COL112 Unit 1 Mathematical Thinking and Modeling in Business

COL112 Mathematical Modeling For Business Unit 1 Section 1.
1 Page 1

COL112
Mathematical Modeling for
Business

Unit 1
Mathematical Thinking and Modeling in Business
Section 1
Percentages in Business

Department of Mathematics and Statistics
University College
Zayed University

COL112 Mathematical Modeling For Business Unit 1 Section 1.1 Page 2


Unit 1

Section 1 Percentages in Business


1.1 Why Use Percentages?
Consider this problem, which students are faced with many times in their studies:
Fatima took two tests and got a score of 62 out of 75 on the first test and 97 out of 120 on the
second test. Which was the better grade?
Solution
Because the total number of points on each test is different, it is hard to tell.
But, changing the grades to percent grades means that both grades will appear to be out of the same
total of 100.
So, 62 out of 75 is the same as saying that Fatima got
62
75
of the total available marks.
Notice that you can think of this as a fraction.
To write this as a percent, divide the 62 by 75 (which gives us a decimal) and then multiply by 100.
So,
62
75
= 0.8267
Which, as a percent = 82.67
Therefore, 62 out of 75 is the same as 82.67%
And in the same way, 97 out of 120 is the same as 80.83%
Which means that Fatima did better on the first test.
This is meant to show that, by writing fractions as decimals and percentages, it is easier to compare
quantities.

Self-Assessment Question [S.A.Q.]
Ahmed took three tests and got the scores: 78 out of 90; 36 out of 40 and 26 out of 30.
Which was his best grade?
What do you notice about the other two grades?

Things You Must Know.
Percentages are just another way of writing fractions and decimals.
You can convert between all three forms using these rules:

To Convert A Percentage To A Common Fraction:
Replace the % symbol with division by 100 and simplify the fraction.
24% =
24 6 4 6
100 25 4 25
= =

To Convert A Percentage To A Decimal:

Remove the % symbol and divide by 100 (the result is that the decimal point appears to move two
places to the left.)
24% = 0.24

To Convert A Decimal To A Percentage:
Multiply the decimal by 100 and add the % sign. (The result is that the decimal point appears to
move two places to the right)

0.24 0.24 x 100 24%

To Convert A Common Fraction To A Percentage:
First convert the common fraction to a decimal fraction (by dividing denominator into numerator)
and then convert the decimal fraction to a percentage.

1
0.25 25
4
= = %

0.25
4 1.00


Percent Problems Explained

There are six types of basic percent problems:
A. % of problems
30% of 450 is what number?
30% of what number is 450?
What percent of 450 is 30?
And
B. % change problems (Increase or decrease)
What is the result of a 30% increase on the number 450?
What is the result of a 30% decrease on the number 450?
What is the percentage increase from 30 to 450?
What is the percentage decrease from 450 to 30?

They all have different answers and all need a different method.
The secret of success in percentage problems is to learn all of them and know when to apply them.
This section will be part skills and part applications.
It is very important to know how to work out percentage problems in their real life situations and it
is also very important to be able to do them quickly and efficiently.
This unit will give you chance to do all of these.
There are more difficult types, but we will deal with those later.

A. % of Problems: Skills
Examples
1. 30% of 450 is what number?
Let the unknown number be N
Then, N = 30% of 450
= 0.30 x 450
= 135
Therefore, 30% of 450 is 135

2. 30% of what number is 450?
Then, 30% of N = 450
i.e. 0.30 x N = 450
i.e. N =
450
0.3

N = 1500
Therefore, 450 is 30% of 1,500
Or, 30% of 1,500 is 450

3. What percent of 450 is 30?
Then, N =
30
450
x 100 (%)
= 6.6667 %
Therefore, 30 is 6.6667% of 450
Or, 6.6667% of 450 is 30


SAQ

Therefore,


i.e.

i.e.
Therefore,
Or,

Then,

Therefore,
Or,



Therefore, 45% of 258 is


Therefore,


Therefore,

S.A.Q.
*

Use the method on the previous page to calculate the following problems.

