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Chapter III Mathematics Of Business

I. Percentage
𝑟
- Whenever we mention r%, we simply mean the fraction 100 .
10
Example: 10%= 100 = 0.1

II. Scale factor

The scale factor is the multiplier that gives the final value in the percentage problem.
- For example, the initial value is “a”, after “t” time, it increases or decreases by r% then the final value of “a” is “A” can
be calculated by 𝐴 = 𝑎(1 ± 𝑟%). Hence, we call (1 ± 𝑟%) is the scale factor.
- Scale factor can be determined in two ways as follows:

𝐹𝑖𝑛𝑎𝑙 𝑣𝑎𝑙𝑢𝑒
(1) 𝑆𝑐𝑎𝑙𝑒 𝑓𝑎𝑐𝑡𝑜𝑟 =
𝑖𝑛𝑖𝑡𝑖𝑎𝑙 𝑣𝑎𝑙𝑢𝑒

𝑆𝑐𝑎𝑙𝑒 𝑓𝑎𝑐𝑡𝑜𝑟 = (1 + 𝑟%) 𝑖𝑓 𝑖𝑛𝑖𝑡𝑖𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 𝑖𝑛𝑐𝑟𝑒𝑎𝑠𝑒𝑠 𝑏𝑦 𝑟%

→ 𝑟% = 1 − 𝑠𝑐𝑎𝑙𝑒 𝑓𝑎𝑐𝑡𝑜𝑟
(2)
𝑆𝑐𝑎𝑙𝑒 𝑓𝑎𝑐𝑡𝑜𝑟 = (1 − 𝑟%) 𝑖𝑓 𝑖𝑛𝑖𝑡𝑖𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 𝑑𝑒𝑐𝑟𝑒𝑎𝑠𝑒𝑠 𝑏𝑦 𝑟%
{→ 𝑟% = 𝑠𝑐𝑎𝑙𝑒 𝑓𝑎𝑐𝑡𝑜𝑟 − 1

- Một sự thay đổi trong một khoảng thời gian có thể có một hoặc nhiều giá trị scale factor, ví dụ trong một năm giá của
một sản phẩm có thể tăng hoặc giảm nhiều lần. Khi này final value được tính bằng cách lấy initial value nhân cho tất cả
các scale factor.
- Ví dụ trong tháng 1, giá của một chiếc điện thoại tăng 15% và 1 tuần sau đó nó tiếp tục tăng 10%.
→ 𝑜𝑣𝑒𝑟𝑎𝑙𝑙 𝑠𝑐𝑎𝑙𝑒 𝑓𝑎𝑐𝑡𝑜𝑟 𝑖𝑠 (1 + 15%)(1 + 10%).
Example:
(1) The price of a phone was $1,500 in 2014. Two years later, due to inflation, the price increased by 15%. However, 2
weeks later the store decided to offer a 20% discount for the store's 20th anniversary. Find the price of the phone on sale
during the sale.
(2) Find the overall percentage change of a car that has undergone two price reductions of 15% and 20% respectively.
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III. Index number and inflation rate
1. Index number
- Index number is used to reflect the changes in price or any other quantity compared with a standard of base value.
- Index numbers enable us to identify trends and relationships in data which are often given in the form of a time series.
- The base value is usually 100 and the index number of the underlying year is calculated by:
𝑽𝒂𝒍𝒖𝒆 𝒐𝒇 𝒚𝒆𝒂𝒓 𝒕
𝑰𝒏𝒅𝒆𝒙 𝒏𝒖𝒎𝒃𝒆𝒓 = ∗ 𝟏𝟎𝟎
𝑽𝒂𝒍𝒖𝒆 𝒐𝒇 𝒃𝒂𝒔𝒆 𝒚𝒆𝒂𝒓
Example: The table below represents the GDP of the U.S. during 5 years. If 2018 is taken as the base year. Find the
index number for 2017, 2018, 2019, and 2020
2017 2018 2019 2020 2021
281.3 308.7 330.4 343.2 362.6

(*) Solution
2017 2018 2019 2020 2021
281.3 308.7 330.4 343.2 362.6
91.12 100 107.02 111.17 117.46

(*) Laspeyres Price Index

- The Laspeyres price index (or consumer price index) measures the change in the prices of a basket of goods and services
relative to a specified base period weighting.
- The Laspeyres price index is commonly used to calculate the consumer price index (CPI).
- Mua cùng 1 sản lượng mỗi năm, nhưng giá mỗi năm mỗi khác
→ đ𝒐 𝒍ượ𝒏𝒈 𝒔ự 𝒕𝒉𝒂𝒚 đổ𝒊 𝒗ề 𝒈𝒊á 𝒈𝒊ữ𝒂 𝒄á𝒄 𝒏ă𝒎 𝒔𝒐 𝒗ớ𝒊 𝒏ă𝒎 𝒄ơ 𝒔ở

