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Date Created: 11/15/15
Running Head FINANCIAL POLYNOMIALS Financial Polynomials name MAT 221 Introduction to Algebra Linda Seeger March 30 2014 FINANCIAL POLYNOMIALS 2 Financial Polynomials Financial polynomials are an important part of determining how much money you will need to save to buy an expensive item that you are wanting We use financial polynomials when we are deciding on how much money we should invest in our retirement funds when we are planning for an overseas trips or something as simple as purchasing a new car If you sit down to talk to a financial advisor more than like they are going to use financial polynomials to figure out how much of your money you should invest in stocks bonds retirement and college fund When evaluating a polynomial where the interest is compounded annually we the formula P1 r2 To evaluate this eXpression we use the FOIL method by which we multiply First then work from Outer Inner and then Last Knowing that the interest rate on an investment is compounded r i l 3 semiannually we use the polynomial 1 x where P is the dollar amount invested and r is the annual interest rate I start by using the FOIL method to remove the parentheses Plr22 The original formula with the eXponent with the binomial P1 r21r2 First you square the quantity which multiplies itself and cancels the eXponent P1r2r2r22 Next using the FOIL method I combine like terms P l2r2r24 FINANCIAL POLYNOMIALS 3 Financial Polynomials PPrPr24 P is distributed across the trinomial and the parentheses are dropped This polynomial unlike others is not in descending order By substituting the variables with values we can find a solution to the eXpression There are two different investments and interest rates that I will be using in this polynomial P 200 and r 10 and P 5670 and r 35 For both solutions r will be written as a decimal PPrPr24 Again we start with the original eXpression 200200102001024 the variables were substituted with the given values 2004024 following the order of operation we multiply then do the 24012 addition We use the simplest form of 24 which is 12 24050 Using the formula we find that a 200 investment compounded semiannually at 10 will yield a dividend of 22050 FINANCIAL POLYNOMIALS 4 Using the same steps we can evaluate another polynomial with different values PPrPr24 Again we start with the original expression 56705670035567003524 we substitute the variables with the values 5670396924 then we multiply then add Financial Polynomials 606690l2 simplify 24 to 12 606740 Using the formula we find that a 5670 investment compounded semiannually at 35 will yield a dividend of 606740 Finally we will simplify a polynomial expression 9x3 3x2 l5x 3x We start with the given expression 9x3 3x2 15x The expression is rewritten and 3x becomes the 3x divisor 9x 3x2 l5x Next each term is divided 3x 3x 3x 3x2 l 5x Because the variables have exponents and they are being divided we subtract from the exponent There are no like terms so the expression is simplified fully FINANCIAL POLYNOMIALS 5 Saving and investing are important to everyone s future If you speak with any financial specialists they will tell you that investing is one of the most important steps to take for your future If you worry that you do not have enough money to start investing there is a formula to show how much your money will grow over an amount of time with a given interest rate Reference Dugopolski M 2012 Elementary and intermediate algebra 4th ed New York NY McGraw Hill Publishing
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