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Final Report Business Mathematics
Final Report Business Mathematics
Number System
Prepared by:
Sourov Shaha Suvo
ID: M18150201705
Section: A (15th Batch)
Department of Accounting & Information Systems
Jagannath University
1
1.1 Overview
From time immemorial human beings we have been trying to have a count of their
belongings- goods, ornaments, jewels, animals, trees, sheep‘s/goats, etc. by using
various techniques - putting scratches on the ground/stones - by storing stones - one
for each commodity kept/taken out. This was the way of having a count of their
belongings without having any knowledge of counting. One of the greatest inventions
in the history of civilization is the creation of numbers. We can imagine the confusion
when there were no answers to questions of the type ―How many?‖, ―How much?‖
and the like in the absence of the knowledge of numbers. The invention of number
system including zero and the rules for combining them helped people to reply
questions of the type: (i) How many apples are there in the basket? (ii) How many
speakers have been invited for addressing the meeting? (iii) What is the number of
toys on the table? (iv) How many bags of wheat has been the yield from the field?
The answers to all these situations and many more involve the knowledge of numbers
and operations on them. This points out to the need of study of number system and its
extensions in the curriculum. In this report, I will try to present a brief review of
natural numbers, whole numbers and integers, real number, rational and irrational
numbers in detail.
All positive whole numbers are called natural numbers. That is all positive integers
except zero are called natural numbers.
b) Subtraction and division of two natural numbers may or may not yield a natural
number .
iii) Two natural numbers can be added and multiplied in any order and the result
obtained is always same. This does not hold for subtraction and division of natural
numbers.
2
The counting numbers start with 1 and their end is not defined. Generally it is
denoted by ―N‖
1.3 Integers
All whole numbers negative positive and including zero are known as integer
numbers. We can also define them as ratios of two numbers which do not have a
remainder.
When any integers multiplied, each of the multiplied integer is called a factor or
divisor of the resulting product.
Example 1.3.1: Simplify the following and state whether the result is an integer or not
12 × 4, 7 ÷ 3, 18 ÷ 3, 36 ÷ 7, 14 × 2, 18 ÷ 36, 13 × (–3)
18 ÷ 3 = 6; It is an integer
A real number is a combination of rational & irrational number. The real numbers are
―all the numbers‖ on the number line. There are infinitely many real numbers just as
there are infinitely many numbers in each of the other sets of numbers. But, it can be
proved that the infinity of the real numbers is a bigger infinity.
3
Natural numbers constitute a proper subset of integers and the integer constitute a
proper subset of rational numbers and the latter constitutes a proper subset of real
numbers.
A point is chosen on the line to be the "origin". Points to the right are positive, and
points to the left are negative.
A distance is chosen to be "1", then whole numbers are marked off: {1,2,3,...}, and
also in the negative direction: {...,−3,−2,−1}.
or irrational (like π)
Solution: Given solution set includes all the numbers smaller than -13 and bigger
than -3.
For this, place two hollow circles, one at -3 and another at -13. Now, an arrow
appointing towards right side from -3 and another arrow pointing towards left side
from -13. It is shown below
4
1.6 The Rational Numbers
The number which can be expressed in the form p/q where p & q are two integer but q
is not equal 0 is called rational number.
The set Q = { p/q :p, q€I and q≠0} is called the set of rational numbers.
The set of rational numbers encloses the set of integers and fractions.
The rational numbers that are not integral will have decimal values. These values can
be of two types:
Non Terminating decimal fractions: The non terminating decimal fractions having
two types:
Non terminating periodic fractions: These are non terminating decimal fractions of
the type a. b1b2b3b4b5 …..bmb1b2b3b4b5 …..bm.
19/6 = 3.16666666…..
18/7 = 2.57142857142857…….
21/9= 2.3333…….
Non terminating non periodic fractions: These are non terminating and there is no
periodic decimal places for that number . i.e a. b1b2b3b4b5 …..bmc1c2………
So from above terminating and non terminating periodic fraction numbers belongs to
rational numbers.
5
1.7 The Irrational Numbers
The number which cannot be expressed in the form p/q where p & q are two integer
but q is not equal 0 is called irrational number.
𝑛
If 𝑎 is not equal to x, an integer, then it is called irrational number.
√2 = p/q , where p and q are two integer but q ≠ 0. Again suppose that rational
number p/q is its lowest term, that is p and q have no common factor except 1.
𝑝2
=> 2 = 𝑞2
=> 𝑝2 = 2𝑞 2 . . . . . (i)
Let, p = 2n
=> 𝑝2 = 4𝑛2
=> 2𝑞 2 = 4𝑛2
=> 𝑞 2 = 2𝑛2
It means that both p and q are even numbers. P an q have a common factor at least 2,
which contradicts our assumption.
6
1.8 Imaginary Number
Because the square of any number is positive. This occurs in some quadratic
equations and therefore has to be taken into account and properly defined.
Ex: 𝑥 = −2.
If a and b are real numbers then a+ib is known as a complex number, which has ‗a‘
the real part and ‗b‘ the imaginary part.
Illustration
7
Number Sets In Use
Here are some algebraic equations, and the number set needed to solve them:
Negative integers
Non Negative integers
Positive integers
Non positive integers
Prime numbers
Composite numbers
Co prime numbers
Even and Odd numbers
Perfect number.
8
Chapter # 2
Indices and Logarithms
Prepared by:
Meghna Philomena Rozario
ID: M18150201704
Section: A (15th Batch)
Department of Accounting & Information Systems
Jagannath University
9
2.1 Indices
Indices or Index numbers are used to measure the changes in one or more variable
over a period of time. These numbers are stated as a percentage of a base figure. Index
numbers are the specialized averages that measure the change in level of a
phenomenon. They measure the effect of changes over a period of time. A collection
of index numbers for years is referred to as index series.
