Name Date Class

Chaptet12 lnvestments
Lesson Iz.L Certifieates of Deposit
Mathematics
@
Your money earnsinterestat a higher rate when you buy a certificateof deposit
(CD) than it doeswhen you invest it in a regularsavingsaccount.Most CDs earn
interestcompoundeddaily,monthly,or qtarterly.

Amount = Original Principal x Amount of $1.00

Compound Interest = Amount - Original Principal
Use the compoundinteresttable to determinethe interestearned.
AMOUNTOF$1.M INVESTED, DAILY,MONTHLYAND
QUARTERLY COMPOUNDING
Annual Intercst Period-'l Year Interest PerioH Years
Rate Dally Monthly Quarterly Daily Monthly Quaderly
3.00% 1.030453 1. 0 3 0 4 1 6 1 . 0 3 0 3 3 9 1 27491 1.127328 1.126992
3.25% '1.033032 1 . 0 3 2 9 8 9 1 . 0 3 2 8 9 8 1 38822 1.138628 1.138230
'1.035567
3.50% 1.0356'18 1 . 0 3 5 4 6 2 1 50266 1 . 1 5 0 0 3 9 1 . 1 4 9 5 7 4
3.75% 1. 0 3 8 2 1 0 1. 0 3 8 1 5 1 1 . 0 3 8 0 3 1 1 61825 1. 1 6 1 5 6 3 1. 1 6 1 0 2 3
4.OO% 1.040808 1.040742 1.040604 1 73501 1. 17 3 19 9 1.172579
4.25% 1. 0 4 3 4 1 3 1 . 0 4 3 3 3 8 1.043182 1 85293 1. 1 8 4 9 4 9 1.184242
1 97204 '1 1. 1 9 6 0 1 5
4.50%;o 1.046025 1.045940 1.045765 .196814

Complete tlie table.

Annual Original Amountper Amount
lnterest -
Interest Period
Rate Principal $1.00 Earned
1. 3.00% 1 yearquarterly $ 6,000 c

,. 3.50% 4 yearsdaily 20,000 d

s
3. 4.25% 4 yearsmonthly 3,000 I

E
4. 4.50% 1 year quarterly 120,000 O

D. 3.75% 1 yearmonthly J,C4U

=
-
6. 3.25% 4 yearsquafierly 325,500 a

@
7. Lorena Ramos can invest $4,000in a l-year CD at 4o/o
-
compounded monthly.
O

a. What is the amount?

b. What is the interest earned?

172 Chapter 12 Mathemqticsfor Business and.Personal Finance

 Name Date Class

8. Alicia Cox purchased a 4-yearcertificate of deposit for

$15,000.The cerlificate earns interest atarate of 3.75o/o
compounded daily.
a. What is the amount of the certificate at maturitv?
b. What is the interest earned?
9. Charles Demaize purchased a -year certificate of deposit for
$45,000.The certificate earns interest at 4.5o/o
compounded daily.
a. What is the certificate worth in 4 years?
b. What has the cer[ificate earned in those 4 years?
10. The Nakatas have $30,000they want to invest in a certificate of
deposit. They can purchase a 4-yearcertificate from Lake Bank
compounded quarterly
that earns interest at a rate of 3.75o/o
or a 4-year cerbificate from Knoll Bank that earns interest at a rate
of 3.75o/o
compounded daily.
a. What is the maturity value of the CD from Citizens Bank?
b. What is the maturity value of the CD from F&M Bank?
c. What is the difference between the maturitv values of the
two certificates?
11. ALGEBRA Harry Miller deposits $20,000in Town Bank's
2.ro-yearCD, which pays 5.25o/o compounded quarterly. Use
the compound interest formula to determine:
a. the future value of Harry's $20,000.
b. how much interest Harrv will earn.

ci
E

e
E

I
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o
=
F

o
O

Chapter | 2 Mathematics for Business and Personal Finance l7t

 Name Date Class

Chaptetl2 Investments
Lesson L2.2 Annual Percentage Yield
Mathematics
@
The annual percentage yield (APY) is also called the effective annual yielcl.
Financial institutions advertise not only their annual interest rates but also the
APY on certificates of deposit and savin$s accounts. The APY is the rate at whir:h
your money earns simple interest in one year. To calcuate the annual percentage
yield on an investment you need this fornrula:

AnnuatPercentageyield = IoLT"t*F#e.
Use the interest table in Lesson 12.1 for the anrouttl of $1.00t alue. Conrplete
the table.

