Exponential Functions in Business

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Exponential Functions in Business
Turgenbayeva Aiida
ID 20092726
Variant 2
Kazakhstan Institute of Management, Economics and Strategic Research

MSC1101 Mathematics for Business and Economics
Instructor: Dilyara Nartova
Section #2
Summer-I 2009
Abstract
This project reflects my knowledge and understanding of the interest rate, its types, formula and its evaluation in order to determine the most profitable type of investment scheme for National Bank wishing to increase its savings in developing country. My project will also illustrate the elements of money management in business, basically finding the deposit amount for investment to attain a given future value. Finally project will reflect the timing in money management, thus showing what time period needs to be in order to attain certain return on investments.

Exponential Functions in Business
Initial data
Principal – 2726* 10^6
Interest rate – 6%
Compound - 20092726
Interest Rate Types
Simple interest
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Simple interest is calculated on the original principal only.  Accumulated interest from prior periods is not used in calculations for the following periods. Compound interest
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Compounded interest calculation based on each period on the original principal and all interest accumulated during past periods.  Even though the interest usually is stated as a yearly rate, there are also exist compounding periods such as annually, semiannually, quarterly and continuously.

Calculations
I. The expected level of savings in 9 years if the money in bank is compounded: a) Annually
[pic]
S= 2726 (1+0, 06) ^9=4605, 5197* 10^6
Annually compounded interest is the interest that is paid or earned on the amount of interest accrued each year for as long as the investment exists. b) Semiannually
[pic]
S = 2726(1+0, 06/2) ^18= 4640, 8326* 10^6...
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