INTERNATIONAL UNIVERSITY OF

ECUADOR

DISTANCE EDUCATION / LINE

STUDY GUIDE / COMPILATION OF

TOPICS

ASIGNATURA: MATEMÁTICA
FINANCIAL

Ing. Geovanny Reyes Segovia MBA

DEVELOPMENT OF THE UNITS.

SUBJECT: FINANCIAL MATHEMATICS

FIRST UNIT: THE PERCENTAGE

Objective of the Unit.

Mastering the percentage correctly as a calculation tool, in the
application of all commercial and financial operations that are
are carried out daily in business markets.

The Percentage.

Percentage, also called percent, comes from the word

percentile, which means percent. The calculation of the percentage is
one of the most used operations in the commercial and financial field,
since it is used to indicate increases, decreases, profits, rate
of interest, discount rate, etc.

The term 'percent' means 'hundredth', that is, the percent of a

number N is a fraction with numerator N and denominator 100. The
The percent symbol is %, for example:

14% means 14/100 = 0.14

2.16% means 2.16/100=0.0216
348% means 348/100 = 3.48

Conversely, any number can be expressed as a percentage.

just multiply by 100 and add the % symbol. For example:

0.1814 = (0.1814) (100) % = 18.14%

1.175 = (1.175) (100) % = 117.5%

What does the expression '6 out of 78' mean, then? Just as 6% means 6.
hundredths, this expression means: find 6 hundredths of 78. Therefore,
6% of 78 is simply 78 multiplied by 0.06; that is:

6% of 78 = (6/100) (78) = (0.06) (78) = 4.68

The number 4.68 is called the product. 6% is the percentage.

it was called one hundred and seventy-eight.
Example 1.1
Obtenga el 16.75% de 5,820.00

Solution:
16.75% of 5,820.00 means 16.75 hundredths of 5,820.00; this is:
16.75% de 5,820.00 = (16.75/100)(5,820.00) = (0.1675) (5,820) = 974.85

Example 1.2
Raúl bought a television worth 3,850.00. If he made a down payment of
20% of the price, how much was the down payment?

Solution:
Pago inicial = 20% de 3,850.00 = (20/100) (3850) = 770.00

Example 1.3
What percentage of 2,500.00 is 900?

Solution:
Let x be the percentage sought, expressed in decimal form. As x% of
2,500.00 must be equal to 900.00, so it is possible to form the following
equation:

(x)(2,500.00) = 900.00

Solving for x gives:

x = 900/2,500
x = 0.36 = 36%
Example 1.4
A sales agent received 8,208.00 in commission for selling merchandise with
a total value of 68,400.00 What is the percentage gained?

Solution:
Let x be the percentage, expressed in decimal form, of commission earned. As
x% of 68,400.00 must be equal to 8,208.00, so:

(x)(68,400.00) = 8,208.00

Therefore:
x = 8,208.00/68,400.00 x
= 0.12 = 12%

Example 1.5
The manager of a clothing store raised the price of the pants to
man at 12%. What was the original price of the pants, if the
Is it actually 365.00?

Solution:
Let x be the price of the pants before the increase. The increase was of
12% on the price x. Therefore,

Increase = 12% of x = 0.12 x

The current price is formed as follows:

Previous price + increase = current price

That is:

x + 0.12 x = 365

This is:

1.12 x = 365

x = 325.89
Proposed Exercises # 1

Mr. Gutiérrez receives a net salary of $2,920 dollars.

monthly. If they spend 27.55% on rent for the house they live in and 39.95%
In food, how much will be available for other expenses?

A business increases its payroll expenses as an incentive policy.

18% each year. If this expense is currently $91,600 dollars, what about
how much will it rise in 4 years?

3. A real estate agent earned $8,635 dollars in commission for

to sell a property. If the commission he earns is 8% of the sale,
What was the selling price of the estate?

If the basic salary of Ecuador in the year 2000 was 57 dollars and
the current one in force is 386 dollars, what was the percentage of
increase?

A stockbroker advised Fabián Terán to place 19% of his

42% in bonds, 42% in stocks, and the rest in buying real estate.
If Fabián invested 275,000 dollars in the purchase of real estate, what
Is it the total value of the invested capital?

In the year 2005, the number of inhabitants in Ecuador was

9,535,000 of which 2,308,000 were men. Calculate the
percentage of women.

In 1995, the metropolitan area of Nevada had 1,705,000.

inhabitants; by the year 2005 there were 2,940,000 inhabitants. Obtain
the percentage of increase.

A house insured for 70% of its value catches fire.

real, and $144,600 is charged for the insurance. Calculate what it was
real value of the house.

For a luxury suite, 105,500 dollars was paid after it was made.
a 12% discount off the original price, how much did it cost?
suite?
 10. An item increased by 20%. If it currently costs 677.14.
dollars, what was the value before the increase?

11. Una empresa tiene un presupuesto asignado para sus anuncios

advertising, the company spends 7,600 dollars on radio spots and
1,400 dollars in flyers, these expenses represent 35% of
total budget. What is the total budget?

12. If an employee under a dependent relationship contributes 338 dollars

of the 9.45% that corresponds to the personal contribution, how much will it be?
employee salary?

Utility over cost and over selling price.

The cost of an item consists of all the expenses incurred to manufacture it.
or to acquire the item. The cost of a service consists of all expenses
facts to provide the service.

To determine the selling price of a product or service, it is added to

enough to cover operating expenses and have
an utility. Operating expenses or operational expenses are the
amounts paid for rent, salaries, advertising, etc. The
amount added to the cost of the item or service to cover expenses
of operation and obtain a profit, is called gross profit. The profit
this is the amount that remains after covering the operating expenses
it is called net utility.

This is:

SELLING PRICE = COST + GROSS PROFIT

GROSS PROFIT = OPERATING EXPENSES + NET PROFIT

As an example, consider the following: a manufacturer produces an item.

it costs $120.00 to produce it. Estimates $50.00 for expenses
operation by produced item and seeks to obtain a net profit of
$40.00 per item sold. The selling price of the item would be:

Gross profit = $50.00 + $40.00 = $90.00

Selling price = $120.00 + $90.00 = $210.00

It is customary that when setting sales prices, the gross profit and the profit
Net income is given as a percentage instead of a figure in units.
monetary. The percentage is given based on either the cost or the price of
sale. However, it doesn't matter what the profit is based on, it is always
it is added to the cost to determine the selling price.

Example 1.1
A retailer bought a fan for $90.00. They want to add a markup.
gross of 55% of the selling price to cover operating expenses and the
net profit. At what price should the fan be sold?

Solution:

Let x = selling price

Gross profit = 55% of the selling price = 55% of x = 0.55 x

Therefore:

Selling price = cost + gross profit

x = 90 + 0.55 x

x - 0.55x = 90

0.45 x = 90

x = 200

Example 1.2
A manufacturer wants to produce artificial Christmas trees and sell them.
at $310.00 each. If you add 70% of the production cost to cover
the operating expenses and the net profit, how much is the maximum that can be
spend to produce Christmas trees?

