Study Card for Contemporary Business Mathematics with Formula 6.

1 A = dL Calculating the amount of discount when the list price and

Canadian Applications, Twelfth Edition discount rate are known
S. A. Hummelbrunner Kelly Halliday Ali R. Hassanlou Formula 6.2 N = L - A Calculating the net amount when the list price and amount
of discount are known
LIST OF FORMULAS Formula 6.3 N = L11 - d2 Calculating the net amount directly without computing the
amount of discount
Formula 2.1 a m * an = am + n The rule for multiplying two powers having the same base Formula 6.4 NET PRICE = L11 - d1211 - d2211 - d32 p 11 - dn2 Calculating the net amount directly when a list price is sub-
Formula 2.2 a m , an = am - n The rule for dividing two powers having the same base ject to a series of discounts
Formula 2.3 (am)n = amn The rule for raising a power to a power
Formula 6.5 SINGLE EQUIVALENT RATE OF DISCOUNT Calculating the single rate of discount that has the same
Formula 2.4 1ab2 m = ambm The rule for taking the power of a product
FOR A DISCOUNT SERIES effect as a given series of discounts
a m am = 1 - 3 11 - d1211 - d2211 - d32 p 11 - dn2 4
Formula 2.5 a b = m The rule for taking the power of a quotient
b b
1 Formula 6.6 S = C + E + P Basic relationship between selling price, cost of buying,
Formula 2.6 a-m = m The definition of a negative exponent operating expenses (or overhead), and profit
a
y -m x m Formula 6.7 M = E + P Basic relationship between markup, operating expenses (or
Formula 2.7 a b =a b The rule for a fraction with a negative exponent overhead), and profit
x y
1 n Formula 6.8 S = C + M Basic relationship between selling price, cost of buying,
Formula 2.8 a n = 2a The definition of a fractional exponent with numerator 1
and markup
1 1 1
Formula 2.9 a-n = 1 = n The definition of a fractional exponent with numerator −1 Formula 6.9
RATE OF MARKUP MARKUP M
= = * 100 Calculating the rate of markup as a percent of cost
an 2a BASED ON COST COST C

a n = 2am = A2a B
m n n m
Formula 2.10 The definition of a positive fractional exponent RATE OF MARKUP
MARKUP M
Formula 6.10 BASED ON = = * 100 Calculating the rate of markup as a percent of selling price
m 1 1 SELLING PRICE S
Formula 2.11 a- n = m = n The definition of a negative fractional exponent SELLING PRICE
a n
2am MARKDOWN MARKDOWN MD
Formula 2.12 ln 1ab2 = ln a + ln b The relationship used to calculate the logarithm of a product Formula 6.11 = = * 100 Calculating the sale price when the amount of markdown
RATE REGULAR SELLING PRICE S
is known
a
Formula 2.13 ln a b = ln a - ln b The relationship used to calculate the logarithm of a quotient
RATE OF MARKDOWN MD
b Formula 6.12 = = * 100 Calculating the rate of markdown
MARKDOWN REGULAR SELLING PRICE S
Formula 2.14 ln (ak) = k(ln a) The relationship used to calculate the logarithm of a power
Formula 3.1 PERCENTAGE = RATE * BASE The basic percentage relationship Formula 6.13 SALE PRICE = REGULAR SELLING PRICE * NPF Calculating the sale price directly without computing the
Formula 3.2 NEW NUMBER = ORIGINAL NUMBER The relationship to use with problems of increase or decrease SR = S11 - md2 amount of markdown
+ INCREASE (problems of change)
- DECREASE Formula 7.1 I = Prt Calculating the amount of interest when the principal, the rate of interest, and the
AMOUNT OF CHANGE time are known
Formula 3.3 RATE OF CHANGE = The formula for calculating the rate of change (rate of
Formula 7.2 S = P + I Calculating the future value (maturity value) when the principal and the amount of
ORIGINAL NUMBER
increase or decrease)
interest are known
INCOME IN CURRENT DOLLARS
Formula 3.4 REAL INCOME = The formula for eliminating the effect of inflation on income Formula 7.3 S = P11 + rt2 Calculating the future value (maturity value) at simple interest directly when the
CONSUMER PRICE INDEX
principal, the rate of interest, and the time are known
Formula 4.1 y = mx + b Slope-y-intercept form of a linear equation S
Formula 7.4 P= Calculating the present value at simple interest when the future value (maturity
Formula 5.1 1SELLING PRICE * VOLUME2 - 1VARIABLE COST Formula for calculating profit when separating fixed 1 + rt value), the rate of interest, and the time are known
PER UNIT * VOLUME2 - FIXED COST = PROFIT and variable costs
or, 1SP * X2 - 1VC * X2 - FC = PFT Formula 9.1 FV = PV11 + i2 n Calculating the future value (or maturity value) when the original principal, the rate
Formula 5.2 CONTRIBUTION MARGIN PER UNIT = SP - VC Formula for calculating contribution margin per unit of interest, and the time period are known

