An employee opens a savings account today with $25,000 and within a year
start making quarterly deposits of $40, $80, $160, $320, and so on
successively. If the savings account pays 28% NT, find the amount
accumulated that the employee will have in their account in six years, knowing
Additionally, during the last two years, the employee withdrew $40,000 each
quarter. R/. $ 89,916,000.

25000

160 320 G = 100%

40 80
17
0 4 5 6 7 24 trimestres
40000

F
I= 28%NT

We transform the interest rate

We do

In six years, you will have saved a total of $89,916,325.

Industrial engineering students | Fifth Semester 2012

 SOLUTIONARY [FUNDAMENTALS OF FINANCIAL MATHEMATICS]

20. A company produces 200 units of an item per month. The price per
The unit is $12,500 in the first year, $13,000 in the second year, $13,500
in the third year and so on. The cost per unit of the item is $
8,000, and the company invests a quarter of the profits monthly in a
institution that pays 30% annually for the first four years and 31.5%
AMV from then on. How much will the company have saved after nine?
years? A/. $ 152,350,000.

a5 G
a3 a4
a1 a2

0 1 2 3 9

I130% I231.5% AMV

We transform interest rates

We find the values of a.1, a2and to3and we determine the value of G, taking into account
it states that the value of the deposited installments is one-fourth of the profits
obtained from the sale

Industrial engineering students | 5th Semester 2012

 ANSWER KEY FOUNDATIONS OF FINANCIAL MATHEMATICS

We do

Industrial engineering students | Fifth Semester 2012

 FUNDAMENTALS OF FINANCIAL MATHEMATICS
SOLUTION BOOK

A factory has fixed costs of $600,000 per month and variable costs of
$150 per unit. There is no production during the first 6 months because this
time will be dedicated to testing and adjustments. In month 7, production will begin with
300 units and each month production will increase by 200 units until reaching
at the top of 2,500 per month. If the factory is expected to be sold at the end of 3 years, calculate
the total cost of production in these 3 years in today's pesos, assume a rate
3% monthly cash. R/. $ 17,791,600.

A2375000

a145000 G=200*150=300000

A=600000

A=600000 7 18 19 36 months

F
I = 3% monthly

We do

Industrial engineering students | Fifth Semester 2012

 ANSWER KEY FUNDAMENTALS OF FINANCIAL MATHEMATICS

24. A machine produces a profit of one million pesos during the first
year, however, the utility of the machine decreases $35,000 each year due to the
depreciation. Calculate in today's pesos the total earnings assuming that the
The machine will operate for 10 years. The interest rate is 30% per annum.
$2,815,488

1,000,000

G=35000

1 10
P
I=30%EA

We do

The machine will produce an approximate profit of $2,815,488.

Industrial engineering students | Fifth semester 2012

 ANSWER KEY [FUNDAMENTALS OF FINANCIAL MATHEMATICS]

26.A financial entity lends a client $3,000,000, with an interest of 34%

NMV. The debtor has a period of 15 years to repay the debt, through
monthly payments. Assuming that the first installment is $10,000 and is due on
end of the first month, what should be the percentage of monthly adjustment of the
installment, to pay off the debt? A/. J= 3.47% monthly.

J= ?
10000

1 180

3,000,000
I = 34% NMV

We transform the interest rate

We do

Industrial engineering students | V Semester 2012

 SOLVER FUNDAMENTALS OF FINANCIAL MATHEMATICS

28. If from my salary of $400,000 I expect to save 60% within 9 months and month
My savings will decrease by $5,000 per month until month 24, how much will I accumulate?
months after the last deposit was made, if the account is credited with a
1.5% monthly interest from today until month 15, and from then on 1.75%
monthly?. R/. $ 4,128,842.65.

0.6*400000

G= 5000

0 30
9 15 16 24

F
I=1.5% monthly I=1.75% monthly

We do

Industrial engineering students | Fifth Semester 2012

 SOLUTIONARY FUNDAMENTALS OF FINANCIAL MATHEMATICS

30. How much should be deposited today in a corporation that pays us interest?
of 3% per month, to cover a series of expenses in perpetuity if starting
within two months and with a value of $3,000, it increases month by month in the
same amount?. R/ $ 3,333,333.33.