𝑺𝒖𝒎 𝒐𝒇 [𝑷𝒓𝒊𝒄𝒆 𝒂𝒕 𝑶𝒃𝒔𝒆𝒓𝒗𝒂𝒕𝒊𝒐𝒏 𝑷𝒆𝒓𝒊𝒐𝒅 ∗ 𝑩𝒂𝒔𝒆 𝑸𝒖𝒂𝒏𝒕𝒊𝒕𝒚]

(+)𝑳𝒂𝒔𝒑𝒆𝒚𝒓𝒆𝒔 𝑷𝒓𝒊𝒄𝒆 𝑰𝒏𝒅𝒆𝒙 = ∗ 𝟏𝟎𝟎
𝑺𝒖𝒎 𝒐𝒇 [𝑷𝒓𝒊𝒄𝒆 𝒂𝒕 𝑩𝒂𝒔𝒆 𝑷𝒆𝒓𝒊𝒐𝒅 ∗ 𝑩𝒂𝒔𝒆 𝑸𝒖𝒂𝒏𝒕𝒊𝒕𝒚]
(*) Paasche Price Index
- The Paasche price index measures the change in the price and quantity of a basket of goods and services relative
to a base year and observation year quantity.
- The Paasche price index is commonly used to calculate inflation.
- Cùng một lượng sản phẩm tại thời điểm hiện tại được mua, nhưng mức giá giữa năm hiện tại và năm trước khác
nhau → 𝑺𝒐 𝒔á𝒏𝒉 𝒈𝒊á 𝒕𝒓ị 𝒈𝒊ữ𝒂 𝒄ù𝒏𝒈 𝟏 𝒍ượ𝒏𝒈 𝒔ả𝒏 𝒑𝒉ẩ𝒎 𝒉𝒂𝒚 𝒅ị𝒄𝒉 𝒗ụ 𝒈𝒊ữ𝒂 𝟐 𝒏ă𝒎.

𝑺𝒖𝒎 𝒐𝒇 [𝑷𝒓𝒊𝒄𝒆 𝒂𝒕 𝑶𝒃𝒔𝒆𝒓𝒗𝒂𝒕𝒊𝒐𝒏 𝑷𝒆𝒓𝒊𝒐𝒅 ∗ 𝑶𝒃𝒔𝒆𝒓𝒗𝒂𝒕𝒊𝒐𝒏 𝑸𝒖𝒂𝒏𝒕𝒊𝒕𝒚]

(+)𝑷𝒂𝒂𝒔𝒄𝒉𝒆 𝒑𝒓𝒊𝒄𝒆 𝒊𝒏𝒅𝒆𝒙 = ∗ 𝟏𝟎𝟎
𝑺𝒖𝒎 𝒐𝒇 [𝑷𝒓𝒊𝒄𝒆 𝒂𝒕 𝑩𝒂𝒔𝒆 𝑷𝒆𝒓𝒊𝒐𝒅 ∗ 𝑶𝒔𝒆𝒓𝒗𝒂𝒕𝒊𝒐𝒏 𝑸𝒖𝒂𝒏𝒕𝒊𝒕𝒚]

Example:
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The table presented below displays the unit prices of various items in the years 2014 and 2015, along with the
corresponding quantities of each item purchased during the same period.
Product Number bought in Unit price in 2014 Number bought in Unit price in 2015
2014 2015
A 20 8 17 10
B 35 18 38 23
C 10 6 12 5

If 2014 is the base year, calculate

(a) Laspeyres Price Index in 2015.
(b) Paasche Price Index in 2015.
(*) Solution
10∗20+23∗35+5∗10
(a) Laspeyres Price Index = 8∗20+18∗35+6∗10 ∗ 100 = 124

17∗10+38∗23+12∗5
(b) Paasche Price Index = ∗ 100 = 124
17∗8+38∗18+12∗6
(*) Dạng chuỗi Index:
Year 1 2 3 4 5 6 7 8
Value a b c d e f g h
Index 1 100𝑎 100𝑏 100 100𝑑 100𝑒 100𝑓 100𝑔 100ℎ
𝑐 𝑐 𝑐 𝑐 𝑐 𝑐 𝑐
Index 2 100𝑎 100𝑏 100𝑐 100𝑑 100𝑒 100 100𝑔 100ℎ
𝑓 𝑓 𝑓 𝑓 𝑓 𝑓 𝑓

𝐼𝑛𝑑𝑒𝑥 1 𝐼𝑛𝑑𝑒𝑥 1 𝑡ạ𝑖 𝑛ă𝑚 𝑐ℎọ𝑛 𝑙à𝑚 𝑏𝑎𝑠𝑒 𝑦𝑒𝑎𝑟 𝑐ủ𝑎 𝑖𝑛𝑑𝑒𝑥 2
→ =
𝐼𝑛𝑑𝑒𝑥 2 100

Example
Provide a table showing the unemployment (millions of people) over the years in the United States. Initially, the
government chose 2010 as the base year, but then due to some external influences, 2013 was chosen as the base year.
Look for vacant positions on the table.
Year 2010 2011 2012 2013 2014 2015
Index 1: 100 97.8 99.6 103.4 a b
Index 2: x y z 100 112 104.8
(*) Solution