B. % Change Problems (Type 1): Skills
1. What is the result of a 30% increase on the number 450?
Let the unknown number be N .
Then, N = 450 + 30% of 450
i.e. N = 450 + 0.3 x 450
I.e. N = 450 + 135
= 585
Therefore, the result of a 30% increase on 450 is 585
Some algebra can be used in this example.
Since N = 450 + 0.3 x 450
we can factorize , giving N = 450(1 + 0.3)
= 450(1.3)
= 585

2. What is the result of a 30% decrease on the number 450?
Let the unknown number be N .
Then, N = 450 30% of 450
i.e. N = 450 0.3 x 450
I.e. N = 450 135
= 315
Therefore, the result of a 30% decrease on 450 is 315
Applying the same logic as above:
N = 450(1 0.3)
= 450(0.7)
= 585

SAQ
1. What is the result of a 65% increase on the number 240?

Therefore
Algebra.
Since
we can factorize , giving

2. What is the result of a 65% decrease on the number 240?

Therefore,
Applying the same logic as above:


B. % Change Problems: Applications
Percentages are often used as comparisons, or changes, between two amounts. In business, the
comparison is often between old and new prices or between other sets of data.
Example 1
A car cost AED 120,000 in 2010. If the price of the car increased by 6.5% in one year, what would be
the cost of the same model in 2011?
Let the new cost be N.
Then, N = 120000 +6.5% of 120000
i.e. N = 120000 + 0.065 x 120000
= 120000 ( 1 + 0.065)
= 120000 (1.065)
= 127800
Therefore, the cost of the car in 2011 would be AED 127,800

S.A.Q.
*

Last year a boat cost AED 8,900 and the price of the boat increased by 17.5% this year. What is
the cost now?

Example 2
A computer originally sells for AED 9,870, but the retailer marks the price down by 20% in a sale.
How much would the computer cost at the sale price?
The new price is now going to be less than the old price, because the change is a decrease.
That is, the change is negative.
Let the new cost be N.
Then, N = 9870 20% of 9870
i.e. N = 9870 + 0.2 x 9870
= 9870 ( 1 - 0.2)
= 9870 (0.8)
= 7896
The new price of the computer is AED 7,896

S.A.Q.
*

A Home Theatre cost AED 18,900 in 2010 and its price decreased by 19.5% over two years. What
is the cost now?

Of course, once you become comfortable with these kinds of problems, you can also do
them in the following way:
Example 1 Revisited
The cost of the car in 2010 is the old price.
The increase in price of the car because of the 6.5% is the change in price
The cost of the car in 2011 is the new price.
To make calculations easier, call the old price 100% (of AED 120,000).
The increase of 6.5% means that the new price is 106.5% of the old price.
Therefore, the new price = 106.5% of old price = 1.065 x 120000 = 12780

The increase of means that the new price is % of the old price.
Therefore, the new price = of old price = = ______________
Example 2 Revisited
The new price is now going to be less than the old price, because the change is a decrease.
That is, the change is negative.
Let the old price be 100% (of AED 9,870)
The decrease in price is 20% of the old price.
So, the decrease in price = 20% of 9870 = 0.20 x 9870 = 1,974
The decrease of 20% means that the new price is 80% of the old price.
Therefore, the new price = 80% of old price = 0.8 x 9870 = 7896

S.A.Q.
*

A smart phone cost AED 3,950 last year and its price decreased by 12.5% during this year. Using
the method above, what is the cost now?
S.A.Q.
*

A washing machine cost AED 2,900 in 2010 and its price increased by 22.5% over two years.
Using the method above, what is the cost now?