Like to2=2 a1we deduce that j = 100%

K = 3000 G=3000

I=3% monthly
P

We do

We have to

When

So

Industrial engineering students | Fifth Semester 2012

 SOLUTIONARY FUNDAMENTALS OF FINANCIAL MATHEMATICS

A loan of $5,000,000 must be paid off in 3 years as follows: twelve installments.

monthly in the first year, the thirteenth installment is the 12th installment reduced by $500 and
Similarly, they will continue to decrease by the same amount until month 24. The
Quota 25 is the increased quota by $300 and it will continue to increase by $300.
until month 36. Find the value of the last installment if the interest is 1.8%
monthly R/. $ 189,741.5.

A 30
500

12 13 24 25 36

5000000
i= 1.8% mensual

We find the value of installment 36

Industrial engineering students | 5th Semester 2012

 SOLUTIONARY FUNDAMENTALS OF FINANCIAL MATHEMATICS

34. A loan must be paid off in 12 monthly installments as follows: the first is of
a certain value, which increases by a certain constant amount month by month; if it is known
que el valor de la cuota 6 es de $ 33.500 y el valor de la cuota 12 es de $53.500,
find the value of the first and second installment as well as the value of the loan
If the financing interest is 2% per month. R/. $ First installment: $16,833.33;
segunda cuota: $ 20.166,66; valor préstamo: $ 363.588,54.

53500
33500
G

0
6 12

P
I = 2%

We determined the value of G

We find the value of installment 1

We find the value of installment 2

We determine the value P

Industrial Engineering Students | Fifth Semester 2012

 SOLUTIONARY [FUNDAMENTALS OF FINANCIAL MATHEMATICS]

An item sold for cash costs $700,000; for installments, they require a down payment.
$100,000 and the rest to be paid in 9 monthly installments in such a way
that each installment decreases by $300 compared to the previous one. If the interest of
financing is 2% monthly, find the value of the last installment.
$74,669.6

100000 G=300

700000
I= 2% mensual

We do

Industrial engineering students | Fifth Semester 2012

 Solution manual [FUNDAMENTALS OF FINANCIAL MATHEMATICS]

In one year, $5,000,000 must be paid as a down payment for a

apartment; for that purpose, monthly deposits are made starting today with a
savings of $200,000. What should be the constant increase in the installments?
Later, if the deposits earn an interest of 1.4% per month?
$26,415.6

200000 G

12 months
Today

5000000
I = 2% monthly

We do

The monthly increase in the fees must be $26,415.60

Industrial engineering students | Fifth Semester 2012

 ANSWER KEY [FUNDAMENTALS OF FINANCIAL MATHEMATICS]

40. When buying a machine, they owed $3,000,000 which they

they must pay 2.7% monthly and 24 monthly installments in such a way that each
the payment is $2,500 more than the previous payment. If once payment 9 is settled
payment of $400,000 and I request to refinance the balance to cancel it during the same period.
time but with payments that decrease by $500 compared to the previous payment,
find the value of the installment 9 that is paid in the first payment method, to
the same as the value of the first installment that will be paid after it is requested
refinanciación.R/. $ Cuota 9: $ 165.886,78, Primera cuota refinanciación: $
187,898.8

A1 2500

24 months
Today

3000000
I = 2.7% monthly

We find the price of installment 1

We do

Valor de la cuota 9

We determine the balance of the debt once installment 9 is paid.

Industrial Engineering students | 5th Semester 2012

 SOLUTIONARY [FUNDAMENTALS OF FINANCIAL MATHEMATICS]

400000 G=500

9
10 24
We do

Balance
I= 2.7% mensual

Industrial engineering students | Fifth semester 2012

 ANSWER KEY [FUNDAMENTALS OF FINANCIAL MATHEMATICS]

A loan must be repaid in 5 years with a financing interest of 36%

nominal MA. If the payments are biweekly and equal within each semester
but, semester by semester, they decrease by $1,500, find the value of the first
installment if the loan was $3,000,000.R/. $59,466.

