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Business 149

Business 149 . SLG Midterm Review. Topics Covered. Be able to: Calculate simple present values and future values Convert between various rate (these are easy marks) Use rate conversions in with a present or future value problem Work in both real and nominal dollars

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Business 149

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  1. Business 149 SLG Midterm Review

  2. Topics Covered Be able to: Calculate simple present values and future values Convert between various rate (these are easy marks) Use rate conversions in with a present or future value problem Work in both real and nominal dollars Calculate simple perpetuities and annuities Use the FV formula to find the future value of a perpetuity or annuity Use the growth equations to solve FV and PV of perp. or annuity Solve a retirement problem (the most marks on the test)

  3. Tips & Tricks

  4. 10-minute check • When his daughter was born, Mr. Dodds started depositing $200 every 3 months into a trust fund earning 3% p.a. comp. semi-annually. Following her eighteenth birthday, Mr. Dodd’s daughter is to receive equal payments at the end of each month for 4 years while she is at university. If interest is to be 3.9% p.a. compounded monthly after her 18th birthday, how much will she receive every month?

  5. How far did you get? • Were you able to understand the problem? • Did you draw & label a good timeline? • Did you recognize what you needed to do? • Rate conversions? • Equate the FV of deposits with the PV of withdrawals? • Solve for C?

  6. If I had one hour to save the world I would spend fifty-five minutes defining the problem and only five minutes finding the solution.- Albert Einstein

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