Solution:
In this case, the unknown is the production cost. If x is the cost of
production, then:

Gross profit = 70% of x = 0.70x

Selling price = x + 0.70x = 310

1.70x = 310

X = 182.35

Proposed Exercises # 2

The owner of a shoe store wants to buy shoes of a model that

It is sold for $225.00 per pair. What is the maximum price that can be
to pay, if the gross profit must be 60% of the selling price?

An item that cost $338.00 is sold for $442.00. Find the

gross profit, as a percentage, based on the selling price.

3. How much should a retailer sell an item that cost 7,700?

dollars, if the desired gross profit is 45% based on the price of
sale?

The selling price of a tape recorder is $538.00. The expenses

Operating expenses are 45% of the cost and the net profit is 22% of the cost.
What is the cost?

5. A merchant who wishes to add a Tablet, whose selling price

it is $285.00, to your office supplies line, you find that
You can acquire it for $156.75. Will this cost price give you the
gross profit of 45% on the selling price?

6. What was the cost price of an item that was sold for $805.00?
with a profit margin of 19%?

A merchant acquires goods at a cost of 915 dollars.

Determine the price at which it should be sold, so that,
 applying a 12% discount on the selling price, obtain
a 25% profit on the cost price.

A real estate agent sold two houses for 820,000 dollars

each one lost 15% of its actual selling price in one and in the other
He gained 17% of the original purchase price. Did he gain or lose in total?
how much?

A merchant refused to sell a merchandise when it was offered to him.

6,665 dollars, which would have earned him 25% of what it cost.
Some time later he had to sell it for 5,750 dollars. What
percentage of the cost gained from making the sale?

10. A merchant bought a computer for $590.00. He wants to add

a gross margin of 56% of the selling price to cover the expenses
of operation and net profit. At what price should it be sold
computer?

Commercial Discount.

It is common for product manufacturers and wholesalers to provide to

your clients proposed price lists for each product. The price
shown in these lists is the called list price and it is the price
suggested for retail, that is, the list price may or may not be the price
final amount to be paid by the consumer.

Manufacturers and wholesalers sell their products to retailers with a

discount based on the list price, called commercial discount. The
commercial discount is a percentage of the list price, and receives the
discount rate name. The list price minus the discount
The commercial is called net price.

Commercial discounts are generally applied to sales made

from the manufacturer to the wholesaler; from the wholesaler to the retailer, and when the
manufacturer sells directly to the retailer. Trade discounts do not
they apply to retail sales.
Example 1.1
Find the net price of a merchandise, whose list price is $478.00,
if a commercial discount of 23% is applied.

Solution:

Descuento = 23% del precio de lista = 23% de 478 = 109.94

Net price = list price - discount

Precio neto = 478–109.94 = $368.06

Commercial discounts can be simple or chained.

It is common for several discounts to be applied to the list price due to

diversas razones. Por ejemplo, un fabricante que vende tanto a mayoristas
how retailers can specify that the retailer is granted a
commercial discount of 20%, while the wholesaler receives 10%
additional, due to the volume of the purchase. These successive discounts
they are called chain discounts, in successive series.

Since the chain discount rates are applied on a basis

different at each stage of problem resolution, discounts
In a chain, you should never add and use the sum as one.
discount.

When discount rates are applied in series, the list price is

multiply by the first discount rate and the result is subtracted from
list price to obtain a residue that becomes the basis for the
second discount rate. This residue is multiplied by the second rate
discount and the result is subtracted from the remainder to obtain a new
residual that is the basis for the third discount rate and so on
successively.

Example 1.2
A fine furniture manufacturer offers discounts to a wholesaler.
comerciales del 30%, 15% y 8%. Encuentre el precio neto de un pedido
by
$158,340.00
Solution:

List price = $158,340

30% discount = (158,340) (0.30) = $47,501
= 158,340–47,501 = 110,838
Balance

15% discount
About the balance = (110,838)(0.15) = $16,625.70
New balance = 110,838–16,625.70 = $94,212.30

8% discount
About the balance = (94,212.30)(0.08) = $7,536.98
Net price = 94,212.30–7,536.98 = 86,675.32

Another method to find the net price in a problem where it is applied.

commercial discount (simple or in chain), consists of using the following
general formula:

PN = PL (1–d1) (1– d2),……., (1–dn)

Where PN is the net price, PL is the list price and d1, d2, ..... dn are
the applied commercial discounts.

Example 1.3
Solve example 1.2 using the formula.

Solution:

PN = 158,340 (1–0.30) (1–0.15) (1–0.08)

PN = 158,340 (0.70) (0.85) (0.92)
PN = $86,572.32

Example 1.4
The net price of a desk was $680 after it was
discounted 18% and 10%. Find the list price.
Solution:

By isolating PL from the equation, we have:

PL = PN / (1–d1) (1–d2)

PL = 680.00 / (1 - 0.18) (1 - 0.10)

PL = 680.00 / (0.82) (0.90)

PL = $921.41

Proposed Exercises # 3

1. A publishing company sets a net price of $59.00 for a book of

statistics. What should be the list price of the book, if the publisher
Do you grant a commercial discount of 30% to the bookstore?

2. On an invoice of $28,073.33 the following are granted

chain discounts: 12%, for bulk purchases; 10%, for
special promotion and 8%, for cash payment. Find the
amount to pay.

3. Two competing companies have the same list price for

a merchandise. One of the companies offers discounts
series of 25% and 15%; the other offers discounts on
series of 18 ⅓%, 13% and 11%. Which company is more advantageous for a
buyer?

4. A new salesperson who did not know the meaning of discounts

chain commercials that your company offers, which are 22%
and 16%, added them when applying a discount on their first sale. If the
total amount on which the commercial discount must be applied,
It was $55,115, how much was the seller's error?
 5. A tire manufacturer wants to sell a certain tire to a
net price of $122.30 each, after discounts of 15%
10% and 5%, what should be the list price of the toy?

6. The net price of an item is $487.78 if deductions have been made

discounts of 9%, 7%, and 4%, what is the list price?

7. The purchasing manager of a retail store bought 8 washing machines brand

17 kg Whirlpool for $895.00 each minus series discounts
of 11% and 9%, what was the total net price? what was the rate of
equivalent discount?

8. The manager of an electronics store reduced the

Apple brand laptops twice in a row, at 12%
It was marked up by 6%, and she sold it for $1,748.50. What was its original price?

An invoice for 9,600 dollars is subject to chain discounts of

7.5% and 4.75%. Find what simple discount would give the same.
net price?

10. The series discounts granted on a purchase were 14%,

12% and 6%. If the net price is $24,898.72, find the rate.
equivalent discount.

SECOND UNIT: SIMPLE INTEREST

Objective of the unit.

Understand in a simple way how money earns interest in the
current era, increasing its value over time and understanding the use
the management of the current interest rates applied to loans,
investments, policies, among other financial operations.