Applications:
In scenarios where inflation plays a major part, index numbers are useful in
deflating.
As these numbers aid in measuring the effect of change over a period of time they
reveal various trends and tendencies.
Using index numbers various suitable policies can be framed.
They are used in the field of commerce, meteorology, industry etc.
They measure the purchasing power of money.
They are helpful in studying the difference between comparable categories of
people and items.
Index numbers of import and export prices of a country help measure the changes
in trade of a country.
They measure the seasonal and cyclical variations for a time period.
2.2 Logarithm
Logarithm, the exponent or power to which a base must be raised to yield a given
number. Expressed mathematically, x is the logarithm of n to the base b if bx = n, in
which case one writes x = logb n. For example, 23 = 8; therefore, 3 is the logarithm of
8 to base 2, or 3 = log2 8. In the same fashion, since 102 = 100, then 2 = log10 100.
Logarithms of the latter sort (that is, logarithms with base 10) are called common, or
Briggsian, logarithms and are written simply log n.
Invented in the 17th century to speed up calculations, logarithms vastly reduced the
time required for multiplying numbers with many digits. They were basic in
numerical work for more than 300 years, until the perfection of mechanical
calculating machines in the late 19th century and computers in the 20th century
10
rendered them obsolete for large-scale computations. The natural logarithm (with
base e ≅ 2.71828 and written ln n), however, continues to be one of the most useful
functions in mathematics, with applications to mathematical models throughout
the physical and biological sciences.
Applications of Logarithms:
Logarithms were quickly adopted by scientists because of various useful properties
that simplified long, tedious calculations. In particular, scientists could find the
product of two numbers m and n by looking up each number‘s logarithm in a special
table, adding the logarithms together, and then consulting the table again to find the
number with that calculated logarithm (known as its antilogarithm). Expressed in
terms of common logarithms, this relationship is given by log mn = log m + log n. For
example, 100 × 1,000 can be calculated by looking up the logarithms of 100 (2) and
1,000 (3), adding the logarithms together (5), and then finding its antilogarithm
(100,000) in the table. Similarly, division problems are converted into subtraction
problems with logarithms: log m/n = log m − log n. This is not all; the calculation of
powers and roots can be simplified with the use of logarithms. Logarithms can also be
converted between any positive bases (except that 1 cannot be used as the base since
all of its powers are equal to 1), as shown in the table of logarithmic laws.
Only logarithms for numbers between 0 and 10 were typically included in logarithm
tables. To obtain the logarithm of some number outside of this range, the number was
first written in scientific notation as the product of its significant digits and its
exponential power—for example, 358 would be written as 3.58 × 102, and 0.0046
would be written as 4.6 × 10−3. Then the logarithm of the significant digits—a
11
decimal fraction between 0 and 1, known as the mantissa—would be found in a table.
For example, to find the logarithm of 358, one would look up log 3.58 ≅ 0.55388.
Therefore, log 358 = log 3.58 + log 100 = 0.55388 + 2 = 2.55388. In the example of a
number with a negative exponent, such as 0.0046, one would look up log 4.6 ≅
0.66276. Therefore, log 0.0046 = log 4.6 + log 0.001 = 0.66276 − 3 = −2.33724.
12
Chapter # 3
Theory of Sets
Prepared by:
Meghna Philomena Rozario
ID: M18150201704
Section: A (15th Batch)
Department of Accounting & Information Systems
Jagannath University
13
3.1 Definition of Set
A set is a collection of well defined and well distinguished objects. The basic
characteristics of a set is that -
3.2 Sub-sets
For example, the set of integers {…-3, -2, -1, 0, 1, 2, 3, …} is a subset of the set of
real numbers.
A ⸦ B means if 𝑥 ∈ 𝐴, 𝑡ℎ𝑎𝑛 𝑥 ∈ 𝐵.
Set B is called proper subset of super set A if each and every element of set B are the
elements of the set A and at least one element of superset A is not an element of B.
B = {1,3,5,7}
So, B ⸦ A
14
3.5 Venn Diagram
A Venn diagram is a pictorial representation. It was named after English logician John
Venn.
A Venn diagram (also called primary diagram, set diagram or logic diagram) is
a diagram that shows all possible logical relations between a finite collection of
different sets. These diagrams depict elements as points in the plane, and sets as
regions inside closed curves. A Venn diagram consists of multiple overlapping closed
curves, usually circles, each representing a set.
Union of two sets A and B is the set of all elements in either set A or B.
Written A U B
A ∪ B = { x: x ∈ A or x ∈ B }
Intersection of two sets A and B is the set of all elements in both sets A or B.
Written A ∩ B
𝐴 ∩ 𝐵 = { 𝑥: 𝑥 ∈ 𝐴 𝑎𝑛𝑑 𝑥 ∈ 𝐵 }
Difference of two sets A and B is the set of all elements in set A which are not in
set B.
Written A - B.
𝐴 − 𝐵 = { 𝑥: 𝑥 ∈ 𝐴 𝑎𝑛𝑑 𝑥 ∄ 𝐵 }
Written A`
Need a universe of elements to draw from.
Set U is usually called the universal set.
𝐴` = {𝑥: 𝑥 ∈ 𝑈 − 𝐴 }
15
3.7 Sets and Set Theory in Business Operations:
Set theory is a mathematical abstract concerned with the grouping of sets of numbers
that have commonality. For example, all even numbers make up a set, and all odd
numbers comprise a set. All numbers that end in zero make up a set of numbers that
can be divided by 10. Using and comparing sets enables the creation of theories and
rules that have practically unlimited scope, whether in mathematics or applied to areas
such as business.
Applied to business operations, set theory can assist in planning and operations. Every
element of business can be grouped into at least one set such as accounting,
management, operations, production and sales. Within those sets are other sets. In
operations, for example, there are sets of warehouse operations, sales operations and
administrative operations. In some cases, sets intersect -- as sales operations can
intersect the operations set and the sales set.
