Math Review

FINE 5200 │ Managerial Finance

Yelena Larkin

Not in the textbook

Math Review (not in the textbook)
│1
> Working with powers

> (Xn)(Xm) = Xn+m (23)(22) =

> (Xn)m = Xnm (23)2 =
> (Xm)/(Xn)= X(m-n) (23)/(22) =
X-n = 1/ (Xn) 2-3 =
> (X+Y)m ≠ Xm +Ym (2+3)3 ≠ 23 + 33

Remarks:
Powers in the range of -1<n<1 are roots
Powers in the negative range do not give you negative results!
Math Review: Logarithms
│2
Math Review: Equations
│3
> Solving Equations (powers and logarithms)

> Xn=A, X=?

Examples: X3=8 X13=.75 (1+X)3=300

> AX=B, X=?

Examples: 2X=8 .5X=.125 2(1+X)=15

> A/(1+B)X=C,X=?

Examples: 1/(1+0.05)X=.9 100/(1+0.1)(X+2)=50

Math Review: Notations
│4
> Summation 8
12 + 22 + 32 + 42 + 52 + 62 + 72 + 82  t
versus
t 1
2

3 5
Example:  3t
t 1
100/1.1 t

t 0

> Units: numbers,%, basis points (bp)

— % is 1/100 of a number
— bp is:
– 1/100 of % or
– 1/10000 of a number
1,583  35% = 7BP= ?% = ?