We transform the interest rate

We make

The value of the first installment is $59,441.7

Industrial engineering students | 5th Semester 2012

 SOLUTIONARY FOUNDATIONS OF FINANCIAL MATHEMATICS

44. A machine needs to be replaced within 5 months and it is estimated that its
the price at that moment will be $17,213,648.4. To this end, it is desired to create a fund
in a corporation that will pay an interest of 3% per month. Find the value of
deposit that must be made within a month if the deposits increase
at a monthly rate of 4%, in relation to the previous deposit. R/. $ 3,000,000.

J = 4%

5 months
1

17213648.4
I = 3% monthly

We do

Industrial engineering students | 5th Semester 2012

 Solution manual FUNDAMENTALS OF FINANCIAL MATHEMATICS

46. Find the value of a loan for 3 years, with a financing interest of
3% monthly, if it was paid as follows: the first installment of $60,000.
it was paid a month after the loan was granted. The other installments during the
In the first year, they increased by 8% monthly; the 13th payment was the 12th payment decreased.
at 9%, and the others continued to decrease by the same percentage until the
installment 24. The installment 25 has the value of installment 24 increased by 3%. The
The other installments of the third year also increased by 3%. R/. $ 1,761,542.6.

The value of the loan is $1,761,542.608

Industrial engineering students | 5th Semester 2012

 SOLUTIONARY FUNDAMENTALS OF FINANCIAL MATHEMATICS

48.A debt must be paid off in 18 monthly installments such that each installment
decreases by 2.4% compared to the previous installment. If the financing interest is
of 3.1% monthly and the value of the first installment is $400,000. a) Find the
loan amount, b) Find the accumulated amount that has been paid once
canceled the installment 10, and c) If upon paying the installment 10 a request is made to refinance the balance
existing at that moment to cancel it with 15 equal monthly installments.
3.3% monthly interest determine the value of the new installments. R/. Loan:
$ 4.561.674, Acumulado: $ 4.165.035, Saldo a refinanciar: $2.025.252,76;
new installments: $ 173,350.95.
400000

J = 2.4% monthly

1 18 months

3.1% monthly
a) The value of the loan P

b) The total accumulated once the installment 10 is paid off (F10)

Industrial engineering students | V Semester 2012

 SOLUTIONARY FUNDAMENTALS OF FINANCIAL MATHEMATICS

c) We determine the debt balance in month 10

We find the value A of the installments to be paid.

Industrial engineering students | Fifth Semester 2012

 Solution manual FUNDAMENTALS OF FINANCIAL MATHEMATICS

A loan to acquire a home must be paid off in 7 years with installments.

Equal monthly amounts within each semester but decrease from semester to semester.
at 2%. If the financing interest is 48% APR and the value of the first installment
es de $ 580.000, encontrar: a) Valor del préstamo, b) ¿cuánto se estará debiendo
once the installment 50 is canceled?. R/. $ 15,213,469.57 and $ 9,544,420.23.

580000
J = 2% semiannual

1 84 months

P
I= 48% EA

We transform the rate at which the payments decrease.

We transformed the interest rate

Industrial engineering students | Fifth Semester 2012

 ANSWER KEY FUNDAMENTALS OF FINANCIAL MATHEMATICS

We determine the value P of the loan

b) How much will be owed once the 50th installment is paid?

Industrial Engineering Students | Fifth Semester 2012

 SOLUTIONARY [FUNDAMENTALS OF FINANCIAL MATHEMATICS]

52. You need to request a loan for the purchase of a vehicle that costs 15.
millions of pesos. You foresee that by committing the premiums they pay you in
the company, you could make increasing semiannual payments at 5% for 5
years. Their relationships with the Finauto Financial Corporation S.A. are so good,
they are granted a grace period of six months for capital and interest, and an interest rate of 14%
semester. Find out what the first and the last installment of the loan should be?
R/. Cuota 1: $2.745.196 y Cuota 10: $ 4.258.700.