16
Chapter # 4
The Straight Lines, Linear and Quadratic
Equations
Prepared by:
Md. Emran Hossain
ID: M18150201706
Section: A (15th Batch)
Department of Accounting & Information Systems
Jagannath University
17
4.1 Equations
In mathematics, an equation is a statement that asserts the equality of two expressions.
The word equation and its cognates in other languages may have subtly different
meanings; for example, in French an equation is defined as containing one or
more variables, while in English any equality is an equation.
The most common type of equation is an algebraic equation, in which the two sides
are algebraic expressions. Each side of an algebraic equation will contain one or
more terms. For example, the equation
Ax2 + Bx + C = Y
has left-hand side Ax2 + Bx + C, which has three terms, and right-hand side Y,
consisting of just one term. The unknowns are x and y and the parameters are A, B,
and C.
An equation is analogous to a scale into which weights are placed. When equal
weights of something (grain for example) are placed into the two pans, the two
weights cause the scale to be in balance and are said to be equal. If a quantity of grain
is removed from one pan of the balance, an equal amount of grain must be removed
from the other pan to keep the scale in balance. Likewise, to keep an equation in
balance, the same operations of addition, subtraction, multiplication and division must
be performed on both sides of an equation for it to remain true.
18
In geometry, equations are used to describe geometric figures. As the equations that
are considered, such as implicit equations or parametric equations, have infinitely
many solutions, the objective is now different: instead of giving the solutions
explicitly or counting them, which is impossible, one uses equations for studying
properties of figures. This is the starting idea of algebraic geometry, an important area
of mathematics.
The "=" symbol, which appears in every equation, was invented in 1557 by Robert
Recorde, who considered that nothing could be more equal than parallel straight lines
with the same length.
Linear equation
Quadratic equation
Cubic equation
Bio-quadratic equation
Slope intercept ( Y = mx + b )
Point slope (y – y1) = m(x – x1)
Standard (Ax + By = C )
19
4.4 Quadratic equation
An equation which when reduced to the rational integral form contains the square of
the unknown quantity and no higher power is called a quadratic equation or an
equation of the second degree.
An equation which contains only the square of the unknown and not the first power is
called a pure quadratic equation. Example: 5x2 = 21.
But an equation which contains the square as well as the first power of the unknown is
called an a factor or complete quadratic equation. Example: ax2 + bx + c = 0 where x
is the unknown and a, b, & c represents the constants of the equation.
1. Method of factorization
2. Method of complete squaring
A cubic equation is an equation in which the highest power of the unknown is three.
Example: ax3 + bx2 + cx + d = 0 where x is the unknown and a, b, c & d represents the
constants of the equation.
Accumulation method
Substitution method
Elimination method
20
Cross multiplying method
Determinant method
Matrix method
Gauss-Jordan method
Graphing method
Series method
Projection method
LP method
4.7 Use of equation
The practical use of the equations is in evolving certain relations and finding out the
value of the unknown. Sometimes complicated verbal statements when translated into
equations or inequalities can be solved with great ease.
Equations are actually used by us in daily life. As we know most of the mathematics is
depends on equation and mathematics is one of the disciplines which we utilize in
everyday life. Thus, we use equations very frequently in daily life.
Chips: Today‘s computer chips used in all the machines we use in daily routine like
washers, dryers, cars, backs, etc. All chips, which we use in these machines based on
mathematical equations and algorithms.
Information search: We use the internet to look up the information. We just type the
words and get many websites related to that word. This is all the parts of mathematics
equations, which allow us to get information from all over the world within seconds.
For example, let you search for ―equation‖ within seconds, you get N number results.
This is a part of the math equation. The equation for this is, ―Resulting sites with (free
online tutoring) = input words (free online tutoring)‖.
Mathematical equations are also used in traffic control, aircraft, space program and
medicine and so on. So we should always remember that any math equation result has
the potential to change the world. That is the reason all mathematical equations are
important in our life.
21
4.7.1 Uses of equations in business
In all of the above equations, ―Assets‖ refers to everything your company owns,
including things like property and inventory. ―Liability‖ represents any cost you must
pay, such as insurance premiums, and ―Owner‘s Equity‖ is simply the value of the
company that you own outright.
Example:
Marilyn is the sole owner of a clothing boutique in Denver. She has put $100,000 of
her own money into the business to purchase the products she keeps in stock, but she
does not own the property in which her store is located. Instead she pays $2,000 in
rent each month.
This is how Marilyn would calculate her assets for a 12 month period:
22
4.8 The Break-Even Point
Break-Even point analysis is used to determine how much revenue a business must
earn in order to cover all expenses during a specific time period. While it‘s usually
used to find dollar amounts (or other currencies, depending on where the business is
operating), revenue can be represented in this equation as other units such as hours of
services rendered.
The formula for break-even point is this:
Break-Even Volume = Fixed costs / (Sales price – variable cost per unit )
In this equation, ―Fixed Costs‖ are all of the normal, expected costs of running a
business—anything from rent to salaries. ―Sales Price‖ refers to the price at which
you sell your goods or the amount you charge for your services, however you
standardize that amount.
―Variable Cost Per Unit‖ is amount you have to spend to make your product or
provide your service.
Example:
Daniel runs a food truck in Florida that specializes in grilled cheese sandwiches. He
has one employee who earns a salary of $35,000 in a year, and he has to pay $150
each month for insurance.
Factoring in ingredients and labor, it costs Daniel $1.90 to make one grilled cheese
sandwich, but he charges patrons $5.75. So:
BE Volume = (($35,000 / 12) + $150) / ($5.75 – $1.90)
BE Volume = $3,067 / $3.85
BE Volume = 797
Daniel must sell at least 797 grilled cheese sandwiches each month to cover his costs.