100 103.4
= → 𝑥 = 96.7
𝑥 100
2. Inflation rate
- Nominal data: Giá trị thô ( giá gốc ), chưa tính qua lạm phát
- Real data: Giá đã tính qua lạm phát.
- At base year, nominal value = real value
(*) Adjust value data for inflation
(+) Năm quan sát nằm bên phải base year
𝑁𝑜𝑚𝑖𝑛𝑎𝑙 𝑣𝑎𝑙𝑢𝑒
Nominal value = Real value*(1 + r%) → 𝑅𝑒𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 = 1+𝑟%
(+) Năm quan sát nằm bên trái base year
𝑅𝑒𝑎𝑙 𝑉𝑎𝑙𝑢𝑒
Nominal value = 1+𝑟% → 𝑅𝑒𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 = 𝑁𝑜𝑚𝑖𝑛𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 ∗ (1 + 𝑟%)
(+) If the overall percentage change of nominal data exceeds the overall percentage increase in inflation, so we will
observe a rise in real value during the period, and vice versa.

(*) Example
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This table shows the house price from 2009 to 2014 accompanied by the inflation rate.

Year 2009 2010 2011 2012 2013 2014

Price $85000 $89000 $93000 $95000 $97000 $103000
Inflation rate 8.2% 7.6% 8.6% 8.8% 9.3%

Use the annual rates of inflation given in the table to adjust the prices to those prevailing at the end of 2011. Compare the
rise in both the nominal and real values of house prices during this period.
(*) Solution

The real price of 2009 adjusted to 2011 is 85000(1 + 8.2%)(1 + 7.6%) = $98959.72

The real price of 2010 adjusted to 2011 is 89000(1 + 8.2%) = $96298

The real price of 2011 is $93000

95000
The real price of 2012 adjusted to 2011 is 1+8.6% = $87476.98

97000
The real price of 2013 adjusted to 2011 is (1+8.8%)(1+8.6%) = $82094.3

103000
The real price of 2014 adjusted to 2011 is (1+9.3%)(1+8.8%)(1+8.6%) = $79755.08

IV. Interest rate

(1) Simple interest
- The amount of interest received is the same for all years
Example:
Assuming you loaned your cousin 10 million USD for two years, your cousin has promised to repay you a fixed amount
of 6% of the original loan each year.
(*) Solution:
- The amount that you will have after the 1 year: 10m + 10m*0.06 =10.6m USD
- The amount that you will have after the 2 years: 10.6m + 10m*0.06 =11.2m USD
- The fixed additional amount that you would receive each year is called the ‘simple interest’.
→ 𝑺𝒊𝒎𝒑𝒍𝒆 𝒊𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝒄𝒂𝒏 𝒃𝒆 𝒄𝒂𝒍𝒄𝒖𝒍𝒂𝒕𝒆 𝒃𝒚 𝒕𝒉𝒊𝒔 𝒇𝒐𝒓𝒎𝒖𝒍𝒂: 𝑭𝑽 = 𝑷 + 𝑷 ∗ 𝒓% ∗ 𝒏
Where
- FV is future value
- P ( principal ) is the original amount
- r% is the interest rate
- n is the number of year ( month/ week/ day )