Introduction.
When a person uses a good that belongs to them, they generally must
pay a rent for the use of said property; for example, rent is paid to the
to inhabit a house that does not belong to us. The same happens with money;
When money is borrowed, a fee is paid for its use.
money. In this case, the rent receives a special name, it is called interest.
interests.

Concept.
Interest is defined as the money paid for the use of someone else's money.
It can also be said that interest is the return one gets from
invest money productively. Interest is simple when it is paid
at the end of a previously defined time interval, without the capital
varies. Simple interest is mainly used in investments and
short-term credits, of one year or less.

The interest to be paid on a debt, or that which will be charged from an investment,
depends on the amount of money borrowed or invested and of the
time the loan or investment lasts. In other words, the interest
Simple interest varies directly with the capital and time.

Suppose that $20,000 will be invested for a period of 6 months and at a rate
of 2% monthly interest. According to the meaning of interest rate, the
The interest that will be charged for this investment will be 2% of $20,000, each month, it is
to say:

2% of 20,000 = (20,000) (0.02) = $400 per month

As the investment is for 6 months, the interest, by definition, must be

charged at the end of the term, the total interest that will be charged at the end of the 6
months will be:

(400)(6) = $2,400

From the above, it is evident that simple interest is calculated through

the following formula:

I = P.i.t

Where I is the simple interest that is paid or received for a capital (or
principal) P; t is the elapsed time (term) during which it is used or
invest the capital; i is the interest rate.
Example 1.1
Rigoberto borrowed $6,300 to be paid in 4 months. If the interest rate is
What amount will he have to pay for interest at a 33% simple annual rate?

Solution:

The data is:

P = $6.300
I = 33% annual = 0.33 per year (expressed in decimal form)
t = 4 months

The time unit does not match, therefore it is not possible.

replace the numerical values directly in the formula. Before replacing
it is necessary to convert the annual interest rate to a monthly interest rate:

i = 33% annual = 33%/12 months = 2.75% monthly = 0.0275 per month

Substituting the numerical values into the equation, the result is

I = (6.300)(0.0275)(4) = $693

The above means that by the end of the four months, Rigoberto must
pay the principal ($6,030) plus the corresponding interest ($693); that is,
You must pay a total of $6,993.

Example 1.2
Marcela has a capital of $32,000. She invests 70% of her capital at 5.58%
quarterly and the rest at 10.5% semi-annually. How much interest does he receive each month?
total?

Solution:
As the time is being measured in months, it is necessary to convert the
monthly interest rates:

5.58% quarterly = 5.58%/3 = 1.86% monthly = 0.0186 per month

10.5% semiannual = 10.5%/6 = 1.75% monthly = 0.0175 per month
70% of $32,000 is $22,400 and the rest (30%) is $9,600. When investing
$22,400 at 5.58% quarterly, for one month, the interest earned is:

I = (22.400) (0.0186) (1) = $416.64

The monthly interest of $9,600 invested at 10.5% semiannually is:

I = (9.600) (0.0175) (1) = $168

The total interest earned after one month is 416.64 + 168 = 584.64

Proposed Exercises # 4

1. How much will a merchant pay for a credit granted to them?

candy and chocolate factory, purchasing merchandise for 2,332
dollars at 27 days of term, if they charge an interest rate of 4.5%
quarterly?

2. Calcule el interés simple se 7,500 dólares al 6% de interés bimestral

for one year and four months.

3. Obtain the simple interest that produces a capital of 11,065 dollars

in 105 days at a semi-annual interest rate of 8%

4. What is the simple interest on a loan of 13,332 dollars for 1 year?

term, with a monthly interest rate of 1.85%?

5. An investment of 21,075 dollars at a semiannual interest rate of

5.25%, how much will it generate in interest in 18 months?

6. In a loan of 19,714 dollars, at an annual interest rate of 22%,

How much is the interest generated in 77 days?

7. The principal of a debt is 3,038 dollars for 17 months, with a

3% bimonthly interest rate, how much will the interest be?

8. What is the simple interest of an investment of 20,980 dollars, at

144 days, with an annual interest rate of 9%?
Simple Amount
The sum of the capital plus the simple interest earned is called the amount.
simple only mounts, and is symbolized by the letter M. Therefore,

M=P+I (1.1)

By replacing the simple interest equation with the amount equation, we obtain:

M = P + Pit

Factoring the previous expression gives:

M = P (1 + it) 1.2

Equations (1.1) and (1.2) indicate that if a capital is lent or invested

for a period of time, at a simple interest rate of dei% per unit of
time, then the capitalPse transforms into a final amountMal of
time t. Because of this, it is said that money has a value that depends
of time. The amount is also called future value.
Example 1.1
Calculate the amount or future value of a loan for $20,000 at 36% interest.
simple and a 6-month term.

Solution:

P = $20,000 t = 6 meses i = 36% anual = 36%/12 meses =

3% monthly = 0.03 per month

Method 1.

I = (20,000)(0.03)(6) = $3,600

Using equation (1.1):

M = 20,000 + 3,600 = $23,600

Method 2.

The amount is obtained directly through equation (1.2):

M = 20,000 [1 + (0.03)(6)] = $23,600

Proposed Exercises # 5

A person obtains a loan for 75,000 dollars for two years

of term and a simple interest rate of 2.44% per month. How much
Will you pay at the end of the term for the loan received? How much?
Will it pay for interest?

2. What is the Future Amount or Value of an Investment of 11,000

dollars, at 7.65% semiannual interest in 8 months?

In a business loan of 14,250 dollars at an annual rate of 16.85%,

How much is paid in total at the end of the three years?

A loan of 7,000 dollars is requested at 10.5% quarterly.

simple interest, how much should be paid in interest for
6-month term? What is the value of the amount?

On February 7th, a person invested 10,000 dollars in a promissory note.

with liquidable yield at maturity, earning an interest of
21.75%. What will the amount be for March 7, date of
maturity of the investment?

6. Un comerciante adquiere un lote de mercancía por un valor de

3,500 dollars, which agrees to be settled by an immediate payment
of 1,500 dollars and a final payment afterwards. Agree to pay 10% of
simple annual interest on the balance. How much will he have to pay within
of 4 months?

A person deposits 150,000 in an investment fund

stock markets that guarantee a return of 0.8% monthly, if you withdraw
your deposit after 84 days, how much will you receive?

8. Mr. López obtains a loan of 20,000 dollars that

requested from a bank and agrees to pay it after two months, at a
annual interest rate of 12%

Commercial and real interest.

When the time in a loan is given in days, it becomes necessary
convertir la tasa de interés anual a una tasa de interés por día. Cuando la
annual rate is converted to daily rate using the natural year (365 days or
366 if the year is a leap year) as the divisor in the simple interest formula or
of the amount, the interest obtained is called real interest or exact interest.

When the conversion is carried out using the number as the divisor
360, it is said that commercial year is being used. In this case, the
interest obtained is called commercial interest ordinary interest.

Example 1.1
Calculate the commercial and real interest of a loan for $14,750 at 38% for
50 days.