Profit Margins
Profit margin is a logical next step after calculating your Break-Even point. The latter
tells you when you earn back what you‘ve put into your business, and the former tells
you how much revenue beyond that point is, well, profit. Here‘s the formula:
23
Profit Margin = Net Income / Sales
In this equation, ―Net Income‖ is equal to the amount your business has made less
expenses, and ―Sales‖ indicates the balance of every sale you‘ve made.
Calculating revenue and profit margins can help you determine how well your
company is doing and make adjustments. For example, you can use this formula to
help set prices for goods or services in order to modify your earnings and better cover
the cost of manufacturing or shipping.
Example:
Terry is working on calculating the total profit margin for her book store at the end of
the year. She brought in $400,000, but had to pay a total of $25,000 in rent, $15,000
for insurance and $150,000 in salaries for her six part-time employees. Therefore:
PM = ($400,000 – $25,000 – $15,000 – $150,000) / $400,000
PM = $333,000 / $400,000
PM = 5.2%
4.9 Use of equations for decision making in business
Taking right decision is very important in business. The success of business mainly
lies in the right decision. Equations help the business to take right decision.
Determine the revenue, cost & profit function: Equations help to find out the
revenue, cost & profit functions. As a result management can easily know about their
cost, profit and revenue by any number of quantity productions. So production
managers can easily take the decision whether production should be increased or
decreased.
Market predictions: Without predict the market management cannot take any
suitable decision. Mathematical equations help management to predict the market.
Cost minimizing: Cost minimizing is a blessing for the business without any change
of quality. Mathematical equations identify fixed cost, variable cost per unit and
marginal cost per unit. From this management can take the decision of cost
minimizing.
24
Break-even point: Break-even point indicates where there is no profit or loss. That
means in this point the revenue and cost will always remain same. From analyzing
this point, management can take the decision of production to avoid loss.
Profit analysis: To gain profit is the main objective of any business. Profit analysis
shows and compares profit from previous activity. So it is an important tool to make
decisions.
We can assume the necessity of equations in business by solving a mathematical
problem which is given below:
Problem: A company has a linear total cost function and has determined that over the
next three months it can produce 10,000 units at a total cost of Tk 5,00,000. This same
manufacturer can produce 20,000 units at a total cost of Tk 6,00,000. The selling
price per unit is 5.50.
a) Determine the revenue, cost and profit functions.
b) What is the amount of fixed cost?
c) What is the variable cost per unit?
d) What is marginal cost?
e) Find the break-even quantity.
f) What is the break-even volume of sales?
g) What would be company‘s cost if it decides to shut down operation for three
months?
h) If because of strike the most company can produce is 1,00,000 units, should it
be shut down? Explain why or why not?
Solution: a)
a) Given, per unit selling price, P = Tk. 5.50
Total revenue function ( R ) = Per unit selling price ( p ) × quantity (q )
R = 5.50q
g) If the company decides to shut down operating for the next three months, the
company must pay fixed cost.
So, the company‘s loss will be Tk. 5, 00,000
h) In case of strike, if the company continue their production and can produce
1,00,000 units then profit,
π = 0.50Q – 50000
= 5.50 (10, 00,000) – 5, 00,000
= - 4,50,000
27
Chapter # 6
Permutations and Combinations
Prepared by:
Md. Akashur Rahman
ID: M18150201702
Section: A (15th Batch)
Department of Accounting & Information Systems
Jagannath University
28
6.1 Overview
The study of permutations and combinations is concerned with determining the
number of different ways of arranging and selecting objects out of a given number of
objects, without actually listing them. There are some basic counting techniques
which are useful in determining the number of different ways of arranging or
selecting objects.
6.2 Permutations
In mathematics, the concept of permutation describes the practice of arranging all the
members of a set into a particular sequence or order, or if the set is already
ordered, rearranging (reordering) its elements. This process is called permuting.
Ex: Let 1,2,3 be three number and their all possible permutations will be
(1,2,3), (1,3,2), (2,1,3), (2,3,1), (3,1,2), and (3,2,1).
The number of permutations of n objects taken all at a time, denoted by the symbol
nPn, is given by, nPn = n!
Formula of Permutation,
𝒏!
𝒏𝑷 r = [! = factorial]
𝒏−𝒓 !
Example: Find how many four letters words can be formed out of the word
“LOGARITHMS”?
Solution: There are 10 different letters, therefore, n is equal to 10 and since we have
to find four-letter words. r is 4. Hence the required number of words are –
29
10!
10𝑃 4 =
10 − 4 !
10∗9∗8∗7∗6∗5∗4∗3∗2∗1
=
6∗5∗4∗3∗2∗1
= 𝟓𝟎𝟒𝟎
i. Repetitive
ii. Non-repetitive
Permutations when the objects are not distinct The number of permutations of n
objects of which 𝑃1 are of one kind, 𝑃2 are of second kind, ..., 𝑃𝑘 are of 𝑘 𝑡ℎ kind and
𝐧!
the rest if any, are of different kinds is
𝐏𝟏! 𝐏𝟐 !……𝐏𝐤!
= 𝟐𝟐𝟔𝟖𝟎𝟎
And the second word is ENGINEERING, here it consists of 11 letters and there are 3
𝟏𝟏!
E, 3 N, 2 G, 2 Is and one R, the total number of =
𝟑!∗𝟑!∗𝟐!∗𝟐!
= 𝟐𝟕𝟕𝟐𝟎𝟎
30
6.3 Combinations
A combination is a way of selecting items from a collection, such that the order of
selection does not matter.
Example #1: At an election there are five candidates out of whom three are to be
elected and a voter is entitled to vote for any number of candidates not greater than
the number to be elected. In how many ways may a voter choose to vote?
Solution: There are five candidates. Here a voter can choose one candidate or two
candidates or three candidates.
So, here we can write – 5C1+5C2+5C3
= 5+10+10
=25
Example #2: The question paper of Physics and Chemistry contains ten questions
divided into two groups of five questions each. In how many ways can an examinee
answer six questions taking at least two questions from each group?
