Question

An amount of mony grows upto rs 4850 in 2 years and upto rs 5335 in 3 years on compound interest the yearly rate of interest is

Answer 1

Mathematics of Finance by PAUL M. HUMMEL, Ph. D. Professor of Statistics and Commercial Mathematics University of Alabama and CHARLES L. SEEBECK, Jr., Ph. D. Associate Professor of Mathematics University of Alabama CHECKED First Edition Fifth Impression NE1V YORK TORONTO LONDON McGR AW-HILL BOOK COMPANY, INC. 1948 MATHEMATICS OF FIXAXCE CoPTRIGHT, 194S, BT THE McGnAIV-HlL'L BOOK COMPANY, I N‘C. PRINTED IN THE United States of America. All rights reserved. This book, or parts thereof, may not be reproduced in any form vrithout permission of the publisher THE MAPLE PRESS COMPAJCY, TORE, PA, PREFACE Perhaps no course in mathematics has grown in popularity more rapidly than the mathematics of finance. This course was introduced in the United States less than fifty years ago, and yet at the present time it is required for students in nearly all collegiate schools of • business and is elected by many in other colleges. Because of this increased popularity one would expect constant improvements in techniques and teaching methods. In the opinion of the authors, however, the presentation in most modern books differs very little from that of earlier texts. This is particu- larly true of the treatment of general annuities, for example, where the traditional presentation is almost invariably followed. Experience in teaching the course many times has firmly convinced the authors that many of the most effective techniques are either passed over lightly or omitted entirely in existing texts. The concept of an equation of equivalence is an example. It is so fundamental that the student understand the properties and uses of an equation of equivalence that the authors have devoted a short chapter to this topic, including the proofs of several of the obvious properties. Throughout the text, extensive use is made of the time diagram as an aid in writing an appropriate equation of equivalence. It is difficult to overemphasize the importance of this “visual aid” in setting up problems. Tins book differs widely from existing texts in the treatment of general annuities. The development given here has been used in the classroom for the past eight years with gratifying success. Thus it is not an untried innovation. Moreover, many of the advantages of this treatment carry over to perpetuities. The authors have purposely omitted a chapter on building and loan associations since they differ so widely in practice and since a thorough knowledge of interest and annuities is sufficient to solve any problem arising in this field. A brief chapter on life insurance has been included for those VI PREFACE who wish to teach the bare fundamentals of this important topic. It is the feeling of the authors that the theory of life insurance should be a course in itself, so that at most onk' a brief introduction can be included in a course in the mathematics of finance. The chapter on approximating methods has been included mainl} 1 - for the benefit of new teachers and the more mature students. Although the proof of some of the formulas requires application of the calculus, the proper use of these formulas can be taught to elementary students. Much of the material in this chapter is not found elsewhere. Normally, all the material in this book cannot be covered in one course. In those schools where the course is required and presupposes only college algebra, a five-quarter or three-semester- liour course should include practically all the material in the first nine chapters. Most of the starred sections should be omitted in such a course. For a similar course given to more mature stu- dents, the first nine chapters (including many of the starred sec- tions) should be augmented bj' additional topics from Chaps. X, XI, and perhaps XII. A short course should cover at least most of the material in Chaps. I, II, III, IV, and VII and selected topics from Chaps. V, VI, VIII, and IX.