Solution:

Commercial interest

P = $14,750 t = 50 días i = 38% anual = 38/360 %

daily = 0.38/360 per day

I = (14,750)(0.38/360)(50) = $778.47

Real interest

P = $14,750
t = 50 days
i = 38% annual = 38/365 % daily = 0.38/365 per day

I = (14,750)(0.38/365)(50) = $767.81

As can be seen, the commercial interest is higher than the

real interest for the same capital, interest rate and time. This profit
extra makes the commercial year very used in banks, house of
stock market and in stores that sell on credit.

El año comercial es utilizado por bancos, casa de bolsa y comercios en,

practically, all of its financial operations. The commercial year must
to a custom that arose among the lenders of the Middle Ages, who
They defined the commercial year as consisting of 12 months of 30 days each
one.
Suppose you want to calculate the interest on $15,000 loaned at 24%
simple interest for 3 months. In this case, the interest would be:

I= (15,000) (0.24/12) (3) = $900

If instead of using months, the calculation is done using days (3 months
(= 90 days) and commercial year, then:
I = (15,000) (0.24/360) (90) = $900

If 365 (actual year) is used as the divisor, then the interests

they result different:
I = (15,000) (0.24/365) (90) = $887.67

The use of the calendar year in financial calculations is much lower than the
commercial year. In many instances, the period between the moment when
a loan is taken out or a certain capital is invested and its
due date is indicated by dates. To calculate the time
elapsed between two dates, effective calendar days are counted. To
to calculate the number of days, it is customary to exclude the first day and include the last one
last; however, this is not a widespread practice, as some
Sometimes both the first day and the last day are counted. In this way, for a
loan contracted on January 25 and settled on April 26 of a year
any non-leap year, the elapsed time is 91 days:

January 6 days (31–25)

February 28 days
March 31 days
April 26 days
Total 91 days

Example 1.1
Calculate the ordinary and exact interest of a loan for $7,675 at 33%, from
September 13 to December 12 of a certain non-leap year.

Solution:
Calculation of the days elapsed:
September 17 days (30–13)
October 31 days
November 30 days
December 12 days
Total 90 days

Ordinary Interest
I = (7,675)(0.33/360)(90) = $633.19
Exact interest
I = (7,675)(0.33/365)(90) = $624.51

Example 1.2
At a certain bank, the net interest rate for savings accounts is
the case of individuals is 15% per year. Mr. Aguirre opened a
savings account with 2,350 on May 3rd, 2000 (leap year). No
no deposits or withdrawals were made after the account opening date,
And on May 29 of the same year, he canceled it. How much money did the gentleman receive?
Aguirre? Use calendar year.

Solution:
Days passed: 29–3 = 26 days
M = 2,350 [1+(0.15/366)(26)] = $2,375.04

Example 1.3
When a debt is not settled on the due date, it starts to
earn interest called penalty interest, which is calculated based on the
capital originally loaned. It is common for the default interest rate
it is 50% more than the normal rate applied, although this is not a rule
general. The reader can check that the late interest rate
indicated in the promissory note (9,730) + (3235.23) = ($12,965.23) shown is,
effectively, a 50% more than the normal rate. (57% annual)

Solution:
Late interest = (9,730) (0.57/360) (12) = $184.87
Total amount to be paid = principal + ordinary interest + interest
moratorium
Total amount to pay = amount + late fees
Total amount to pay = 12,965.23 + 184.87 = $13,150.10

Proposed Exercises # 6
1. Obtain the ordinary and exact simple interest of 14,000 dollars, from the
January 2 to May 1 of a certain leap year. The rate of
The interest is 7.5% per year.

2. A company wishes to deposit 435,000 dollars for a term of 182

days, and must decide whether to deposit the money in the Bank of the East,
which pays 11.85% commercial interest, or at the Bank of the West
which pays 13.2% real interest. Which bank is better to choose?
3. Calculate the commercial and real simple interest of 10,800 dollars, at
16.9% annual from July 7 to October 1 of a certain year
leap year.

4. Calculate the simple commercial and real interest on a debt of 9,450

dollars from May 8 to September 30, with an interest rate
annual of 17.08%

5. Using the calendar year, obtain the maturity value of a

debt of 54,500 dollars, from February 1 to August 10, with
an annual interest rate of 20%.

6. Obtain the real and commercial interest of $21,300 at 4.10%

monthly, with a loan term of 120 days.

7. A person obtains a loan of 1,890 dollars on the 3rd of

February and restore the capital plus interest on June 15th.
same year. Obtain the amount, if the interest rate was 3.25%
monthly, of a certain leap year.

8. Calculate the Commercial and Real Interest of an Investment of 75,000.00

dollars at 9.45% interest, from January 18 to July 27.

9. What will be the commercial and real interest on December 24, of a

capital of 10,500 dollars deposited on May 15 of the same year
year, in a savings account that pays 8.32% annually?
 10. Find the real and exact simple interest on a loan of 1,500.
dollars, with 15% annual simple interest, from March 15 to the 18th.
December of a certain leap year.

Present Value.
The following example will serve to demonstrate the meaning of the concept of
present value, also called current value.
Suppose that today you receive a loan of $15,000 at 10
months of term and with a simple interest rate of 3% per month. The amount
it will be:

M = 15,000 [1 + (0.03) (10)] = $19,500

For the borrowed capital, you will have to pay $19,500 within 10 months.
$19,500 is the future value of $15,000. Conversely, it is said
$15,000 is the present value of $19,500.
It means that $15,000 today is equivalent to $19,500 in 10 months.
at a monthly simple interest rate of 3%.

Example 1.1
Find the present value of $2,000 due in 9 months, if the
the interest rate is 38.25%

Solution:
To obtain the present value of a given amount, P is isolated from the
equation (1.2) of the amount. P = VP = M / (1 + it)

VP = 2,000 / 1+ (0.3825/12) (9)

VP = $1,554.15
$1,554.15 is the present value or current value of $2,000. This means
that $1,554.15 invested today, for 9 months at 38.25%, will turn into
$2,000. It is also said that $1,554.15 is equivalent to $2,000 if the
{"time":"9 months","interest_rate":"38.25%"}
Example 1.2
Present value means the value of money on any convenient date.
For example, what was the present value on November 19, 1998?
from the promissory note of $12,965.23, at an annual rate of 38%, for 37 days.

Solution:
VP = 12,965.23 / 1+ (0.38/360) (37)
VP = $12,477.90
On November 19, the promissory note had a present value of $12,477.90. This
means that $12,477.90 invested for 37 days will turn into
$12,965.23, if the interest rate is 38%.

Example 1.3
What will be the interest rate of a promissory note for $2,130, which has an amount
to pay of $2,257.80, with a 31-day term?