Solution: The questions can be answered in following ways-
i. 2 questions from 1st group + 4 questions from 2nd group
ii. 3 questions from 1st group + 3 questions from 2nd group
iii. 4 questions from 1st group + 2 questions from 2nd group
31
So, by use the formula of Combination we can solve the problem –
The Total Numbers of ways,
= 5C2*5C4 + 5C3*5C3 + 5C4*5C2
= 10*5 + 10*10 + 5*10
= 200 (ans.)
Note:
1. Use permutations if a problem calls for the number of arrangements of objects
and different orders are to be counted.
2. Use combinations if a problem calls for the number of ways of selecting objects
and the order of selection is not to be counted.
32
6.5 Area of applications of Permutation and Combinations.
Ans. Permutations and combinations come handy, in more or less prominent ways,
in almost every area of practical mathematics. They often arise when different
orderings on certain finite sets are considered, possibly only because one wants to
ignore such orderings and needs to know how many configurations are thus identified.
For similar reasons permutations arise in the study of sorting algorithms in computer
science.
Homeland security: This is a very specialized problem domain that has become a
major national challenge after 9/11. To confront this challenge, many intelligent
computing techniques have been applied, including intelligent pattern analyses of
human faces, X-ray images, chemical components, data from a distributed network of
wireless sensors, etc.
33
Accumulation of electronic communication data: Since combinatory are
extensively applied to these intelligent computing techniques, there is a wide
spectrum of potentials for the national security issue.
34
Chapter # 7
Progression
Prepared by:
Madhobi Akter
ID: M18150201703
Section: A (15th Batch)
Department of Accounting & Information Systems
Jagannath University
35
7.1 Progression
1. Arithmetic Progression
2. Geometric Progression
{sn}= {s0,s1,s2,s3,s4….}
= {-1,3,7,11,15,…..}
36
from the above ,the n th term denoted by TN is given as TN=a+(n-1)dan arithmetic
series is the sum of the terms of an AP.
Where sn is the nth term of an AP .when first term of an AP and the common
difference of an AP are known ,the AP is completely defined.
Application of AP:
Example 1: Mr. Teghan wants to embark in a saving scheme. He decides that the
minimum amount he should save in any one year should be 100000.At the end of the
first year he serve 100000 and save an additional 5000each succeeding year. How
much shall he have by the end of the 30th year.
Solution:
a=$100000
d= 5000
n=30
sn=n/2{2a+(n-1)d}
S30=30/2{2*100000+(30-1)5000}
=15[200000+29*5000]
=15[200000+145000]
=$5175000 (ans)
Example 2:Miss Heargo talk begins a savings scheme and these she does in an AP.
she finds out that after making 20 savings she had 105000in her account an after 40
savings she had accumulated 410000.
37
c) Calculate what will be in her account after her 100 savings?
s20 =20/2[2a+20-1)d
and s40=40/2[2a+(40-1)d
s40 = 40a+780d=4100000……..(2)
40a+380d=2100000
-40a+790d=4100000
d =5000
20a+190*5000=1050000
20a =1050000-950000
20a =10000
100000
a = 20
=5000
Solution(c) S100=100/2[*5000+(100-1)5000]
=$25250000
Example 3: A sales agent of Ekma palm remitted eight sums os moneny ny electronic
cheques to the sales manager at the head office .These sums were in arithmetic
progression with the first being 40000 .Determine the common difference and the
eight sums period if the last was 53000.
38
Solution: Here,
a=40000
d=?
t8=530000
tn=a+(n-1)d
t8=40000+(8-1)d=530000
so,40000+7d=530000
7d=530000-40000
490000
d= =70000
7
so t8=4000+(8-1)70000
=530000
Application of Geometric progression:
It is the sequence such that any element after the first is obtained by multiplying the
preceding element by a constant called the common ratio which is denoted by ―r‖
𝑎2 𝑎3 𝑎𝑛
r=𝑎1=𝑎2=𝑎𝑛 −1
a1=first term
a2=second term
𝑎𝑛 =𝑎1 𝑟 𝑛−1
39
Sum of terms in a Geometric progression
𝑎 1 (1−𝑟 𝑛 )
Sn=
1−𝑟
Example 1: A line is divided into six parts forming a geometric sequence .If the
shortest length is 3 cm and the longest is 96cm,find the length of the whole line.
𝑎1 =3,𝑎𝑛 =96,n=6
3(26 −1)
sn= =3(64-1)=189cm
2−1
Example 2: The value of an automobile depreciates at the rate of 15% per year.what
will be the value of an automobile be after three years if it is purchased for 4500
dollars?
15
=𝑎1 − 𝑎1 = 𝑎1 (1 − 0.05)
100
=𝑎1 (0.85)
15
=𝑎1 . 85 − 𝑎1 . 85 (85 )
15
=𝑎1 . 85 [1 − 100 ]
40
=𝑎1 (. 85)3
Hence the value of the automobile at the end of 3 years after being purchasedfor
4500=4500(. 85)3
=4500(.6141)
=$2763.45
41
Chapter # 8
Mathematics of Finance
Prepared by:
Madhobi Akter
ID: M18150201703
Section: A (15th Batch)
Department of Accounting & Information Systems
Jagannath University
42
Definition:
Financial mathematics mainly uses the modern mathematical theory and method (such
as stochastic analysis, portfolio analysis, nonlinear analysis, multivariate statistical
analysis, mathematical programming, modern computational method etc)of financial
(including banking, investment, bonds).
Interest:
Interest is the fee paid money. to use someone else it is denoted by (i)
Simple interest: The interest is paid only on the principal frequently charged on loans
of a year or less.
Example: Suppose$ 3000 is placed in a savings account. if the annual interest rate
6%and interest compounded semiannually what is the balance in the account after7
years?