(2). Compound interest

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- Normally, in addition to the interest on the original amount, the bank would also give you additional ‘interest on the
interest’. This is called ‘compound interest’.
- Suppose you decide to put VND 10 million into a savings account at Vietcombank that pays the annual compound
interest rate of 6% for 10 years.
(+) The total amount you will have in 1 year:
10𝑚 + 10𝑚 ∗ (0.06) = 10𝑚 ∗ (1 + 0.06) = 10𝑚 ∗ 1.06 = 𝐹1
(+) The total amount you will have in 2 years:
𝐹1 + 𝐹1 ∗ 0.06 = 𝐹1 ∗ (1 + 0.06) = 10𝑚 ∗ 1.06 ∗ 1.06 = 10𝑚 ∗ 1.062 = 𝐹2
(+) The total amount you will have in 3 years:
𝐹2 + 𝐹2 ∗ 0.06 = 𝐹2 ∗ (1 + 0.06) = 10𝑚 ∗ 1.062 = 10𝑚 ∗ 1.063
→ 𝑇ℎ𝑒 𝑡𝑜𝑡𝑎𝑙 𝑎𝑚𝑜𝑢𝑛𝑡 𝑦𝑜𝑢 𝑤𝑖𝑙𝑙 ℎ𝑎𝑣𝑒 𝑖𝑛 10 𝑦𝑒𝑎𝑟𝑠: 𝐹𝟏𝟎 = 10𝑚 ∗ 1.06𝟏𝟎 = 𝑉𝑁𝐷 17.9𝑚
𝒓% 𝒎∗𝒏
→ 𝑪𝒐𝒎𝒑𝒐𝒖𝒏𝒅 𝒊𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝒄𝒂𝒏 𝒃𝒆 𝒇𝒐𝒖𝒏𝒅 𝒃𝒚 𝒕𝒉𝒊𝒔 𝒇𝒐𝒓𝒎𝒖𝒍𝒂: 𝑭𝒖𝒕𝒖𝒓𝒆 𝒗𝒂𝒍𝒖𝒆 = 𝑷𝒓𝒊𝒏𝒄𝒊𝒑𝒂𝒍 ∗ (𝟏 + )
𝒎
Where
- Future value (FV) is the final sum after n years
- Principal (P) is the original sum of money
- r% is the annual percentage rate (APR)
- “m” is the number of compounding periods in one year
- “n” is the number of years
(*) Các giá trị của “m”
𝐷𝑎𝑖𝑙𝑦 → 𝑚 = 365
𝑤𝑒𝑒𝑘𝑙𝑦 → 𝑚 = 52
𝑚𝑜𝑛𝑡ℎ𝑙𝑦 → 𝑚 = 12
𝑞𝑢𝑎𝑟𝑡𝑒𝑟𝑙𝑦 → 𝑚 = 4
𝑎𝑛𝑛𝑢𝑎𝑙𝑙𝑦 → 𝑚 = 1
(*) Special: Compound continuously interest
- The type of compounding in which the interest is added on with increasing frequency is called continuous
compounding.
- If the interest is compounded in a smaller and smaller period, the future value rises but appears to be approaching a
fixed number.
𝑚/𝑟 𝑟∗𝑛
𝑟 𝑛𝑚 1
𝐹𝑛 = lim 𝑃∗ (1 + ) = lim 𝑃 ∗ [(1 + 𝑚 ) ] = 𝑷 ∗ 𝒆𝒓∗𝒏
𝑚→∞ 𝑚 𝑚→∞
𝑟

V. Geometric series
- In the mathematics of business, the application of geometric series will be used to determine the future value after a
period of time where multiple payments occur (individuals save regularly or businesses pay back loans in multiple
installments).
• Suppose we want the sum of the first six terms of the geometric progression: 3, 6, 12, 24, …
• One way to do it is to write the first six terms and add them together:
• 3 + 6 + 12 +24 + 48 +96 = 189
• Or we can use the Newton binomial to sum a geometric series
𝒓𝒏 −𝟏
• 𝑎 + 𝑟 × 𝑎 + 𝑟 2 × 𝑎 + ⋯ 𝑟 𝑛−1 × 𝑎 = 𝒂 ∗ ( 𝒓−𝟏 ) (𝑟 ≠ 1)
• 𝑎 is the first term.
• 𝑛 is the number of terms that are needed to sum.
• 𝑟 is the geometric ratio.

(*) Application:
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(+) Saving
Dạng 1: Thời điểm tiết kiệm và gộp lãi cùng đơn vị ( Gửi tiền tiết kiệm vào đầu năm, compound annually; Gửi tiền
đầu tháng, compound monthly;...)
Example: Garlley saves $1,500 at the beginning of each year for ten years. What is the total amount Garlley will receive
after 10 years given that the interest rate is 6% compounded annually?
(*) Solution
Timeline:

→ 𝑆 = 1500(1.06)10 + 1500(1.06)9 + 1500(1.06)7 + ⋯ + 1500(1.06)2 + 1500(1.06)

1.0610 − 1
↔ 𝑆 = 1500(1.06) = $20957.46
1.06 − 1

Example: Garlley saved $1,500 at the beginning of each month for ten years. What is the total amount Garlley will
receive after 10 years given that the interest rate is 6% compounded monthly?
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(*) Solution:
𝟏
- 1 tháng = 𝟏𝟐 𝒏ă𝒎
Timeline:

→ 𝑆 = 1500(1 + 0.5%)120 + 1500(1 + 0.5%)119 + 1500(1 + 0.5%)118 + ⋯ + 1500(1 + 0.5%)2 + 1500(1 + 0.5%)
(1 + 0.5%)120 − 1
↔ 𝑆 = 1500(1 + 0.5%) = $247048.11
(1 + 0.5%) − 1
𝑟% 𝑛∗𝑚
(1 + 𝑚)
𝑟% −1
→ 𝐶Ô𝑁𝐺 𝑇𝐻Ứ𝐶 𝑇Ổ𝑁𝐺 𝑄𝑈Á𝑇: 𝑆 = 𝑃 (1 + )
𝑚 𝑟%
𝑚
Example: Garlley saved $1,500 at the beginning of each Quarter for ten years. What is the total amount Garlley will
receive after 10 years given that the interest rate is 6% compounded quarterly?
6% 40
(1 +
6% 4 ) −1
→ 𝑆 = 1500 (1 + )∗ = $82622.87
4 6%
4