I = $2,247.80 - $2,120 = $127.80

The formula of the simple interest equation is cleared.
i = I / Pt
i = 127.80 / (2,130)(31) = 1.944613512 x 10-³
Now it is necessary to convert i into a percentage. To do this, it is multiplied by the
value of i by 100:

i = (1.944613512 x 10^-3)(100) i
0.1944613512% daily
To convert the daily interest rate to an annual interest rate, it is multiplied by
the previous result times 360. i = (0.1944613512)(360) = 70% annual
Example 1.4
An investment of $14,400 earns $2,092.80 in interest over 8 months. Calculate:

a) The annual simple interest rate.

b) The effective rate of the period

Solution:
a) i = 2,092.80 / (14,400)(8) = 0.018166666666 per month i

1.8166666666% monthly
To convert the monthly rate to an annual rate, the result is multiplied by 12.
i = (1.8166666666)(12) = 21.8% annual
b) The effective rate of the period is the interest rate that
corresponds to the agreed period or term for the
operation. This is:

i = 2,092.80 / (14,400) (1) = 0.1453333333 in the period of 8 months.

The 1 replaced in the formula refers to a period of 8 months.
When expressing the previous result as a percentage, we have:

i = 14.5333% in 8 months

Example 1.5
How long will a $4,500 loan take to produce $253.13?
simple interest, if the interest rate is 45%?

Solution:
t is cleared from the simple interest equation
I / Pi
t = 253.13 / (4,500)(0.45) = 0.125002469 years
Converting the fraction of the year into days:
t = (0.123288888888)(360) = 45 days
Proposed exercises # 7
Find the Present Value of 4,500 dollars due in
120 days, if the interest rate is 19.20% per year.

2. What is the capital that, invested at 1.58% per month, produced a

amount of 3,200 dollars in 45 days?

3. Find the Present Value for an Amount of 11,098 dollars at 6%

quarterly interest, 4 months before maturity.

Jorge lent money to Darío to repair his car. Darío

do you agree that Jorge charges you an interest rate equal to the
valid at the time of settling the debt.
After three months, Darío paid 3,945.05 dollars to cover the
debt plus interest. How much did Jorge lend, knowing that the
The current interest rate was 23.31%?

5. What is the Present Value of an Investment, where it ends?

receiving $12,785.00, from January 15 to November 30
from a certain leap year, at an interest rate of 18.6%?

A merchant ends up paying 12,982.00 dollars for a loan.

granted on February 19 of a certain leap year, by a
supplier, at a quarterly interest rate of 4.15%, dated
Maturity on August 24th. How much was the granted credit?

7. The interest earned on a loan of 7,700 dollars, over a term

for 5 months, it was 220 dollars. Calculate the annual interest rate and the
effective rate of the period.

8. Calcule la tasa de interés para que 9,000 dólares en 120 días,

they earn an interest of 498 dollars.

A promissory note for 3,435 dollars was settled after 35 days.

by a check for 1,603.98 dollars. What is the interest rate?
annual? Use the calendar year.
 10. Andrea invested 39,000 dollars in a fixed-term investment fund.
of 42 days. If at maturity he received 50,000 dollars:
a) What performance did you achieve?
b) What annual interest rate did it earn?

11,714 dollars loaned at 6% quarterly earned an interest of 300

dollars calculate the term.

12. A person signed a promissory note on February 14 for a capital of

18,180 dollars at a 19.25% annual interest rate. On what date do the
Will the interest be 1,000 dollars?

On March 20, Mrs. Arias invests 13,000 dollars at a rate

22% annual. What day does he withdraw his investment if he obtains 1001.76
interest dollars?

14. How long will it take for $5,900 to triple at the given interest rate?
Is it simple at 19.38% annually? Use the calendar year.

15. Mrs. García requests a loan of 8,050 dollars for the

purchase of a color inkjet printer copier.
Agree to pay 474.50 in interest after 45 days. What rate?
effective rate of the period paid for the loan?

Value equations.
There are times when a debtor wishes to replace a set of debts,
previously contracted with a certain creditor, by another set
that it is equivalent, but with different amounts and due dates.
To achieve the above, it is necessary to formulate an equation of values.
equivalent or simply value equation. A value equation is
an equality that establishes that the sum of the values of a set of
debts is equal to the sum of the values of a set of debts
proposals to replace the original set, once its values of
due dates have been moved to a common date, called focal date
valuation date.
The value equation is based on the fact that money has a value.
that depends on time. The future value of an invested amount or
The loan is greater than its present value due to the interest it earns.
Conversely, the present value of a sum of money is less than its
future value due to the rational discount it suffers. For this reason, two or
more amounts of money cannot be added while they have not been
transferred all to a comparison date (focal date).

The focal date is an arbitrarily chosen date that allows us to

develop the value equation. In solving problems with
simple interest value equations have the disadvantage that the
the result varies when changing the focal date; for this reason, the date of
valuation must be data from the problem.

To facilitate the resolution of the problem, it is advisable to use what is

know time diagram. This consists of a horizontal line
with a time scale in years, months, days, etc., depending on the
problema, y en ella se indican los montos de las deudas, tanto originales
as proposals. The original obligations are placed above the
time diagram and the new obligations are placed below.

Example 1.1
A person has a debt that must be settled in the following way:
$7,200 at this moment and $13,400 in two months. If you wish to settle
completely your debt today, how much will you have to pay, if the rate
Is the interest 24.36%?

Solution:
First of all, it is necessary to establish the focal date, since it was not
established in the statement. If the debtor wishes to settle their debt on the day of
Today, you should not pay $20,600 (7,200 + 13,400), since the $13,400 is a
future value, while the $7,200 matures today. Two or more amounts
They cannot be summed unless their values coincide in time.
maturity. What can be done is to calculate the present value of the
$13,400 and, yes, add them to the $7,200. Therefore, today
it seems a 'natural' focal date in this problem; although it can be chosen
any moment as a focal date.

The timeline diagram would be as follows:

 Original Debt

$7,200 $13,400

0 1 -2 months

Proposed debt

0 represents the current moment or present and X represents the quantity

total to pay today to settle the debt; that is, the payment
proposed. The arrow indicates that the future value of $13,400 is transferred to
current moment, as this point has been taken as a focal date.
Discounting a future value to the present means that the
present value of the amount, two months before its maturity. That is:

VP = 13,400 / 1 + (0.2436/12) (2) = $12,877.19

When transferring the amount to the focal date, all amounts (7,200;
12,877.19 y X) are already found on a common date where it is possible
its verification and, therefore, the value equation can be posed
next

Total value of debts = Total amount of debts

Originals proposals
This is:
7,200 + 12,877.19 = X
That is to say:

X = $20,077.19
This person will have to pay $20,077.19 today and thus settle their
debt.

Amortization with simple interest.

Many debts are settled by a single payment on the date of
maturity; however, it is common for credits to be contracted for
to pay them through partial payments or installments. In this case, it is said that the
loan is amortized.

Amortization means settling a debt and its interests through a series

of partial payments or installments that can be equal in value or variable,
carried out at equal or different time intervals. In most of the
credit operations are typically settled by making payments on debts
of equal amount, so that they include principal and interest, and completed
at equal time intervals. For this to be the case, it is sufficient to divide the amount
of the debt over the number of payments, that is:

Abono = Monto de la deuda / Número de pagos

The amortization of a debt can be with simple interest or with compound interest.
composed.