Annual
Annual Original Amountper Interest
lntercst Period Amount Percentage
Rate Principal $1.00 Earned
Yield
1. 3.50% 1 yearquarlerly $10,000
2 4.25% 1 year quaderly 5,500
3. 3.OOyo 1 year monthly 12,500
4. 3 2 5 % 1 yeardaily 18,555

5. Kim Tayes invests $8,000in a certificate of deposit fcrr I yezrr:

The certificate eams interest at an annual rate of 4.Zr;ttt/o
compounded quarterly.
a. What is the amount'?
b. What is the interest earned?
c. What is the annual percentage yield to the nearest 'c

thousandth of a percent? E

6. Shayla Montega invests $28,000in a certificate of deposit -

E
for 4 years. The certificate earns interest at an annual rate
i
compounded quarterly.
of 4.50o/o =
a. What is the amount after 4 years? I

b. What is the interest earned? F

o
c. What is the amount after I year? -
d. What is the interest earned? O

e. What is the annual percentage yield to the nearest

thousandth of a percent?

174 Chapter 12 Mathematicsfor Business qnd Personal Finance

 Name Date Class

Chaptet12 Investments
Lesson 12.3 Buying Stocks
Mathematics
@
Whenyou purchasea shareof stock,you becomepart owner of the corporation
that issuesthe stock.The total amountyou pay for the stock dependson the cost
per share,the numberof sharesyou purchase,and the stockbroker'scommission.

Cost of Stock = Number of Shares x Price per Share

Total Paid = Cost of Stock * Commission
Completethe table. Note that all shareprices are ficticious.

Company
Numberof Gostper Cost of Stock Gommission Total Paid
Sharcs Share
1 . BelsawInc. 500 $11.25 $ 9.99
, KunkleLtd. 2200 25.50 45.50
'105.00
3. PosadnyCo. 3.500 /o.J I

4. Tanya Elliot purchased 400 shares of Frontier Oil at $19.00

per share and paicl a $29.95commission.
a. What was the cost of the stock?
b. What was the total paid?
b. Alan Delucia purchased 1,000shares of FPC Enterprises at
$38.54per share and paid a $0.35per share commission.
a. What was the cost of the stock?
-
b. What was the total paid?
'; 6 . Arthur McGraw purchased 320 shares of AutoZone. He paid
d
a comnrission of l.2o/oof the cost of the stock to the
I
stockbroker. The stocks cost him $78.50per share.
E
a. What was the cost of the stock?
=
b. How much was the commission?
c. What was the total paid?
2
F

o
t. After consulting with his broker, Don Hochstetler purchases
2,000sharesof Fallon Energy stock at $20.10per share.He
also purchased 1,500shares of MacWord Scientific at fi56.24
per share.The commission is 0.1%of the cost of the stock.
a. What was the cost of the Fallon Energy stock?
b. How much was the commission?
c. What is the total value of the stocks includine the
commission?

Chapter | 2 Mqthematics for Business ancl Personal Finance l7t

 Name Date Class

Chapter12 lnvestments
Lesson I2.4 Selling Stocks
Mathematics
@
When you sell your stocks, the sale can result in either a profit or a loss. If the amount
you receive for the sale minus the sales commission is greatcr than the total amount
you paid for the stocks, you have made a profit. If the amount you receive minus the
sales commission is less than the total paid, your sale has resulted in a loss.
Net Sale = Amount of Sale - Commission
Profit (Loss) = Net Selling Price - Investment
Round each answer to the nearest c:ent.
l. Barry Kato owned 400 shares of stock in a car company. He paicl
a total of $11,580.00for the stock. He sold the stock for $29.50per
share and paid a commission of lo/oof the selling price.
a. What was the amount of the sale?
b. What was the net sale?
c. What was the profit or loss'/
, Mar6/ iurd Irene Benefielclpurcha^sed400 shares of airlinc stock
2 years ago. They paid a total of $8,484.55for the stock. Last
week they sold the stock for $19.50per share and paitl an online
commissionof $19.95.
a. What wzrsthe amount of the sale'l
b. What was the net sale?
e. What was the profit or lossi'
-
3 . Jos6 Rodriguezrecently sold 1,320sharesof oil stock for
$31.70per shareplus a commissionof $29.95plus $0.03per -
share.He paicla total of $56,166.00for the stock. a