J= 5%
a1

2
11 semesters

15000000

I = 14% semiannual

Taking into account that a grace period was granted, we make

The value of the last installment is therefore

Industrial engineering students | Fifth Semester 2012

 SOLUTIONARY [FUNDAMENTALS OF FINANCIAL MATHEMATICS]

A company sells 500 units of its product each month at a price of

$1,000 per unit in the first year, to $1,200 per unit in the second
year, at $1,400 per unit during the third year and so on. The company
saves one-tenth of their monthly income in a financial corporation that
pays 2.5% monthly. Find out the total value that the company will have saved after
seven years. R/. $19,186,475

a2 a3 G
a1

1400
1000 1200

7 years
0 1 2 3

F
We transform the interest rate I = 2.5% monthly

We find the values taking into account that only one tenth of the savings is considered.
sales of a1, a2, a3, and we determine the value of G

Industrial engineering students | 5th Semester 2012

 ANSWER KEY [FUNDAMENTALS OF FINANCIAL MATHEMATICS]

We determine the value of G

After 7 years, approximately $19,185,890.77 will be saved.

Industrial engineering students | Fifth Semester 2012

 SOLUTIONARY FOUNDATIONS OF FINANCIAL MATHEMATICS

A debt of $50,000,000 will be financed through 36 installments.

monthly payments that increase by $50,000 each month, and a fee
extraordinary for an amount of $3,000,000 in month 24. If the interest rate is
2,5% mensual, calcule el valor de la primera cuota.R/. $ 1.258.628,20.

3000000

a1 G= 50000

0
24 35

50000000
I=2.5% monthly

We do

The first installment will have a value of $1,258,628.204

Industrial engineering students | Fifth Semester 2012

 SOLUTIONARY [FUNDAMENTALS OF FINANCIAL MATHEMATICS]

A liability of $34,000,000, with an interest rate of 34% monthly, is going to

cancel with 24 monthly payments that increase by 4% each month. After
After canceling the third installment, it is resolved to pay the balance with 12 quarterly payments.
which increase by $12,000 each quarter. Calculate the value of the first payment of
new payment plan. R/. $ 4,477,722.56.

a1 J= 4%

1 3 24

Refinancing
34000000
I= 34% MV

We determine the value of the first installment in the first financing system.
doing:

We find the balance of the debt after making the third payment.

a'1 G= 12000

1 12 trimesters
Industrial Engineering Students | Fifth Semester 2012

Debt balance
 SOLUTIONARY FUNDAMENTALS OF FINANCIAL MATHEMATICS

We transformed the interest rate

We do

Industrial engineering students | Fifth Semester 2012

 SOLUTIONARY FUNDAMENTALS OF FINANCIAL MATHEMATICS

60. 60% of a loan is being paid with 36 monthly installments that increase
every month 1.2%, starting with a payment of $1,500,000. Once
The 12th installment is canceled, $10,000,000 is paid, and the balance is financed with 6 installments.
quarterly payments of $5,000,000. If the financing rate is 9.27% per quarter,
What is the value of the credit? A/. $ 65,263,794.54.

The initial funding system is as follows

1500000 J= 1.2%

1 36

0.6P
I= ?

Where

We made the refinancing graph

10000000

1500000 J= 1.2%
A= 5000000

1 12 15 18 21 24 27 30

0.6P
I= ? I=9.27% t

Industrial engineering students | Fifth Semester 2012

 ANSWER KEY FUNDAMENTALS OF FINANCIAL MATHEMATICS

We can observe that the remaining installments of the first financing are
replaced by a payment of 10,000,000 and six quarterly payments of 5,000,000 to
an interest of 9.27%

We determine the initial financing interest by equating:

We find the value of the loan according to the equation

The total value of the loan is $62,707,485.16

Industrial engineering students | Fifth Semester 2012