% Changes (Type 2): Skills
3. What is the percentage increase from 300 to 450?
The actual change = New quantity Old quantity
The fraction change = Actual change
Old quantity

In this case;

Actual change = 450 300 = 150 (Absolute Change)
Fraction change =
450 300 150
0.5
300 300
= =
(Relative Change)
Percent change =
450 300
100
300

= 50%

This is positive, which means an increase.

Therefore, the percentage increase is 50 %

4 What is the percentage decrease from 450 to 300?
Actual change = New quantity Old quantity
Fraction change = Actual change
Old quantity

In this case;
Actual change = 300 450 = 150 (Absolute Change)
Fraction change =
300 450 150
0.3
450 450

= =
(Relative Change)

Percent change =
300 450
100 33.3
450
=

This is negative, which means an decrease

Therefore, the percentage decrease is 33.3333 %
The percent change = New quantity Old quantity x 100
Old quantity

Old quantity


% Change Problems: Applications
Sales at the minimarket one month were AED 789,500 and the next month the sales they were AED
981,300. What was the percentage change?
METHOD
The actual change = New quantity Old quantity
The fraction change = Actual change
Old quantity
Old quantity

In this case;
Actual change = ___________________ = ___________________ (Absolute Change)
Fraction change = (Relative Change)

Percent change = x 100 = _____________

This is positive, which means an increase in sales.
Therefore, the percentage increase is %

Actual change = (Absolute Change)
Fraction change = (Relative Change)
Percent change
Therefore,
S.A.Q.
*

The population of a country in 2000 was 12,580,000. In 2010 the population of the same country
was 13,459,500. What was the percentage change?
Old quantity


Example 1.9
The number of people attending university basketball game last week was 234. This week the
number attending was 159. What was the percentage change?
Actual change = 159 234 = 75
Fraction change = 75
234

Percent change = 75 x 100 = 32.05
234
This is negative, which means an decrease in numbers.

Therefore, the percentage decrease is 32.05%
S.A.Q.
*

The number of students registering for IT majors last semester was 148. This semester is 125.
What is the percentage change?

Example 1.6 A New Method For A Different Type Of Problem

In a sale a television costs AED 8,700 after it has been reduced by 25%. What was the original price
of the television?
We still think of the old price (before the sale) as the 100%. (100% of the old price)
But, we dont know what this old price is.
The decrease in price of 25% means that the new price (8,700) is 75% of the old price.
To calculate the old price we use a method called the unitary method.
This is a method of carrying out a calculation to find the value of a number of items by first finding
the cost of ONE OF THEM.
Method.
We know that:
75% of the old price is 8,700
So, 1% of the old price is
8700
75

Therefore, 100% of the old price is
8700
100
75
= 11,600
The original price of the television was AED11,600

We dont work
this out yet
S.A.Q.
*

A smart phone cost AED 4,250 after it had been reduced by 15%. Using the method above, what
was the original cost?

Example 1.7
An apartment is advertised for sale at AED 1,830,000. This price is 20% more than it was the year
before. What was the original price of the apartment.
Let the original (old) price be the 100%. (100% of the old price)
The increase in price means that the new price (1,830,000) is 120% of the original price.
The Method
We know that:
120% of the original price is 1,830,000
So, 1% of the original price is
1830000
120

Therefore, 100% of the original price is
1830000
100
120
= 1525000
The original price of the apartment was AED 1,525,000

We dont work
this out yet
S.A.Q.
*

A watch costs AED 24,250. This price is 12.5% more than it was last year. Using the method
above, what was cost of the watch last year?

Compound Percent Problems

Examples in which one percentage change is accompanied by another are called compound
percent problems.