Dạng 2: Thời điểm tiết kiệm và gộp lãi khác đơn vị ( Gửi tiền tiết kiệm vào đầu năm nhưng lãi gộp theo quí, theo
tháng, liên tục,…)
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Example: Garlley saved $1,500 at the beginning of each year for ten years. What is the total amount Garlley will receive
after 10 years given that the interest rate is 6% compounded monthly?
(*) Solution:

→ 𝑆 = 1500(1 + 0.5%)120 + 1500(1 + 0.5%)108 + ⋯ + 1500(1 + 0.5%)24 + 1500(1 + 0.5%)12

(1 + 0.5%)120 − 1
↔ 𝑆 = 1500(1 + 0.5%)12 = $21156.77
(1 + 0.5%)12 − 1

→ 𝐶Ô𝑁𝐺 𝑇𝐻Ứ𝐶 𝑇Ổ𝑁𝐺 𝑄𝑈Á𝑇(𝑳Ư𝑼 Ý: 𝑪𝑯Ỉ 𝑺Ử 𝑫Ụ𝑵𝑮 𝑲𝑯𝑰 𝑴Ố𝑪 𝑮Ử𝑰 𝑻𝑰Ế𝑻 𝑲𝑰Ệ𝑴 𝑻Í𝑵𝑯 𝑻𝑯𝑬𝑶 𝑵Ă𝑴)
𝑟% 𝑛∗𝑚
𝑟% 𝑚 (1 − 𝑚 ) −1
𝑆 = 𝑃 (1 + ) ∗
𝑚 𝑟% 𝑚
(1 − 𝑚 ) − 1

Example: Garlley saved $1,500 at the beginning of each quarter for ten years. What is the total amount Garlley will
receive after 10 years given that the interest rate is 6% compounded monthly?
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(*) Solution:

→ 𝑆 = 1500(1 + 0.5%)120 + 1500(1 + 0.5%)117 + 1500(1 + 0.5%)114 + ⋯ + 1500(1 + 0.5%)3

3
(1 + 0.5%)120 − 1
→ 𝑆 = 1500(1 + 0.5%) = $82760.43
(1 + 0.5%)3 − 1
(*) KHI MỐC GỬI TIẾT KIẾM KHÔNG TÍNH THEO NĂM, TA KHÔNG CÓ CÔNG THỨC TỔNG QUÁT.

Dạng 3: Gửi tiết kiệm 1 lần rồi lại sau đó gửi tiếp từng đợt nhỏ hơn theo chu kì khác.
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Example: Garlley saved $1,500 at the beginning of a year for ten years with an interest rate of 6% compounded monthly.
After that, at the beginning of each subsequent month, Garlley saved $250 with an interest rate of 4.5% compounded
monthly. What is the total amount that Garlley will receive after 10 years?
(*) Solution:

𝑆1 = 1500(1 + 0.5%)120 = $2729.1

𝑆2 = 250(1 + 0.375%)119 + 250(1 + 0.375%)118 + ⋯ + 250(1 + 0.375%)
(1 + 0.375%)119 − 1
→ 𝑆2 = 250(1 + 0.375%) = $37549.52
0.375%
→ 𝑇𝑜𝑡𝑎𝑙 𝑎𝑚𝑜𝑢𝑛𝑡 𝑆 = 𝑆1 + 𝑆2 = $40278.62
(*) Dạng này KHÔNG CÓ CÔNG THỨC TỔNG QUÁT.
Document compiled by Vu Cong Minh
Example: Garlley saved $1,500 at the beginning of a year for ten years with an interest rate of 6% compounded monthly.
After that, at the beginning of each subsequent quarter, Garlley saved $250 with an interest rate of 4.5% compounded
weekly. What is the total amount that Garlley will receive after 10 years?
(*) Solution:

(1 + 0.0865%)507 − 1
→ 𝑆 = 1500(1 + 0.5%)120 + 250(1 + 0.865%)13 ∗ = $15034.75
(1 + 0.0865%)13 − 1
Document compiled by Vu Cong Minh
(+) Loans
Vay tiền khoản L đàu chu kì, và trả 1 khoản A như nhau sau mỗi cuối n kì. Sau đó kì cuối cùng khoản tiền vay còn lại = 0
(+) Ban đầu: Mượn 1 khoản L
(+) Cuối chu kì 1 lãi được gộp: 𝐿(1 + 𝑟%)
(+) Sau đó bạn phải trả 1 khoản A: 𝐿(1 + 𝑟%) − 𝐴 → 𝑆ố 𝑡𝑖ề𝑛 𝑐𝑢ố𝑖 𝑐ℎ𝑢 𝑘ì 𝑛à𝑦 𝑙à đầ𝑢 𝑐ℎ𝑢 𝑘ì 𝑘𝑖𝑎.
(+) Cuối chu kì 2, khoản tiền còn lại được gộp lãi lần nữa và bạn phải trả 1 khoản tiền A
→ [𝐿(1 + 𝑟%) − 𝐴](1 + 𝑟%) − 𝐴 = 𝐿(1 + 𝑟%)2 − 𝐴(1 + 𝑟%) − 𝐴
( Đây là số tiền đầu chu kì 3 )
(+) Cuối chu kì 3: Lãi được gộp và bạn phải trả một khoản A
→ 𝑆ố 𝑛ợ 𝑠𝑎𝑢 𝑐ℎ𝑢 𝑘ì 3: [𝐿(1 + 𝑟%)2 − 𝐴(1 + 𝑟%) − 𝐴](1 + 𝑟%) − 𝐴 = 𝐿(1 + 𝑟%)3 − 𝐴(1 + 𝑟%)2 − 𝐴(1 + 𝑟%) − 𝐴.
( Đây là số tiền đầu chu kì 4 )
(+) Giả sử trả đến chu kì thứ n, số nợ = 0
→ 𝐿(1 + 𝑟%)𝑛 − 𝐴(1 + 𝑟%)𝑛−1 − 𝐴(1 + 𝑟%)𝑛−2 − 𝐴(1 + 𝑟%)𝑛−3 − ⋯ − 𝐴(1 + 𝑟%) − 𝐴 = 0
↔ 𝐿(1 + 𝑟%)𝑛 = 𝐴 + 𝐴(1 + 𝑟%) + ⋯ + 𝐴(1 + 𝑟%)𝑛−3 + 𝐴(1 + 𝑟%)𝑛−2 + 𝐴(1 + 𝑟%)𝑛−1
(1 + 𝑟%)𝑛−1 − 1
↔ 𝐿(1 + 𝑟%)𝑛 = 𝐴 ∗
𝑟%
Dạng 1: Thời hạn trả và số lần gộp lãi cùng đơn vị ( Trả và cuối năm, lãi gộp annually; Trả và cuối tháng, lãi gộp
monthly;…)
Example: Garlley borrowed $25,000 from Roxie to invest and agreed to pay a sum of money A at the end of each year for
10 years. Knowing that interest is 6% compounded annually, calculate the value of A.
(*) Solution:

→ 25000(1 + 6%)10 = 𝐴 + 𝐴(1 + 6%) + ⋯ + 𝐴(1 + 6%)9

(1 + 6%)10 − 1
25000(1 + 6%)10 = 𝐴 ∗ → 𝐴 = $3396.7
6%
Document compiled by Vu Cong Minh

Example: Garlley borrowed $25,000 from Roxie to invest and agreed to pay a sum of money A at the end of each month
for 10 years. Knowing that interest is 6% compounded monthly, calculate the value of A.
(*) Solution:

(1 + 0.5%)120 − 1
→ 25000(1 + 0.5%)120
=𝐴∗ → 𝐴 = $277.55
0.5%
𝑟% 𝑛∗𝑚
𝑟% 𝑛∗𝑚 (1 + 𝑚 ) −1
→ 𝐶Ô𝑁𝐺 𝑇𝐻Ứ𝐶 𝑇Ổ𝑁𝐺 𝑄𝑈Á𝑇: 𝐿 (1 + ) =𝐴∗
𝑚 𝑟%
𝑚
Document compiled by Vu Cong Minh

Example: Garlley borrowed $25,000 from Roxie to invest and agreed to pay a sum of money A at the end of each quarter
for 10 years. Knowing that interest is 6% compounded quarterly, calculate the value of A.
(*) Solution:

(1 + 1.5%)40 − 1
→ 25000(1 + 1.5%)40 = 𝐴 ∗ → 𝐴 = $835.68
1.5%
Example: A prize fund is set up with a single investment of $5000 to provide an annual prize of $500. The fund is
invested to earn interest at a rate of 7% compounded annually. If the first prize is awarded 1 year after the initial
investment, find the number of years for which the prize can be awarded before the fund falls below $500.
(*) Solution:
𝑛
(1 + 7%)𝑛 − 1
5000(1 + 7%) = 500 ∗ + 500 → 𝑛 = 16.72
7%
→ 𝑇ℎ𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑦𝑒𝑎𝑟𝑠 𝑓𝑜𝑟 𝑤ℎ𝑖𝑐ℎ 𝑡ℎ𝑒 𝑝𝑟𝑖𝑧𝑒 𝑐𝑎𝑛 𝑏𝑒 𝑎𝑤𝑎𝑟𝑑𝑒𝑑 𝑏𝑒𝑓𝑜𝑟𝑒 𝑡ℎ𝑒 𝑓𝑢𝑛𝑑 𝑓𝑎𝑙𝑙𝑠 𝑏𝑒𝑙𝑜𝑤 $500 𝑖𝑠 17 𝑦𝑒𝑎𝑟𝑠
Document compiled by Vu Cong Minh
Dạng 2: Thời hạn trả và số lần gộp lãi khác đơn vị ( Trả và cuối năm, lãi gộp monthly; Trả vào cuối tháng, lãi gộp
weekly;…)
(+) Khi hạn trả tính theo năm
Example: Garlley borrowed $25,000 from Roxie to invest and agreed to pay a sum of money A at the end of each year for
10 years. Knowing that interest is 6% compounded monthly, calculate the value of A.