Formula 5.3 TOTAL CM = 1SP - VC2 * X Formula for calculating total contribution margin
j
Formula 9.2 i= Calculating the periodic rate of interest
FC
m
Formula 5.4 BREAK - EVEN VOLUME 1in units2 = Formula for calculating break-even volume in units based on Formula 9.3 n = number of years in the term * m Determining the number of compounding (conversion) periods in the term
CM per unit
the unit contribution margin
FV
Formula 5.5
UNIT CONTRIBUTION MARGIN Formula 9.4 PV =
CONTRIBUTION RATE =
UNIT SELLING PRICE
Formula for calculating contribution rate 11 + i2 n
FIXED COST
or
Formula 5.6 BREAK - EVEN SALES 1in sales dollars2 = Formula for calculating break-even sales based on PV = FV11 + i2 -n Determining the present value (or principal, or proceeds, or discounted value)
CONTRIBUTION RATE
contribution rate when the future value, the rate of interest, and the time period are known

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 ln1FV
PV 2
1l + i 2 n - l
Formula 10.1 n= Determining the number of periods, n, when the present value, the future value, and the rate of interest Formula 13.1 FVn1due2 = PMT c d 1l + i 2 Calculating the future value of a simple annuity due
ln11 + i2 i
are known
1 l - 1l + i 2 -n
FV n Formula 13.2 PVn1due2 = PMT c d 1l + i 2 Calculating the present value of a simple annuity due
Formula 10.2 i=a b - 1 Calculating the periodic interest rate, i, when the present value, the future value, and the time period i
PV are known
1l + p2 n - 1
Formula 10.3 f = 11 + i2 m - 1 Calculating the effective rate of interest, f, for a nominal annual rate compounded m times per year Formula 13.3 FVg1due2 = PMT c d 1l + p2 Calculating the future value of a general annuity due using the effective
p
rate of interest per payment period
Formula 10.4 i2 = 11 + i12 m1>m2 - 1 Calculating the equivalent rate of interest, i2, for a nominal annual rate compounded m1 times per year where p = 11 + i 2 c - 1
(1 + i)n - 1 l - 1l + p2 -n
Formula 11.1 FVn = PMTc d Calculating the future value (accumulated value) of an ordinary simple annuity Formula 13.4 PVg1due2 = PMT c d 1l + p2 Calculating the present value of a general annuity due using the effec-
i p
tive rate of interest per payment period
1 - 11 + i2 -n
Formula 11.2 PVn = PMTc d Calculating the present value (discounted value) of an ordinary simple annuity PMT
i Formula 13.5 PV = Calculating the present value of an ordinary simple perpetuity
i
FVn i PMT
ln c a b + 1d Formula 13.6 PV = Calculating the present value of an ordinary general perpetuity
PMT p
Formula 11.3 n= Determining the number of payments of an ordinary simple annuity when the
ln (1 + i) PMT
future value is known Formula 13.7 PV1due2 = PMT + Calculating the present value of a simple perpetuity due
i
PVni
ln c 1 - a bd PMT
PMT Formula 13.8 PV1due2 = PMT + Calculating the present value of a general perpetuity due
Formula 11.4 n= Determining the number of payments of an ordinary simple annuity when the p
-ln (1 + i) present value is known 1 - 11 + i2 -n
Formula 15.1 PP = FV11 + i2 -n + PMTc d Calculating the purchase price of a bond when the interest payment
