# Chapter 5 Mathematics of Finance

In this chapter you will learn about about interest and how it accrues in various financial applications. We’ll look at simple and compound interest as well as annuities and mortgages. For some of you, it may the first time during the course you say, “Finally, something that might really be useful in business!”

All of these problems about loans, annuities, and mortgages are clear cut, but come with a dark side…they are nasty long and hard to memorize.

Your main job will be to know what each formula is used for, what the letters represent, and how to solve for the different quantities in an application.

Mastering these formulas will allow you to meet the objectives for this chapter.

• Compute quantities involved in simple and compound interest.
• Compute quantities involved in annuities and mortgages.

Section 1 – Simple and Compound Interest

Section 2 – Exponential and Logarithm Functions in Finance

Section 3 – Annuities

Section 4 – Amortization