a. What was the amount of the sale? !l

E
b. What was the selling commission?
=
c. What was the net sale? I
3
T
d. What was the profit or loss? a

4. Emma Kishketon sold 300 shares of stock for $46.54per share F

o
plus a commissionof $49.95plus $0.02'pershare. She purchased
the stock for $39.22plus a l% commission. a

a. What was the cost of the stock?

b. What was the total paid?
c. What was the amount of the sale?
d. What was the net sale?
e. What was the profit or loss?

176 Chapter l 2 Mathematics for Business and.Personal Finance

 Name Date Class

ffi
Chaptet12 lnvestments
Lesson I2.5 Stoek Dividends
/r.*4I

li:il Mathematics
-
A dividend is the money you earn as a shareholder of the company. You may receive an
amount specified by the corporation for each share of stock that you own. The annual
fleld is your annual proceeds for holding a stock; it is expressedas a percent of the
price. You can use the annual yreld to compare different stocks as investments.
Total Annual Dividend = Annual Dividend per Share x Number of Shares

Annual yietd = 4l:fE3!Il\l9S$ rcfllel

Costper Share
Round the yield to nearest hundredth of a percent. Prices are ficticious.
1. Mario Gillespie owns 200 shares of Asset Investment
Corporation. He paid $32.75per share. Asset Investment
pays a $5.00per share dividend.
a. What is the total annual dividend?
b. What is the annual yield?
2. Wade Abercrombie owns 90 shares of Allegheny Energy for
which he paid $41.56per share. The company pays annual
dividends of $\.72 per share.
a. What is the total annual diviclencl?
b. What is the annual yield?
3. Kai Hayashi owns 60 sharcs of Conrcrica Inc. for which he
paid $3,945.90,including a commission of $113.,10.Comerica
E pays annual dividends of $1.92.
'-
a. What was the cost per share ?
g
v; b. What is thc annual yielcl/
I

E 4. Joyce Kronecki buvs ll50 sharesof KOW In<..which have a

O
=
I high of $42.50per share ancla low of $23.60.Last year the
=
o col-npanypaid arutual dividends of $0.58per share.
a. What is the total annual clividend/
F

o b. What is the annual yield based on the low?

- c. What is the annual yield based on the high?
O

5. ALGEBRA Sandy Schabelowns 400 sharesof ExxonMobil

(XOM) stock. After the quarterly clividends are reinvested
under a dividend reinvestment program (DRIP), she owns
401.6shares.XOM is selling at $86.40a share.Find the annual
dividend per share and the annual yield for XOM.

Chapter l2 Mathematicsfor Business and Personal Finance 177

 Name Date Class

Chaptetr2 Investments
Lesson \2.6 Mutual Funds
Mathematics
@
Investors purchasing stock in a mutual fund may pay a loading charge. Tlrpe "A" funds
are front-loaded and investors pay when purchasing the stock. T!)e "8" funds are
back-loaded and investors pay when selling the stock. Mutual fund stock is bought and
sold at its net asset value (NAV). The following formulas are used:
Loading Charge = Loading Rate x Amount Invested or Amount of Sale
Amoqlt Investe-4- Lgadilg charge
Number of shares purchaseu -
Net Asset ValuePer Share
or , t:t]1T-l1l-.) -
Net seuingprice" = (*:Toer per
Loadingcharge
\ Shares Share I
Profit(Loss) = Net Selling Price - Investment

Complete the table. Round the number of shares to the nearest thousandth.