Solution: A= P(1+I/m)𝑛
=3000(1+0.06/2)7=$3689.62
43
Simple interest:
I=Prn
I=500*(.12) =60t
The future value (A) of P dollars invested at simple interest r for t years.
A=P (1+rt)
Example, suppose 3000 is placed in a savings account that account that pays 6%
simple interest. What is the balance in the account after 7 months?
A=3000[1+(.06*7/12)]
=$3105
A sum of money that can be deposited today to yield some larger amount in the future
is the present value of that future amount.
𝐴
P=1+𝑟𝑡
1. Interest is deducted in advance from the loan amount before giving the balance to
the borrower.
44
If D is the discount on a loan having a maturity value A at a rate of interest r for t
years ,and p represent the proceeds then
P=A-D
Compound Interest:
Normally used for loan for investments of a year or more .Interest is paid on interest
as well as on principal.
P= Principal value
t= number of years
A B C
YEAR COMPOUND SIMPLE
1 1100 1100
2 1210 1200
3 1331 1300
r(r Nominal) =The stated interest rate to be paid on an investment .Sometimes called
Annual Percentage rate .
Effective rate (r)- The actual increase in an investment .Higher than the nominal rate
if interest rate is compounded .sometimes called Annual percentage
𝑟
r = (1+𝑚 )𝑚 -1
45
Example : r=6%
m=12
.06
r=(1+𝑚12 )12 -1
=6.16%
Example: My daughter would like to have $5000six years from now to put down on a
new car. What amount deposited today at 6% compounded monthlywill amount to
5000 in 6 years?
𝐴 .06
P= 𝑖 =500(1+ 12 )72 =$3491.51
(1+ )𝑛𝑚
𝑚
Ordinary annuity: It is a payment are made at the end of the time period and the
frequency of the payments is the same as the frequency of the compounding.
Sinking fund: Periodic payment are made at the end of the time period, and the
frequency of the compounding.
1+𝑖 𝑛−1
FVA= A [ ]
𝑖
Where,
A= payment
I =rate of interest
Example: if someone deposits $100 at the end of each year for 4 years in a savings
account that pays 10% per year how much he have at the end of 4 years?
46
(1+𝑖)𝑛 −1
Solution: FVA=A[ ]
𝑖
(1+.10)4 −1)
FVA=100[ ]
.10
=$464.10
Future value of an Annuity due: it is the payment are made at the beginning of each
time period.
(1+𝑖)𝑛 −1
FVA=A[ ](1+i)
𝑖
The amount that would have to be deposited in one lumpsum today in order to
produce the same balance at the end of the n year
Example: A car cost $32000 after a down payment of 2000 the balance$ 30000 will
pay off in 60 equal pament with interest of 6% per yearon the unpaid balance .what is
the monthly payment?
1−(1+𝑖)𝑛
Solution: PVA=A[ ]
𝑖
1−(1+.05)60
30000=A[ ]
𝑖.05
A = $579.98
Amortization:
Example: Bob and kathy bought a house for $250000.after a down payment of
25000they financed the remaining225000 for 30 years at 6% annual interest?how
much the first mortgage payment went towards paying interest and how much went
towards the principal?
47
Amortization table
Principal at
Payment Amount of Interest of Portion of
end of the
number payment the period principal
period
0 $225000
1 $1349 $1125.00 $224.00 224776.00
2 $1349 1123.88 225.12 224550.88
3 $1349 1122.75 226.25 224324.63
4 $1349 1121.62 227.51 224097.74
5 $1349 1120.49 228.38 223868.61
180 $1349 802.02 546.98 159856.61
360 $1349 6.65 1330.98 0.0
48
Chapter # 9
Matrices
Prepared by:
Sahnaj Akter
ID: M18150201701
Section: A (15th Batch)
Department of Accounting & Information Systems
Jagannath University
49
9.1 Matrices
Matrices, a set of numbers arranged in rows and columns so as to form a rectangular
array. The numbers are called the elements, or entries, of the matrices.
A matrix is a two dimensional array of numbers or terms arranged in a set of rows and
columns. An m n matrix has m rows and n columns. An element aij located in the
"i" the row and the 'j' the column.
Row Matrices: Matrices with only one row is called row matrices.
3 7 2 1 is a 1 x 4 row matrix.
Column Matrices: Matrices with only one column is called column matrices.
2
4
6 is a 5 x 1 column matrix.
8
10
Square Matrices: A square matrix has the same number of rows as columns .
3 6 8
2 4 5 is a square matrix having 3 rows and 3 columns.
1 9 4
Scalar Matrices: A diagonal matrix whose diagonal entries contain the same
elements.
50
c 0 0
0 c 0 is a scalar matrix.
0 0 c
Diagonal Matrices: A square matrix with all elements not on the main diagonal equal
to zero.
5 0 0
0 6 0 is a diagonal matrix.
0 0 7
3 2 4
If A = then
14 6 9
1 0 0
13 2 4
-A = 0 1 0
14 6 9 0 0 1
And so, A + (-A) = 0
Identical Matrices: A scalar matrix in which all of the diagonal elements are unity.
1 0 0
0 1 0 is an identical matrix.
0 0 1
Null Matrix: If all the elements of a matrix are zero, it is called a null or zero matrix
and is denoted by ‗0‘
0 0 0
0 0 0 is a Null Matrix
0 0 0
51
Addition
If A and B above are matrices of the same type then the sum is found by adding the
corresponding elements aij + bij .
Subtraction
If A and B are matrices of the same type then the subtraction is found by subtracting
the corresponding elements aij − bij.
When the number of columns of the first matrix is the same as the number of rows in
the second matrix then matrix multiplication can be performed.
