Posts Tagged ‘money’

Revenue, Cost, and Product Functions

Thursday, November 19th, 2009

Overview of Revenue, Cost, and Product Functions

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Description

A detailed tutorial on revenue, cost, and product functions. Step by step tutorial including several examples of revenue, cost, and product functions for reference.

Overview

The revenue, cost, and product functions are parts of economics and business math. The cost function is how much something costs, and it can be expressed as C(q) = 100 + 2q. The revenue function is how much money you get from selling what you bought, and it can be expressed as R(q) = 2.5q. The profit function is how much money was actually made, and it is the revenue function minus the cost function.

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Present Value

Tuesday, October 13th, 2009

Introduction to Present Value

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Description

A detailed tutorial on solving for the present value. Step by step tutorial including several examples of solving for the present value for reference.

Overview

Present value is the value on a given date of a future payment or series of future payments. It is typically discounted to reflect the time value of money, and sometimes other factors. Because of this, the main calculation for present value is simply the calculation for the time value of money. The time value of money can be found by using the compund interest formula, which can be mathematically expressed as C_t = C(1 + i)^{-t}\, = \frac{C}{(1+i)^t} \,. This is equal to the present value.

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Continuous Compounding

Tuesday, September 15th, 2009

How to Compound Your Money Continually

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Description

A detailed tutorial on the solving of continuous compounding equations. Step by step tutorial including several examples of how to compound money continuously for reference.

Overview

Continuous compounding is slightly different than compound interest, in that the money is always being compounded - hence the name continuous compounding. Continuous compounding can be found by using the formula A = P * e^rt, which people sometimes remember by saying \”A is Pert.\” In this equation, A stands for the final amount, P stands for the principal (starting) amount, e is a number approximately equal to 2.71828, r stands for the interest rate, and t stands for the time in years.

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Compound Interest

Friday, September 4th, 2009

An Introduction to Compound Interest

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Description

This video explains how to use the compound interest formula and clearly explains all the different parts of it. Many example problems are given for compound interest and a few different methods of solving have been provided.

Overview

Compound interest is something that everyone will have to use at least once in their life. In order to solve compount interest, you need to use this formula:

A = P * [1 + (r/n)]^nt

A: Amount of money (final amount)

P: Principal amount of money (what you start out with)

r: Rate of interest (annual, written as a decimal)

n: Number of times interest is compounded per year

t: Time in years (for how long the money is deposited)

The formula can seem rather complicated, especially with so many different numbers and all of the decimal points. But as long as you follow the basic pattern of the formula and solve as you would any problem, you should have no problem with it.

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