Net Asset Amt Invested Number

Amount Loading
Valueper LoadingRate minus Loading of Shares
lnvested Gharge
Share Charge Purclrased
l. $ 53.00 $ 11 , 1 0 0 No Load $ soo
,. 25.00 15,000 5.OO% 750
3. 250.00 175,000 6.00%
-t2 0R
4. 32,000 4.50%
b. 14.59 10,000 2.5001(,
6. 722.88 357,500 3.80%

7. CharlesJordaninvested$50,000in Astoria InternationalLarge c

CapMutual F\rncl(Tlpe "A"). The net assetvalueis $56.85per

share.The fund is front loadedwith a loadingrate <>f4o/o. -
a. What is the loadingcharge? e
b. How many sharesdid Charlesbuy? =
t

8. The Nortonsinvested$137,500.00 in the WashingtonRealEstate

Mutual Fund (Tlpe "8"). The NAVof the fund at the time of F

o
purchasewas $55.00and was back loadedwith a loadingrate
of 3.250/o.
Whenthe Nortonssold their fund shares,the NAV O

was $59.95.
a. How many sharesdid the Nor[onsbuy?
b. Consideringthe back-endload, how much profit (loss) did the
Nortonsmake on their investment?

| 78 Chapter | 2 Mqthematics for Business and Personq.l Finance

 Name Date Class

Chaptel12 Investments
Lesson L2.7 Bonds
-trr:I

l!3il Mathematics
Bonds are issuedby governmentsand large corporationsto raise money.Whenyou
invest in bonds,you lend moneyto the corporation or goverrrment,and you are paid
interest.Whenthe bond matures,you receivethe facevalueof the bond.
Bond Cost = Face Value x Percent
Annual Interest = Faee Value x Interest Rate
Annual Yield = Annual Interest
Bond Cost

Complete the table below. Round each percent to the nearest hundredth.

FaceValue Quoted Cost of lnterest Annual Annual

Source
of Bond Price Bond Rate Interest Yield
1. GTE $10,000 98.000 5.60%
2 FRJINT 12,000 77.000 2.50%
3. GE CAP 5,000 85.500 3.20%
4. SATTU 20,000 91.375 5.4OYo

Calculate the yield to ttre nearest hundredth of a percent.

5. Ralph Suarezpurchases a $9,000bond at&8.25.It pays 4.5%
annual interest.
a. What is the cost of the bond ?
b. What is the annual interest earned?
- c. What is the annual yield?
6. Eva Rhoclespurchasesa $14,000bond at96.75.It pays 5.25o/o
'-
annual interest.
d
E
ut a. What is the cost of t,hebond?
=
b. What is the annual interest earned?
E
O c. What is the annual yield?
=
=
o
7. The Sonoma llousing Authority is offering $10,000bonds that
E
pay 4.2o/o
annual interest. The quoted price of each bond is
F

o $102.125.Ron Kosciusko purchases 15bonds through a broker

,- who charges a l.25o/osales commission.
O
a. What is the cost of the bonds including the commission?
b. What is the total annual interest?
c. What is the annual yield/
d. What is the annual yield if you include the commission as
parl ofthe cost?

Chapter l2 Mathematicsfor Business and Personal Finance 179

 Name Date Class

Chapter12 lnvestments
Lesson 12.8 Real Estate
Mathematics
@
Investing in real estate is another fornr of investment. The rent received from the rental
property is comparable to interest and dividends from other investments.
Annual Net Income = Annual Rental Ineome - Annual Expenses
AnnuarYierd=*#ffi
Rental properties are purchased for the income the propetty certrprodttct'.
Desired Annual Net Income = Desired Annual Yield x Cash Investment
Desired Annual Net Income + Annual Expenses
Monthly Rent =
t2
Complete the table. Calculate the yielcl to the nearest hundredth of a percent,.