Amortization with simple interest can be carried out in two ways.

different

With global interest

With interest on outstanding balances.

Amortization with global interest.
In this type of amortization, the interest is calculated on the total of the
debt, without taking into account the partial payments made.

Example 1.1
Mr. Javier Medina buys a refrigerator on credit, which costs
the amount is $4,800 under the following payment conditions: Rate of
global interest of 48% and 6 months to pay with monthly installments
equal in quantity. Calculate the value of the monthly subscription.
Solution:
The amount of the debt is:
M = 4,800 [1 + (0.48/12)(6)]
M = $5,952
By dividing this amount by the 6 months, the value of the payment will be obtained.
monthly

Monthly payment = 5,952 / 6 = $992

Interest to be paid on the credit is:

I = 5,952–4,800 = $1.152

Amortization with interest on outstanding balances

If insolvent means unpaid, then interest charged on it

outstanding balance means the interest calculated on a debt based on the balance
what remains to be paid each time a payment is made.

Example 1.2
Resolve the previous example, if interest is charged on balances.
unresolved.

Solution:
The problem can be solved in two ways; first of all,
It will be resolved by developing an amortization table, which shows the
evolution of the debt, period by period.

At this moment it is necessary to mention the difference that exists

between subsidy and amortization. Amortization means settling the capital
through a series of payments, generally equal, while the deposit
total payments the sum of the amortization plus the interest generated in the
period. For the above, it can be said that amortization is the part of
payment that reduces the principal of the debt. In this example, the amortization
monthly is:

Amortización = a = 4,800 / 6 = $800,00

Monthly interest should be calculated on the unpaid part of
capital (outstanding balance) that remains after each amortization.
From the start of the credit until the end of the first month, the outstanding balance
is $4,800. Therefore, the interest to be paid upon making the first
amortization will be:

I = (4,800)(0.48/12)(1) = $192
At the end of the first month, an amortization of $800 will have to be paid plus
$192 in interest; that is to say, a payment of $992 will have to be made.

The outstanding balance at the beginning of the second month is $4,800 - $800 = $4,000.
The interest for paying at the end of the second month is:

I = (3,200)(0.48/12)(1) = $160

The second payment will be $800 + $160 = $960.

After paying the second installment, the outstanding balance is $4,000 - $800 = $3,200

The interest for paying at the end of the third month is:

I = (3,200)(0.48/12)(1) = $128
The third payment will be $800 + $128 = $928

Continuing in this way, it is possible to prepare the following table of

amortización:

Months Amortization Interest Total Payment Balance

Undone

0 - - -
1 $800 $192 $992 $4,800
2 $800 $160 $960 $4,000
3 $800 $128 $928 $3,200
4 $800 $96 $896 $2,400
5 $800 $64 $864 $1,600
6 $800 $32 $832 $800 0
Total $4,800 $672 $5,472
The formula for calculating interest over any period of time within
from an amortization table, it is the following:
I = ni / 2 [2P–a (n-1)]

The formula to calculate the total interest on balances is as follows:

I = ni / 2 (p + a)

Proposed exercises # 8

1. Calculate the interest rate so that $5500, in 138 days, earn a

interest of $455.

$2,800 promissory note was settled after 75 days by means of a

check for $3,603.98 What was the annual interest rate? Use the
calendar year.

A certain individual offers personal loans, where the lender

It charges $160 in interest for every $1,200 borrowed.
for a period of 35 days. Calculate the monthly interest rate
loaded.

Mr. Andrade requested a loan for $29,800 for 11 months at

an interest rate of 24%. If you make a payment of $9,800 in 5
months, How much will he have to pay at the end of the 7 months? Use as
focal date the date in 7 months, the rate for renegotiation
the debt is 21%.

5. Mr. Arroyo signed 2 promissory notes: one with a maturity value of

$5,000 to be paid in 5 months and another with a maturity value of
$6,990.00 to be paid in 8 months. In a new arrangement with your creditor
I agree to pay $4,550.00 today and the rest within 5 days.
months. What amount will have to be paid at the end of the fifth month, if the
the interest rate is 6% quarterly, and the focal date is taken as
month 6?
A person owes $975 that must be paid off in 4 months at 11%.
of simple interest, and $1,600 due in 8 months with interest
at 12.3%. What amount will he have to pay at the end of 6 months for
pay off the total of your debt assuming an interest rate of
9%? Take the date of 6 months as the focal date.

7. Mr. Narváez signed two promissory notes: one with a maturity value
for 3,000 to be paid in 3 months and another with a maturity value of
4,990 to be paid in 6 months. In a new arrangement with your creditor.
I agree to pay 2,800 today and the rest in 6 months.
What amount will have to be paid at the end of the fifth month, if the rate
the interest is 2.7% monthly, and the focal date is taken as the month
six?

Mr. Chávez signed two promissory notes: one with a maturity value
for 2,502.50 to be paid in 2 months and another with a due value of
paying 3,990 to be paid in 4 months. In a new arrangement with your
the creditor agreed to pay 1,800 today and the rest within
5 months. What amount will have to be paid at the end of the fifth month, if
the interest rate is 4.7% monthly, and it is taken as the focal date
the current moment?

9. A person signed a promissory note for 19,060 at 120 days and an interest rate of
interest of 30.4%. He wishes to restructure his debt by signing three
promissory notes of equal amount with maturities of 60, 120, and 180 days.
What will be the value of the new documents if the interest rate
for the restructuring is 27% and the focal date is taken as the
date in 120 days?

A person owes 11,600 dollars that must be settled within 3

months at 9% simple interest, and 18,500 dollars maturing at
9 months and 10% interest. What amount will have to be paid?
final of 6 months to settle the total of your debt, assuming
an interest rate of 9%? Take the date as the focal date
in 6 months

Vinicio owes 27,500 dollars (maturity value) that he must pay.

pay within 10 months and pay 32,000 within a year, with
an interest rate of 19.30%. If you agree with the
 creditor in settling the debt through two equal payments, one
within 6 months and the second at 10 months, and the operation is
Calculate at the rate of 23.85%, what will be the value of each payment, if the
Is the focal date the current time?

On March 15, Armando Aguirre secured a loan for

6,435 at 32.8% simple interest. On April 20, he paid 1,540;
["May 4th 1,600; May 31st 900 and June 22nd 1,000."]
Find the Balance to be Paid on July 15, use as the focal date.
July 15th.

13. A merchant buys a stove on credit, whose price of

The amount is 2,750, under the following payment conditions: without
entry, 4 months to pay by making equal monthly payments
amount and an interest rate of 32%. Calculate the amount of
monthly fee, considering the focal date in month 4.