(1 + 0.5%)120 − 1
→ 25000(1 + 0.5%)120 = 𝐴 ∗ → 𝐴 = $3423.75
(1 + 0.5%)12 − 1
𝑟% 𝑛∗𝑚
𝑟% 𝑛∗𝑚 (1 + 𝑚 ) −1
→ 𝐶Ô𝑁𝐺 𝑇𝐻Ứ𝐶 𝑇Ổ𝑁𝐺 𝑄𝑈Á𝑇: 𝐿 (1 + ) =𝐴 𝑚
𝑚 𝑟%
(1 + 𝑚 ) − 1
Document compiled by Vu Cong Minh
Example: Garlley borrowed $25,000 from Roxie to invest and agreed to pay a sum of money A at the end of each year for
10 years. Knowing that interest is 6% compounded quarterly, calculate the value of A.
6% 40
(1 + 4 ) − 1 = $3418.68
40
6%
→ 25000 (1 + ) =𝐴
4 6% 4
(1 + 4 ) − 1
(+) Khi hạn trả không tính theo năm
Example: Garlley borrowed $25,000 from Roxie to invest and agreed to pay a sum of money A at the end of each quarter
for 10 years. Knowing that interest is 6% compounded weekly, calculate the value of A.

(1 + 0.115%) 520 − 1
→ 25000(1 + 0.115%)520 = 𝐴 ∗ → 𝐴 = $836.5
(1 + 0.115%)13 − 1

(*) DẠNG NÀY KHÔNG CÓ CÔNG THỨC TỔNG QUÁT, PHẢI VẼ TIMELINE SUY LUẬN
Document compiled by Vu Cong Minh
Dạng 3: Trả ngắt quãng
Example: A debtor is to amortize an $18,000 car loan by making equal repayments at the end of each month for 36
months with the interest at 5% compounded monthly.
(a) How much is each monthly payment?
(b) Just after the 16th repayment, the debtor would like to pay off the rest of the loan only by three-quarter repayments at
the interest rate of 4.5% compounded quarterly. What is each quarterly repayment?
(*) Solution:
5% 36
5% 36 (1+ 12 ) −1
(a) 18000 (1 + 12 ) = 5% ∗ 𝐴 → 𝐴 = $539.476
12
(b) The remaining loans after the 16th payment:
5% 16 5% 15 5% 14
18000 (1 + ) − 539.476 (1 + ) − 539.476 (1 + ) − ⋯ − 539.476 = $10331.57
12 12 12
(*) The debtor would like to pay off the rest of the loan only by three-quarter repayments at the interest rate of
4.5% compounded quarterly:
3 4.5% 3
(1 +
4.5% 4 ) − 1 → 𝐴 = $3521.63
→ 10331.57 (1 + ) =𝐴∗
4 4.5%
4
(*) DẠNG NÀY KHÔNG CÓ CÔNG THỨC TỔNG QUÁT
Example: A business takes out a loan of $ 500,000 from a bank and agrees to repay the loan by paying a fixed amount of
$ 60,000 at the end of each subsequent year. Once the debt falls below $60 000 the business pays off the outstanding debt
as the final payment. Work out the final payment if the interest rate is 7.5% compounded annually.