Example 1.11

A bank employee is earning AED 27,000 a month is given a 10% raise one month followed by
another 10% raise the next month.
(a) What is the salary after the second month?
(b) What is the total salary increase over the two months?
Solution
(a)

Old salary is AED 27000.
The new salary is 110% of 27000.
That is,
New salary = 1.10 x 27000
Now, the (1.10 x 27000) becomes the old salary.
So, the new salary is 110% of this.
New salary = 1.10 x (1.10 x 27000)
= (1.10 x 1.10) x 27000
= 1.21 x 27000
= 32670
Therefore, the salary after the second month is AED 32,670
(b)
The new salary is 1.21 times the original salary
The new salary is 121% of the original salary
(1.10 x 1.10 = 1.21)

In other words, the total salary has increased by 21%

Notice that the salary has NOT increased by 10% +10%.

Dont
work this
out
.. bring it
down to
here.

S.A.Q.
*

The number of students registering for Business majors in Spring 2011 was 215. In Fall 2011 this
increased by 5%. This semester it increased by 7%.
(a) What is the number of students registering for Business this semester?
(b) What is the total percentage increase over the two semesters?
[Check your answer to part (b)]

Class Exercise
A restaurant advertises a special offer It offers diners 10% discount. But, the restaurant also adds a
tax of 15% to the bill.

Which would you rather do:

Get the discount first and then pay the tax, or pay the tax first and then get the discount?

Solving the problem

First: try some an easy numerical example and compare costs.

For example, suppose your restaurant bill comes to costs AED1000.

Discount First Method

Calculate the amount you would pay after the discount is taken off the bill, then calculate the final
amount after the tax is added to the bill.

Tax First Method

Calculate the amount you would pay after the tax is added to the bill., then calculate the final
amount after the discount is taken off the bill.

What happened?
Next: try another example.

Suppose your bill comes to AED1500 and compare costs.

Repeat the calculations. What happened?

That is, you are taking special examples.

What you are doing here is SPECIALIZING.

The next step is to GENERALIZE.
.

Generalizing
To generalize we let letters stand for numbers.
Let the original bill be represented by the letter C.
Let the discount (as a decimal) be represented by the letter d. (That is: 10% = 0.10)
Let the tax (as a decimal) be represented by the letter t . (That is: 15% = 0.15

(i) What do you pay if you take the discount off first?
Let the cost of the room after discount is taken off be D.
Then, D = C Cd
So, D = C(1 d) (1)
Let the cost of the room after tax is added to the new cost be T.
Then, T = D + Dt
So, T = D(1 + t) (2)
Now substituting for D in (2) we get:
T = C(1 d)(1 + t) (3)

Complete the next part yourself.

(ii) What do you pay if you add the tax first?
Let the cost of the room after tax is added be T.
Then, ..
So, .. (5)
Let the cost of the room after discount is taken off the new cost be D.
Then, ..
So, .. (6)

Now substituting for T in (6) we get:
. (7)

What conclusion can you draw from this?


In the example on the previous page, the restaurant offered a discount to its customers, but added a
tax to the bill.
Suppose the restaurant offers its diners a discount of 10%, but adds a tax of 12.5% to the bill.
We have seen that it does not matter whether the discount is calculated first , or the tax is
calculated first; the result is the same.
Discount subtracted first
If the bill comes to AED 1580, then this is the original amount.
With the discount subtracted, the new amount will be 90% of 1580.
90% of 1580 = 0.90 x 1580 = 1422
Now, the AED 1422 becomes the old amount.
With the tax added, the new amount will be 112.5% of 1422.
112.5% of 1422 = 1.125 x 1422 = 1,599.75
The bill will come to AED 1,599.75
Tax added first
If the bill comes to AED 1580, then this is the original amount.
With the tax added, the new amount will be 112.5% of 1580.
112.5% of 1580 = 1.125 x 1580 = 1,777.50
Now, the AED 1777.50 becomes the old amount.
With the discount subtracted, the new amount will be 90% of 1777.50
90% of 1777.50 = 0.90 x 1777.50 = 1,599.75
The bill will come to AED 1,599.75
What we have is:
Final bill = (1.125) x (0.90 x 1580)
i.e. Final bill = 1.0125 times the original bill
i.e. Final bill = 101.25% of the original bill
i.e. The total bill has increased by 1.25%
Discount
subtracted
Tax
added