52
Now lets look at the n×n matrix case, Where A has dimensions m×n, B has
dimensions n×p. Then the product of A and B is the matrix C, which has dimensions
m×p. The ijth element of matrix C is found by multiplying the entries of the ith row of
A with the corresponding entries in the jth column of B and summing the n terms. The
elements of C are:
AT = (aji) where j is the column number and i is the row number of matrix A.
In the case of a square matrix (m = n), the transpose can be used to check if a matrix
is symmetric. For a symmetric matrix A = AT.
53
Graphic software such as Adobe Photoshop on your personal computer uses
matrices to process linear transformations to render images. A square matrix
can represent a linear transformation of a geometric object.
In physics related applications, matrices are used in the study of electrical
circuits, quantum mechanics and optics. Engineers use matrices to model
physical systems and perform accurate calculations needed for complex
mechanics to work. Electronics networks, airplane and spacecraft, and in
chemical engineering all require perfectly calibrated computations which are
obtained from matrix transformations. In hospitals, medical imaging, CAT
scans and MRI‘s, use matrices to operate.
Whereas in programming which is taught at the university, matrices and
inverse matrices are used for coding and encrypting messages. A message is
made as a sequence of numbers in a binary format for communication and it
follows code theory for solving.
In robotics and automation, matrices are the basic components for the robot
movements. The inputs for controlling robots are obtained based on the
calculations from matrices and these are very accurate movements.
In geology, matrices are used for making seismic surveys. They are used for
plotting graphs, statistics and also to do scientific studies and research in
almost different fields. Matrices are also used in representing the real world
data‘s like the population of people, infant mortality rate, etc. They are best
representation methods for plotting surveys.
54
Some application of Matrices in business:
Warehouse
Factory W1 W2 W3
Example.1
An automobile dealer sells two car models, standard and deluxe. Each is available in
one of the two colors, white and red. His shakes for the month of January and
February are given by the matrices.
Standard Deluxe
2 1 3 1
A= B=
3 4 2 3
Find the total sales for each models and color for both models.
Solution:
By adding A and B we can get the total sales for each models and color for both
models.
55
2 1 3 1
A+B= +
3 4 2 3
5 2
=
5 7
5 2
Answer: The total sales for each models and color for both models is
5 7
Example: 2
The sales figure for two dealers during January showed that dealer A sold 5
deluxe, 3 premium and 4standard cars, while dealer B sold 7 deluxe, 2
premium and 3 standard cars. Total sales over the two month period of January –
February revealed that dealer A sold 8 deluxe, 7 premium and 6 standard cars. In the
same 2 – month period, dealer B sold 10 deluxe, 5 – premium and 7 standard cars.
Write 2 X 3 matrices summarizing sale data for January and the other 2 – month
period for each dealer. Hence find the sales in February for each dealer.
Answer:
January
A=
5 3 4
7
B= 2 3
(January+February)
A=
8 7 6
10 7
B= 5
56
Here, The sales in February for each dealer
(January+February) –January
8 7 6 5 3 4
A=
10 5 7 minus 7 2 3
B=
= 3 4 2
3 3 4
3 4 2
Answer: The sales in February for each dealer 3 3 4
Example: 3
Ram, Shyam and Mohan purchased biscuits of different brands P, Q and R. Ram
purchased 10 packets of P, 7 packets of Q and 3 packets of R. Shyam
purchased 4 packets of P, 8 packets of Q and 10 packets of R. Mohan purchased 4
packets of P, 7 packets of Q and 8 packets of R. If brand P costs Tk 4, Q costs Tk 5
and R costs Tk 6each, then using matrix operation, find the amount of money spent by
these persons individually.
Solution:
Let Q be the matrix denoting the quantity of each brand of biscuit bought by P, Q and
R and let C be the matrix showing the cost of each brand of biscuit.
57
P Q R
Ram
Q= Shyam
Mohan
C= Q
Since number of columns of first matrix should be equal to the number of rows of the
second matrix for multiplication to be possible, the above matrices shall be multiplied
in the following order.
𝑄 ×C = ×
10 × 4 + 7×5 + 3×6
= 4×4 + 8×5 + 10 × 6
4×4 + 7×5 + 3×6
40 + 35 + 18
= 16 + 40 + 60 =
16 + 35 + 18
Answer: Amount spent by Ram, Shyam and Mohan Tk 99, Tk 116 and Tk 99
respectively.
Determinant
A square matrix can be associated with a real number called it's determinant. The
determinant provides information when the matrix is that of the coefficients of a
system of linear equations. The determinant of a matrix A is denoted det (A), det A,
or |A|.
58
Determinant of a Matrix
Determinant is a real number that is associated with a square matrix.
Determinant of a square matrix is represented by det (A) or |A|.
The determinant of a 2 x 2 matrix
a11 a12
a 21 a 22
is given by:
det (A) = |A| = a11a22−a21a12
In the case of a square matrix of order 2 x 2, the determinant is the difference of the
products of the diagonals as shown in the following diagram.
Example:
2 1
9 4 = 2(-4) - (-1)9 = - 8 + 9 = 1.
Let us now define the determinant of a general square matrix and learn to expand a
determinant to find its value.
Before defining the determinant of a square Matrix of general order, let us define few
key words associated with it.
59
60
3x3 Determinants
a 22 a 23 a 21 a 23 a 21 a 22
det A = a11 - a12 a 31 a 33 +a13 a 31 a 33
a 32 a 33
61
Chapter # 10
Differentiation
Prepared by:
Sahnaj Akter
ID: M18150201701
Section: A (15th Batch)
Department of Accounting & Information Systems
Jagannath University
62
10.1 Differentiation
It also allows us to find the rate of change of x with respect to y, which on a graph of
y against x is the gradient of the curve. There are a number of simple rules which can
be used to allow us to differentiate many functions easily.
dy
1) If y = xn, . = nxn-1
dx
dy
2) If y = kxn, . = nkxn-1(where k is a constant- in other words a number)Therefore
dx
to differentiate x to the power of something you bring the power down to in front of
the x, and then reduce the power by one.