Example: Monthly sales figures for January are 5600. This is expected to fall for the following 9 months at a rate of 2%
each month. Thereafter sales are predicted to rise at a constant rate of 4% each month. Estimate total sales for the next 2
years (including the first January).
Example: A person borrows $ 100,000 at the beginning of a year and agrees to repay the loan in ten equal installments at
the end of each year. Interest is charged at a rate of 6% compounded annually.
(a) Find the annual repayment.
(b) Work out the total amount of interest paid and compare this with the total interest paid when repaying the loan in five
equal annual installments instead of ten.
Example: A person wishes to save a regular amount at the beginning of each month to buy a car in 18 months. An account
offers a return of 4.8% compounded monthly. Work out the monthly savings if the total amount saved at the end of 18
months is $ 18,000.
Example: Determine the monthly repayments needed to repay a $ 50,000 loan that is paid back over 25 years when the
interest rate is 9% compounded annually. Calculate the increased monthly repayments needed in the case when
(a) The interest rate rises to 10%
(b) The period of repayment is reduced to 20 years.
Annual percentage rate (APR): the annual rate of interest payable on mortgages, loans, credit cards, and other credit
products. It is generally used to allow borrowers to compare different credit offers because it not only includes the
relevant interest rate but also any charges involved, such as arrangement fees.
Tóm gọn là dùng khi mình đi vay mượn, mình cần so sánh APR vì nó chỉ ra được cái chỉ số lãi hằng năm cần trả (bao gồm
lãi + chi phí khác)
Annual equivalent (effective) rate (AER): used in savings accounts. It explains what rate of interest you will earn
depending on how often interest is added to your account.
Tóm gọn là dùng khi đi gửi tiết kiệm, tiền lãi khi gửi mỗi năm được bao nhiêu
𝑟% 𝑚
𝐴𝐸𝑅 𝑜𝑟 𝐴𝑃𝑅 = (1 + ) − 1(= 𝑒 𝑟% − 1 𝑖𝑓 𝑐𝑜𝑚𝑝𝑜𝑢𝑛𝑑𝑒𝑑 𝑐𝑜𝑛𝑡𝑖𝑛𝑜𝑢𝑠𝑙𝑦)
𝑚
Document compiled by Vu Cong Minh
Example:
Simon decides to buy a new sofa which is available at each of the three stores at the same fixed price. He decides to
borrow the money using each store’s credit facility.
- Store A has an effective rate of interest of 12.6%.
- Store B charges interest at a rate of 10.5% compounded continuously.
- Store C charges interest at a rate of 11.5% compounded quarterly.
(*) Solution
- Store A, APR = 12.6%
- Store B, APR = 𝑒10.5% − 1 = 11.071%
11.5% 4
- Store C, APR = (1 + ) − 1 = 12%
4
→ 𝑐ℎọ𝑛 𝑠𝑡𝑜𝑟𝑒 𝐵 𝑣ì 𝑘ℎ𝑖 đ𝑖 𝑣𝑎𝑦 𝑚ượ𝑛 𝑡ℎì ư𝑢 𝑡𝑖ê𝑛 𝑐ℎỗ 𝑛à𝑜 𝑙ã𝑖 𝑡ℎấ𝑝 ℎơ𝑛.
Example:
Which of the following savings accounts offers the greater return?
- Account A: an annual rate of 8.05% paid semi-annually
- Account B: an annual rate of 7.95% paid monthly
VI. Investment appraisal
(*) Net present value (NPV)
𝑟% 𝑛∗𝑚 𝑟% −𝑛∗𝑚
𝑆 = 𝑃 (1 + ) → 𝑃 = 𝑆 (1 + ) 𝑤ℎ𝑒𝑟𝑒 𝑃 𝑖𝑠 𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 𝑎𝑛𝑑 𝑆 𝑖𝑠 𝑡ℎ𝑒 𝑓𝑢𝑡𝑢𝑟𝑒 𝑣𝑎𝑙𝑢𝑒
𝑚 𝑚
- We assume that P0 is denoted the initial outlay
→ 𝑁𝑃𝑉 ( 𝑁𝑒𝑡 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 ) = 𝑃 − 𝑃0
(+) Nếu NPV<0 thì không đáng đầu tư
(+) Nếu NPV>0 thì đáng đầu tư
(*) Internal rate of return (IRR)
𝑃0 = 𝑆(1 + 𝐼𝑅𝑅%)−𝑛
Nếu IRR > r% của market thì đáng để đầu tư
(*) Example
(1) An investment project requires an initial outlay of $8000 and will produce a return of $17,000 at the end of 5 years.
Use the
(a) net present value
(b) internal rate of return
Methods to decide whether this is worthwhile if the capital could be invested elsewhere at 15% compounded annually.
(2) Suppose that it is possible to invest in only one of two different projects. Project A requires an initial outlay of $1000
and yields $1200 in 4 years. Project B requires an outlay of $ 30,000 and yields $ 35,000 after 4 years. Which of these
projects would you choose to invest in when the market rate is 3% compounded annually?
(3) A firm needs to choose between two projects, A and B. Project A involves an initial outlay of $ 13,500 and yields $
18,000 in 2 years. Project B requires an outlay of $9000 and yields $13 000 after 2 years. Which of these projects would
you advise the firm to invest in if the annual market rate of interest is 7%?
(4) A firm has a choice of spending $ 10,000 today on one of two projects. The revenue obtained from these projects is
listed in the Table below. Assuming that the discount rate is 15% compounded annually, which of these two projects
would you advise the company to invest in?
End of year Revenue
1 2000 1000
2 2000 1000
3 3000 2000
4 3000 6000
5 3000 4000
(5) (a) Calculate the IRR of a project which requires an initial outlay of $20 000 and produces a return of $8000 at the end
of year 1 and $15 000 at the end of year 2. (b) Calculate the IRR of a project which requires an initial outlay of $5000 and
produces returns of $1000, $2000 and $3000 at the end of years 1, 2 and 3, respectively.