Today marks 2 months since a person managed to

a loan of 20,000 with an interest rate of 28% and maturity
5 months. Four months before that date, I had signed a
I will issue a promissory note with a maturity value of 16,356 for a term of 6 months.
Today, he makes a payment of 12,000 and agrees to settle his debt with another.
Payment within 6 months. How much will this payment be, if the rate of
Is interest agreed at 30% per year? Use today's date as
focal date.

15. Adrián is a merchant who has credit in a warehouse where

buys part of its merchandise. An interest rate of
31% and your account has had the following movement:

Debtor balance as of June 1: 8,900

I made the payment on June 16: 3,200
Load on July 11: 3,650
Load on July 21: 4,720
Payment on August 15: 6,000

Calculate the balance as of September 1st. Use September 1st.

as a focal date.

A merchant owes his supplier 4,250 that he must pay.

in two months and 3,680 to be paid within 4 months. If the
 the merchant wishes to settle his debt at this moment, what
amount to be paid if the interest rate is 2.12% per month?
Use the current moment as the focal date.

17. In an advertisement from a car distributor, published in a

local newspaper, it is mentioned that a car can be bought
giving 40% down payment and the rest to be paid in 10 monthly installments

with a global monthly interest of 5%. If the car costs

$115,000; obtain the monthly payment and calculate the interest that is being

paying for the credit.

18. A watch can be bought for cash at $2540. On credit, it

it requires an initial payment of $540. If an interest rate is charged
simple global of 44% and the debt is settled in 12 weekly payments,
What will be the value of each payment and the interest generated at the end?

from the 12 weeks?

19. At a certain car dealership, the Light model is sold for $165,700.
if the purchase is in cash. On credit, it is offered with no down payment, in 36

equal monthly payments and with a simple interest rate of 39.5%

about the outstanding balance. Get the monthly installment and the total of

generated interest.

20. Mr. Gómez requested a personal loan of $7000 from a

credit institution. The term is 8 months and each month must
to amortize one eighth of the capital plus the monthly interest
accrued, calculated at 4% monthly on the outstanding balance.
Calculate the interest in month 5.

21. An employee receives a loan of $9600 granted by the fund.

of the company's savings where he works. The conditions of the
loan are:

a. Settle the loan through 12 equal biweekly payments.

 b. Interest will be charged on the outstanding balances of
1.12% biweekly.

c. Obtain the biweekly payment and the total interest at the end of
the 12 payments.

22. A television is purchased for a price of $5600, with a payment

initial payment of 20% and 13 equal monthly payments with an interest of 48%

regarding the outstanding balance, calculate the accrued interest on the

firsts

5 months.
b. 10 months.

23. You want to buy a used car that costs 15,400 in cash.
The company that sells it offers you two payment alternatives if you
credit purchase

Charge a global interest rate of 2.4% per month.

Charge a monthly interest rate of 4% on balances
insolvent.
Which alternative is more convenient for you if you make a down payment?
20% and the rest is paid in 18 monthly installments?

24. A debt of 3,000 will be paid through 5 monthly payments,

in the following way:

Payment Amortization
1 350
2 500
3 600
4 750
5 800
 The monthly payment must include the interest on the outstanding balance. If
the interest rate is 2.93% per month, prepare the table of
amortization.

A department store sells a sound system for 3,330.

cash price. To promote its sales, it offers it on credit
with a 15% down payment on the cash price and the balance in
24 equal biweekly payments. If the interest rate is 4.9%
bi-monthly on outstanding balances, calculate the payment amount
biweekly and the total interest paid for the loan.

26. Prepare an amortization table for a loan of 13,100,

14.7% annual interest, for 35 months, calculate the interest per month.
17 years and in the month 24.

A debt of 16,000 dollars is to be amortized in one year.

through equal quarterly payments. If the interest rate is
24% on outstanding balances, find the value of the payments and
prepare the amortization table using the French method.

28. A car, whose cash price is 115,000 dollars, is

sell with a 30% down payment and the balance in biweekly payments at
6 months term, with an interest rate of 14.64%, prepare the table.
of amortization by the French method, find the value of the
payments and determine the total interest at the end of the agreed time.

29. A person requests a loan of 85,000 dollars to be

amortized through equal quarterly payments over 2 years,
with an interest of 30%. Find the value of the payments and the total of
the generated interests.

30. A new car has a cash price of 84,800.

you can acquire without a down payment and in 12 equal weekly installments, with
an interest rate of 18.9%. Find the value of the payments and the
total of the generated interests.
 31. In a Cooperative of the City, they grant microcredits for
neighborhood stores for 10,000 dollars, with a 24-month term, and interest
of 11.65%, with fixed amortized capital and different installments.
Find the total interest and the interest generated in the fifth payment.

A person wants to raise $1,350 to buy a

camera in 3 months. How much should he/she deposit?
every fortnight in a bank account that pays 20% interest.
Prepare the capitalization table.

A loan of 50,000 will be amortized through 5 payments

equal quadrimestral payments. If the interest rate is 10.68%
quarterly. Find the quarterly payment and prepare the
amortization table.

34. Calculate the total interest on a debt of 27,600 dollars.

applying the French method, over a 10-year term, with a rate of
interest of 18.6%, with fixed semiannual installments.

35. At a certain bank, they grant consumer loans of 7,200 dollars.

at an interest rate of 9%, with a term of 18 months, and installments
equal quarterly.

36. In an unsecured loan from IESS, the member requests a

credit for $6,600, at an interest rate of 11.2% and a
a period of 12 months, the employee must decide whether to do it by
the French method or the German one. Indicate which method suits you.
more and what is the difference in interests.

Compound Interest.
Objetivo de la Unidad:Comprender la capitalización que tienen los
loans and investments, where your original capital varies over time,
increasing until maturity by the sum of the interest.
In Simple Interest, the capital that generates the interest remains constant.
the entire duration of the loan. In contrast, in the interest
the interest generated in a given period becomes capital
for the next period. That is, the simple interest generated at the end of
the first period is added to the original capital, forming a new capital.
With this new capital, the simple interest generated in the second is calculated.
period and the interest is added to the capital, and so on. The total sum
obtained at the end of time is known as Compound Amount or Value
Future. The difference between the Compound Amount and the original Capital is
it is called Compound Interest.

I = F–C

Compound interest can be defined as the financial operation in the

the capital increases at the end of each period by adding the interest
defeated.

The agreed period to convert interest into capital is called the Period
of Capitalization or Conversion Period.

Interest can be capitalized annually, semi-annually,

monthly, weekly, etc. The number of times that the interest is
the capitalization in a year is known as the capitalization frequency
conversion frequency. Thus, the capitalization frequency for a
Investment with interest capitalization every month is 12; if the frequency
the interest is bimonthly, the capitalization frequency is 6; if the
interests are capitalized quarterly, the capitalization frequency is
4 and if the interests are capitalized semiannually, the frequency of
capitalization is 2

General formula:

F = C (1 + i) ^ n

Example:
What amount of money will have accumulated after 5 years, if you
they invest 8,000 dollars at 2.06% per month with capitalizable interest every
bimester?

