Basic Mathematics of Finance OPMT 1102

To make students aware of the power of mathematics in producing real results in business, industry and personal finance.

To help students apply basic mathematics to perform common financial analysis and calculations.

For each of the outcomes listed below the student should be able to:

• Identify the problem (e.g. to choose the most economical equipment).
• Formulate the problem elements into mathematical relationships and models.
• Manipulate the relationship and models to provide a solution to the problem.
• Approximate the solution.
• Validate the solution.

COURSE OUTCOMES

• Apply concepts of proportion and percent to business areas such as markup, discounts, budget allocation.
• Utilize standard functions and graphical techniques to analyze relationships between quantities such as cost, revenue, production volume and profit.
• Apply the concept of the time value of money.
• Calculate interest, present and future values using simple interest.
• Calculate interest, present and future values using compound interest.
• Analyze interest rates by finding equivalent and effective rates.
• Calculate payments, present and future values for annuities in budgeting and asset evaluation and for mortgages.
• Calculate and compare interest on various forms of debt or investments.
• Create and use amortization tables for various debt instruments.
• Evaluate investment decisions using methods of payback and discounted cash flow such as net present value and internal rate of return.

Effective as of Fall 2005