Annual Annual
Purchase Cash Monthly Annual Annual
Rental Net
Price lnvested Rent Expenses Yield
lncome lncome
1. $120,000 $20,000 $1,700 $ 1 9 , 0 0 0 $20,400 $1,400
, 134,500 15,000 A 7qn

3. 250,500 50,000 4,200 48,500

4. 520,000 75,000 6,250 68,400

Calculate the yield to the nearest hundredth of a percent and the rent to the
nearest dollar.
5. Beatriz Cruz purchaseda home for $98,500.She made a $28,500 -
down payment aud tuoftgaged the rest. Her annual expenses
for nrortgage interest, taxes, repairs, insurance, and depreciation '-
totaled $6.890.She rent,edthe house for $750a month. ci

a. What is the annual net income? -

b. What is the atrnual yield? E

c. What monthly rent woulcl she have to charge to get =

=
a yielcl of 9o/o? g

6. Jim Hilbert bought a lacation condontinium as a real estate F

o
rental property for $350,800.After a $90,000down payment,
he morlgaged the rest. His annual expenses totaled $29,790 O

and he rented the condo for $3,200per month.

a. What is the annual net income?
b. What is the annual yield?
c. What monthly rent would he have to charge to get a
yield of l1%?

| 80 Chapter | 2 Mathematics for Business and Personal Finance

 Name
tl4}.1dr.1$Lr'1f1d,1,18i{ti39f
sil&Lis#FW$

12 lnvestments
Chapter,
Lesson 12.9 Retirement Investments
^dstnil.
tf;l| Mathematics
An individual retirement account (IRA) is the most Tableof Life Expectancy
conullon type of retirement investment. If funds are Life
withdrawn before age ro9t/2, a |0o/openalty is incurred Age Expectancy
Factor
unless the money is used to pay college expensesfor
70 zt.4
you, ? spouse, children, or grandchildren or if it is used
71 26.5
for a first-timc home purchase. There is no required
72 25.6
minimum clistribution from a Roth IRA; however, you
73 24.7
must begin withclrawing from a traditional IRA at age AA
23.8
70Vzor pay a penalty of 50o/oof the required minimum
75 22.9
distribution, which can be found using the following
76 22.0
table and forrrula:
77 21.2
Required Minimum Distribution = LifeFair Market Value
Expectancy Factor 78 20.3
79 19.5
The penalty for early distribution is computed using this
80 18.7
fbrnrula:

Penalty for Early Distribution = loo/o x Amount of Distribution

Penalty for Failure to Take Distribution = 50o/ox Required Minimum

Distribution
Complete the table.
o

IRAFair Required
Withdrawn Penaltyif Not
Market Penalty Age Factor Minimum
? at Age 55 Withdrawn
Value Distribution
g
U;
1. $3s0,000 $ 1 0 0 , 0 0 0 tz 25.6
e ,. 398,840 0 80
E

=
3. 185,600 5,000
=
3 4. 468,480 45,000 73

F
5. Enrily Moore,who is 72,hasa traditional IRA with a fair
o marketvalueof $347,600.
'E
a. Whatis her requiredminimum distribution?
O
b. Whatpenaltywould she incur if shefailed to take the
distribution?
c. Whatpenaltywould shepay if shehad taken an early
distribution of $10,000to pay off somedebts?

Chapter 12 Mathematicsfor Business and Personal Finance l8t

 Name Date Class

Lesson L2.9 Retirement Investments (continued)

tS
!ffi

tSiil Mathematics
-
6. Yancey Cooley has a traditional IRA with afair market value
of $890,000.He is now 75.
a. What is his required minimum distribution?
b. What penalty would he incur if he failed to take
the distribution?
c. What penalty would he pay if he had taken an early
. distribution of $36,000to pay for his grandchildren's
college education?
7. Lois Boone started contributing $4,000annually to a
Roth IRA at an early age. Now that she is 73, the fair
market value of her IRA is $1,342,863.
a. What is her required nrinimum distribution?
b. What penalt,ywould she pay if she failed to take her
minimum required distribution?
c. If she had taken an early withdrawal of $7,500to pay
for a vacation, what penalty would she have paid?
8. Sam Chalmers has a Roth IRA with a fair market value
of $348,762.He is now T4years of age.
a. What is his required minimum distribution?
b. What penalty would he incur if he failed to take
the distribution?
c. What penalty would he have incurred if he had taken
an early distribution of $46,000to pay for his
grandchildren's college? '-

ui

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| 82 Chapter l2 Mathematics for Business ancl Personal Finance