Solution:
The interest rate is 2.06% per month, but payable every two months, this
It means that (2.06 x 2) 4.12% is paid in each bimonthly period.

Since the total investment time is 5 years, then the total number
the periods of capitalization (n) will be:

n = (5 years) (6 bimonths/year) = 30 bimonths

By substituting the data into the formula, we have:

F = 8,000 (1 + 0.0412)^t = 8,000 (1.0412) ^t

When solving, it is given:

F = 26,860.54

Proposed Exercises # 9

1. Obtain the compound amount and compound interest after 6

months of 3,800 dollars, invested at 29% annual compounded every
months.

2. In the savings accounts, ABC Bank of Houston, Texas, offers

an annual interest rate of 16.67% compounded daily. If
8,400 dollars are invested on January 4th, what will be the future value?
November 19? Use the calendar year.

3. A bank advertisement says: "The money you invest with

we earn interest at 23.7% convertible every day.
the earned interest if you decide to invest 5,730 dollars for three
years in that bank. Use the commercial year.
Thirteen thousand dollars were invested at a 1.65% monthly interest.
compound, capitalizable monthly for one year and 5 months.

a) Obtain the future value at the end of that time

b) How much more was earned with compound interest than what
would it have been earned with simple interest?

5. When Armando turned 6 years old, his grandfather gifted him

10,000 dollars to be invested and, subsequently,
used in their university education. Their parents invested in the
 money in an account that pays 24.4% with capitalization
biweekly. If the interest rate remains constant, how much will there be
in the account when Armando is ready to go to University, to
the age of 18?

A person has to choose between investing 15,000 dollars at 28%

capitalizable every 14 days, for one year, or do it at 30% with
bimonthly capitalization, for one year. What is better?

7. An investment of 20,000 dollars is made for 10 years. During the

first 6 years the compound interest rate capitalized every
semester is 11% annual. Subsequently, the rate drops to
9.6% annual, compounded semi-annually, for a year and a half.
The rest of the time the rate increases to 10% compounded monthly.
What is the final amount of the investment?

Noemí lends her cousin 3,500 dollars for 6 months, charging him
a simple interest rate of 1.5% per month. At the end of this time,
deposit the amount obtained in a savings account that pays you a
20% capitalizable every week. How much money will Noemí have at
two-year cable?

10,000 dollars are deposited in an account that pays 23%

capitalizable every 91 days. The rate remains constant for 2
years. After that time, the rate changes to 20% compounded.
every month. Get the amount after 2 more years. Use the year
natural.

10. An investment of $8,500 at 19.75% compounded biweekly.

After 6 months, the interest rate changes to 21.43% compound.
every month and at that moment 4,000 dollars are withdrawn. After 10
months, the rate increases again, to 23.15% capitalizable every
Month and at that moment 6,000 dollars are deposited. Obtain the
amount after 3 years, counted from the deposit of 8,500.

The Present Value of an investment at compound interest has

a meaning similar to that mentioned in simple interest. That is, the
present value is the capital that invested now, at a given interest rate,
will reach a certain amount after a certain number of periods
of capitalization.
The concept of present value is one of the most useful in mathematics.
financial, as it allows obtaining the value they have at the moment
a set of amounts that are to mature in the future.

Formula:

=
(1 + i )

Example 1

What is the present value of 10,000 that matures in 2 years, if the

The interest rate is 50% and the interest is compounded bimonthly.

Solution:

The interest rate is 50% per year, that is, 0.50/6 bimonthly. In two years
there are 12 bimesters; therefore the total number of capitalizations is 12. To
Clearing C from the equation and substituting the values gives:

10,000 10.000 10.000 10.000

=( ) 12
=
( 1+0.0833333 ) 12
= ( 10.0833333 ) 12 =( 2.613034325 )
1+0.50/6

C = 3,826.97

By investing 3,826.97 dollars at this moment, after 2 years you will have
10,000 dólares, si la tasa de interés es 50% con capitalización bimestral.
In other words, 3,826.97 and 10,000 are amounts equivalent to the rate.
50% with interest capitalization every two months, for 12 periods of
capitalization.

It can also be said that 10,000 dollars are the future value of
3,896.27 dollars, if the interest rate is 50% annually compounding the
interest in 12 bimonthly periods.

Example 2

Luis received an inheritance of 250,000 dollars and wants to invest a part of it.
of this money in a retirement fund. He plans to retire in 20 years.
years and by then he wants to have $12,500,000 in the fund. What
part of the inheritance must be invested now, if the money will be invested at
a compound interest rate of 21% per year each month?

Solution:

F = 12,500,000
i = 21% annual = 1.75% monthly = 0.0175 per month
n = (20 years) (12 months per year) = 240 months

12ʼ500.000 12ʼ500.000 12ʼ500.000 12ʼ500.000

=( = = =
1+0.21/12 ) 240 ( 1+0.0175 ) 240 ( 1.0175 ) 240 ( 64.30730290 )

C = 194,379.17

Proposed Exercises # 10

Calculate the cash price of an inkjet printer

professional for graphic design, which is purchased on credit, giving a
500 dollar entry and a promissory note is signed that matures in 4 months.
for 3,672.92, which includes interest at 45% with monthly capitalization.

2. ¿Cuál es el Valor Presente de 9,304.80 dólares a pagar dentro de 5 meses,

If the interest rate is 4% per month capitalized every fortnight?

3. What was the cost of a computer that currently costs 14,350?

dollars, if it had a monthly increase of 2% compounded
monthly for a semester?

4. Carlos Gonzáles has two debts; one for 5,730 dollars to be paid in 14
months and another of 9,675 dollars to be paid in 20 months. Carlos wishes to pay
his debts at this moment, since he just received 11,000 dollars from
savings fund of the company where they work. If the value of money is
1.82% monthly compounded bi-monthly, will the money be enough?
to settle your debts?

Jaime Gómez wishes to establish a savings fund in order to buy

pay cash for your next sports car and avoid this way the
credit. Calculate buying the car in three years and paying
around 120,000 for him. How much does he have to invest now, knowing
what can put the money in a savings account that gives you the
22.125% capitalizable every day?
6. How much was a company selling 18 months ago, if sales have been...
increasing since then, at a 9% compounded quarterly and
currently sells 1,170,000?

A trust is established for a girl's college education.

with a single payment, so that in 17 years there will be 100,000
dollars. If the fund earns interest at a rate of 9% compounded every
semester, what should the initial deposit be?

8. What amount should be invested at this moment at 33% compounded each

How much would you need to invest per month to turn into 1,000,000 dollars in 15 years?
what interest will have been earned?

A father wants to have $90,000 available for when

your child enters the University in three years, and pay for it with that
money, throughout the career. How much should be deposited today in the bank, of
So that in 3 years I have the 90,000 dollars? The rate that you...
the bank pays 21.8% with monthly capitalization.

10. What is the Present Value of 14,700 dollars to be paid in 11 months,

if the interest rate is 9% per semester capitalizable weekly?