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Business Mathematics - Final Examination: Time Value of Money

This document contains 10 questions covering various topics in business mathematics for a final exam, including time value of money, net present value, marginal functions, elasticity of demand, profit maximization, Lagrange multipliers, definite and indefinite integration, and basic matrix operations. The questions involve calculating future and present values, determining break-even points, finding marginal revenue and elasticities, maximizing profits subject to constraints, and performing operations on matrices such as addition, multiplication, and inversion.

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112 views2 pages

Business Mathematics - Final Examination: Time Value of Money

This document contains 10 questions covering various topics in business mathematics for a final exam, including time value of money, net present value, marginal functions, elasticity of demand, profit maximization, Lagrange multipliers, definite and indefinite integration, and basic matrix operations. The questions involve calculating future and present values, determining break-even points, finding marginal revenue and elasticities, maximizing profits subject to constraints, and performing operations on matrices such as addition, multiplication, and inversion.

Uploaded by

Banana Potatona
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Business Mathematics – Final Examination

Time Value of Money


Question 1:
Your friend John started college at the age of 18 with $63,450 already saved, because 18 years ago when he
was born, his parents placed money into a special college savings account earning 7.25% per year. How much
money did John’s parents place into his college account? How if the rate is 10% instead?

Net Present Value

Question 2:
CV. Carolina is currently considering a five-year project that has an initial outlay or cost of $140,000. The cash
inflows from its project for years 1 through 5 are the same at $35,000.
CV. Carolina has a discount rate of 10%. What is the NPV for CV. Carolina’s current project? Will it accept the
project? Explain.

Marginal Function

Question 3:
A firm’s demand function is given by:
𝑃 = 100 − 4√𝑄 − 3𝑄
a. Write down an expression for total revenue, TR, in terms of Q
b. Find an expression for the marginal revenue, MR, and find the value of MR when Q = 9.
c. Estimate the change in TR when Q increases by 0.25 units.

Elasticity of Demand

Question 4:
Given the demand function:
𝑄 = 200 − 2𝑃 − 𝑃𝐴 + 0.1𝑌 2
Where P = 10, PA= 15 and Y = 100, find:
a. The price elasticity of demand
b. The cross-price elasticity of demand; substitute or complementary goods?
c. The income elasticity of demand; inferior, normal, or superior goods?

Unconstrained Optimization: Profit Maximization

Question 5:
A firm is a monopolistic producer of two goods G1 and G2. The prices are related to quantities Q 1 and Q2
according to the demand functions.
𝑃1 = 50 − 𝑄1
𝑃2 = 95 − 3𝑄2
If the total cost function is:
𝑇𝐶 = 𝑄12 + 3𝑄1 𝑄2 + 𝑄22
Find the values of Q1 and Q2 which maximize π and deduce the corresponding prices.
Lagrange Multipliers

Question 6:
Use Lagrange multipliers to find the maximum value of:
𝑧 = 4𝑥𝑦
Subject to the constraint:
𝑥 + 2𝑦 = 40

Definite Integration: Investment Flow


Question 7:
If the investment flow is:
𝐼 (𝑡) = 9000√𝑡
Calculate:
a. The capital formation from the end of the first year to the end of the fourth year;
b. The number of years required before the capital stock exceeds $100,000.

Indefinite Integration: Marginal Function


Question 8:
A firm’s marginal revenue and marginal cost functions are given by:
𝑀𝑅 = 240 − 0.6𝑄2 and 𝑀𝐶 = 150 + 0.3𝑄2
If fixed costs are 50, determine the maximum profit.

Basic Matrix Operations


Question 9:
3 −10 6 4 −3 1 3−2 −1 𝑇
𝐴=[ ], 𝐵=[ ], 𝐶=[ ]
−4 5 2 2 2 5 6 04 −2

Work out each of the following, where possible:


a. A + C b. 2A – CT c. AB d. BA

Matrix Inversion
Question 10:
Find the inverse of the matrix:
2 1 −1
𝐴=[ 1 3 2 ]
−1 2 1

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