Financial Mathematics

Abstract

This is a single paragraph, no indentation is required. The next page will be an abstract; “a brief, comprehensive summary of the contents of the article; it allows the readers to survey the contents of an article quickly” (Publication Manual, 2010). The length of this abstract should be 35-50 words (2-3 sentences). NOTE: the abstract must be on page 2 and the body of the paper will begin on page 3.

Introduction

Remember to always indent the first line of a paragraph (use the tab key). The introduction should be short (perhaps 3-4 sentences). The margins, font size, spacing, and font type (italics or plain) are set in APA format. While you may change the names of the headings and subheadings, do not change the font or style of font.

In this section, please explain and describe the business you will start by answering the following questions:

a. What will your business sell?

b. Why is this business interesting to you?

Revenue and Profits

This section should be at least 5 sentences in length. Demonstrate that you understand how mathematics is used in business by discussing how your business will generate money. Please answer the following questions:

a. What are your projected year #1 sales? Please discuss how many units will be sold and at what price.

b. What are your projected year #1 expenses and costs? Please discuss what the business will spend money in order to produce the units that are sold.

c. What portion of your sales revenue will be consumed by expenses? Express in fractions and in percentages.

d. What portion of your sales revenue will be profits? Express in fractions and in percentages.

Product Price and Cost

This section should be at least 5 sentences in length. Demonstrate that you understand how mathematics is used in business by providing financial information about the products/services that people will buy from your business. Provide the following information:

a. Provide detail on the prices you will charge (be specific for each product/service you will sell).

b. Provide detail on the costs you must pay to provide each of your products.

c. Explain your price mark-up in percentages and in dollars. Show your calculations.

Investment Requirements

This section should be at least 5 sentences in length. Demonstrate that you understand the course content about banking and loans by discussing your business banking and loans. Answer the following questions:

a. What business accounts will your open? Explain your banking requirements? Describe the bank(s) you would use.

b. Assume that you need to take out a business loan to cover your initial costs and expenses. The amount of the loan is equal to the amount of your projected year #1 expenses and costs (per item 1b above).

c. Describe that loan and show your annual repayment schedule over 10 years with 6% compound interest.

d. Then describe that loan and your repayment over 10 years with 8% simple interest.

Balance Sheet

1. Prepare a BALANCE SHEET that reports your Year #1 business results in terms of ASSETS and LIABILITIES and EQUITY. Use the BALANCE SHEET reviewed during Unit #3 Chat as a TEMPLATE (it is on the following page). 2. Conduct a vertical analysis and explain your greatest Asset (versus all other assets) and your greatest Liability (versus all other Liabilities). Explain the results of your analysis.