Examples:
dy
If,y=x4, .=4x3
dx
dy
If,y=2x4, .=8x3
dx
dy
If y = x5 + 2x-3, . = 5x4 - 6x-4
dx
There are a number of ways of writing the derivative. They are all essentially the
same:
63
dy
(1)Ify=x2, .=2x
dx
dy 2
(2) .(x )=2x
dx
(3)If,f(x)=x2,f'(x)=2x
A formula for the gradient of a curve can be found by differentiating the equation of
the curve.
Example
dy
When x = 3, = 6× 9 = 54
dx
Total costs (TC): Total cost is the combination of fixed cost and variable cost of
output. If the production increases, only total variable cost will increase in direct
proportion but the fixed cost will remain unchanged within a relevant range.
Total revenue (TR): Total revenue is the product of price/demand function and
output.
64
Profit: Profits are defined as the excess of total revenue over total costs.
Symbolically it can be expressed as, P (profit) = TR – TC. i.e., (Total Revenue –
Total Cost)
The rules for finding a maximum point tell us that P is maximized when the derivative
of the profit function is equal to zero and the second derivative is negative. If we
denote the derivatives of the revenue and cost functions by dTR and dTC we have,
'P' is at a maximum when dTR - dTC = 0. This equation may be written as dTR =
dTC.
𝑑(𝑃𝑟𝑜𝑓𝑖𝑡𝑓𝑢𝑛𝑐𝑡𝑖𝑜𝑛 )
Profit Maximizing output= 𝑑𝑥
𝑑(𝑡𝑜𝑡𝑎𝑙𝑐𝑜𝑠𝑡𝑓𝑢𝑛𝑐𝑡𝑖𝑜𝑛 )
Cost Maximizing output= 𝑑𝑥
Marginal Cost (MC): MC is the extra cost for producing one additional unit
when the total cost at certain level of output is known. Hence, it is the rate of
change in total cost with respect to the level of output at the point where total cost
𝑑𝑇𝐶
is known. Therefore we have, MC= 𝑑𝑥 where total cost(TC) is a function of x, the
level of output
Marginal Revenue (MR): MR is defined as the change in the total revenue for the
sale of an extra unit. Hence, it is the rate of change total in revenue with respect to the
quantity demanded at the point where total revenue is known Therefore, we have, MR
𝑑𝑇𝑅
= 𝑑𝑥 where total revenue(TR) is a function of x, the quantity demanded.
Example–1:
65
Solution:
The necessary condition for the optimal sales volume is that the first derivative of the
profit function is equal to zero and the second derivative must be negative. Where the
profit function is:
P = x – 0.00001x2
𝑑𝑃 𝑑
= (x-0.00001x2)
𝑑𝑥 𝑑𝑠
So, 1 – 0.00002x = 0
or, 0.00002x = 1
𝑑2𝑝 𝑑
= (1-0.00002x)= -0.00002<0
𝑑𝑥 2 𝑑𝑥
P = x – 0.00001x2
Answer: The optimum output for the company will be 50,000 units of x and
maximum profit at that volume will be Tk.25,000.
Example – 2:
If the total manufacturing cost 'y' (in Tk.) of making x units of a product is : y =
20x + 5000, (a) What is the variable cost per unit? (b) What is the fixed cost? (c)
What is the total cost of manufacturing 4000 units? (d) What is the marginal cost
of producing 2000 units?
66
Solution:
We have the cost-output equation : y = 20x + 5000. We know that, if the production
increases, only total variable cost will increase in direct proportion but the fixed cost
will remain unchanged in total. So, the derivative of y with respect to the increase in x
by 1 unit will give the variable cost per unit.
𝑑
(a) Variable cost per unit = 𝑑𝑥 (cost-output equation)
𝑑
= 𝑑𝑥 (y)
𝑑
=𝑑𝑥 (20x + 5000) = 20.
(b) Total fixed cost will remain unchanged even if we don't produce any unit. If we
don't produce any unit, there will be no variable cost and only fixed cost will be
the total cost. So, if we put x=0 in the cost-output equation, we will get the fixed
cost.
(c) If we put x=4000 in the cost-output equation, we will get the total cost of
producing 4,000 units.
∴ Total cost of producing 4000 units = y
= 20 (4,000) + 5,000 = Tk.85,000.
67
= [20 (2000) + 5000] – [20 (1999 Tk. + 5000] =
[45,000 – 44,980] = 20.
Example–3:
1
The total cost function of a firm is C= 3 x3 – 5x2 + 28x +10, where C is total cost and
x is output. A tax at the rate of Tk.2 per unit of output is imposed and the producer
adds it to his cost. If the market demand function is given by P = 2530 – 5x, where P
is the price per unit of output, find the profit maximizing output and price.
Solution:
1
= 3x3 – 5x2 + 28x + 10 + 2x = 13 x3 – 5x2 + 30x + 10
𝑑(𝑃) 3𝑥 2
So, =2500 - = 2500-x2
𝑑𝑥 3
The necessary condition for maximization is that the first derivative of a profit
function is equal to zero and second derivative must be negative.
2500 – x2 = 0
or, – x2 = – 2500
so, x = 50
𝑑 𝑃
and𝑑𝑥2 2 = – 2x = – 2x 50 = –100 < 0
Example–4:
The yearly profits of ABC company are dependent upon the number of workers (x)
and the number of units of advertising (y), according to the function,
Solution:
The two equation are solved simultaneously to obtain the values of x and y.
412 – 2x – y = 0
1612–2x–16y = 0
1200 +15y = 0
or, 15y=1200
∴ y = 80
412–2x–80=0
or – 2x = –332
∴x = 166
69
And Pxx (x, y) = –2<0
P (166, 80) = 412 (166)+806 (80) – (166)2 – 4 (80)2– (166) (80) –50000
=16595
70