Formula 12.1 p = 11 + i 2 c -1 Calculating the equivalent rate of interest per payment period p for a nominal annual rate of i interval and the yield rate conversion period are equal
interest compounded c times per payment interval
1 - 11 + p2 -n
11 + p2 n -1 Formula 15.2 PP = FV11 + p2 -n + PMTc d Calculating the purchase price of a bond when the interest payment
Formula 12.2 FVg = PMTc d Calculating the future value of an ordinary general annuity using the equivalent rate of p
p interval and the yield rate conversion period are different
interest per payment period where p = 11 + i2 c - 1
where p = 11 + i2 c - 1 1 - 11 + i2 -n
Formula 15.3 PREMIUM OR DISCOUNT = 1b * FACE VALUE - i * REDEMPTION PRICE2 c d
1 - 11 + p2 -n i
Formula 12.3 PVg = PMTc d Calculating the present value of an ordinary general annuity using the equivalent rate of
p Calculating the premium or discount of a bond (a negative answer indicates a discount)
interest per payment period
FVg p Formula 15.4 APPROXIMATE VALUE OF i =
AVERAGE INCOME PER INTEREST PAYMENT INTERVAL
ln c + 1d AVERAGE BOOK VALUE
PMT
Formula 12.4 n= Determining the number of payments of an ordinary general annuity using the equivalent rate where
ln11 + p2 of interest per payment period when the future value is known 1
AVERAGE BOOK VALUE = 1QUOTED PRICE + REDEMPTION PRICE2
PVg p 2
ln c 1 - a bd
PMT and
Formula 12.5 n= Determining the number of payments of an ordinary general annuity using the equivalent rate - PREMIUM
-ln11 + p2 of interest per payment period when the present value is known
AVERAGE INCOME TOTAL INTEREST PAYMENTS
+ DISCOUNT
PER INTEREST =
NUMBER OF INTEREST PAYMENT INTERVALS
Formula 12.6 SIZE OF THE nTH PAYMENT = PMT11 + k2 n-1 Calculating the size of the nth payment of a constant-growth annuity PAYMENT INTERVAL
Formula 12.7 SUM OF THE PERIODIC CONSTANT - GROWTH Determining the sum of the periodic payments of a constant-growth annuity Calculating the yield rate using the method of averages

11 + k2 n -1 NET PRESENT PRESENT VALUE PRESENT VALUE

Formula 16.1 = - Formula for calculating the difference between the present
PAYMENTS = PMTc d (NPV) OF INFLOWS OF OUTLAYS
k value of cash inflows and the present value of cash outflows,
known as the net present value
11 + i2 n - (1 + k)n
Formula 12.8 FV = PMT c d Calculating the future value of an ordinary simple constant-growth annuity PVIN
i-k Formula 16.2 PROFITABILITY INDEX =
PRESENT VALUE OF INFLOWS
= Formula for calculating the profitability index by
1 - (1 + k)n(1 + i) - n
PRESENT VALUE OF OUTLAYS PVOUT dividing the present value of cash inflows by the
Formula 12.9 PV = PMT c d Calculating the present value of a series of payments forming a constant-growth annuity
i-k present value of cash outflows

Formula 12.10 FV = n1PMT211 + i2 n-1 Calculating the future value of an ordinary simple constant-growth annuity when the
constant-growth rate and the periodic interest rate are the same www.pearsoncanada.ca
Formula 12.11 PV = n1PMT211 + i2 -1 Calculating the present value of an ordinary simple constant-growth annuity when the
constant-growth rate and the periodic interest rate are the same

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