Compound Percent Problems : Skills
1. Calculate the effect on a number of an increase of 6% followed by an increase of 4%.
Let the original number be N .
An increase of 6% will make N into the number (1.06) N.
An increase of 4% will make this new number into the number (1.04) (1.06) N
So, the final number will be:
(1.04)(1.06)N = 1.1024 N
Therefore the result will be an increase of 1.1024 of the original number.
i.e. the number will be 1.1024 times the original number.
i.e. the number will be 110.24% of the original number.
i.e. the number will increase by 10.24%

2. Calculate the effect on a number of an increase of 6% followed by an decrease of 4%.
An increase of 6% will make N into the number (1.06) N.
An decrease of 4% will make this new number into the number (0.96) (1.06) N
(0.96)(1.06)N = 1.0176 N
Therefore the result will be an increase of 1.0176 of the original number.
i.e. the number will increase by 1.76%


3. Calculate the effect of an decrease of a decrease of 6% followed by a decrease of 4%.
An decrease of 6% will make N into the number (0.94) N.
An decrease of 4% will make this new number into the number (0.96) (0.94) N
(0.94)(0.96)N = 0.9024 N
Therefore the result will be an decrease of 0.9024 of the original number.
i.e. the number will decrease by 9.76%. (100% - 90.24%)


Commission
In many areas of work, such as insurance, retail, car sales, employees are paid a basic wage
(sometimes not) per month and then can earn extra money from the quantity of sales they make in
that month.
This is usually a percentage of the sales the employee makes.
This payment is called commission.

Example 1.12
Ahmed receives 9% commission on his net sales. If he sold AED 25,000 in goods during the last
month. What is the amount of his commission?
We need to find 9% of AED 25,000
9% of 25,000 = 0.09 x 25000
= 2250
Therefore, Ahmed receives AED 2,250 in commission

S.A.Q.
*

Bushra receives 7.5% commission on her net sales. If she sold AED 32,500 in goods during the
last month. What is the amount of her commission?


Example 1.13
Fatima is paid a basic salary of AED17,000 per month and can make 8% commission on her sales.
In one month, her sales come to AED 15,600. How much will her total salary for that month be?
We need to find
8% of 15,600 = 0.08 x 15600
= 1248
So, Fatima will receive AED 1,248 as commission.
Fatimas total salary for that month = AED 17,000 + AED 1,248 = AED 18,248.
Therefore, Fatimas total salary will be AED 18,248

S.A.Q.
*

Hamdan receives a basic salary of AED 43,858 per month and can make 12% commission on his
sales. If he sold AED 25,560 in goods during the last month. What will his total salary be for that
month?


In the previous two examples, Ahmed and Fatima received what is called , fixed commission, where
all of the sales earn the same percent commission. In some cases, the commission can vary
according to the level of the employees sales.
This payment is called variable commission.
Example 1.14

Sara is paid commission according to the following scale:
4% on the first AED 10,000 in sales each month
6% on the next AED 12,000 in sales each month
9% on sales greater than AED 22,000 each month.
If she sold AED 26,548 in merchandise in one month, what was her commission?
Solution.
For the first AED 10,000 Sara will receive 4% commission.
For the next AED 12,000 she will receive 6% commission.
The remainder will be paid at 9%.
So, the portion of her sales after the first AED 22,000 is:
26548 22000 = 4548
Which means that AED 4,548 of her sales will be paid at 9%
Therefore, Saras commission will be found from the following computation.
0.04 x 10000 = 400.00
0.06 x 12000 = 720.00
0.09 x 4548 = 409.32

Total 1529.32

Therefore, Saras commission is AED 1,529.32


S.A.Q.
Mohamed is paid commission according to the following scale:
3% on the first AED 7,000 in sales each month
5% on the next AED 10,000 in sales each month
7.5% on sales greater than AED 17,000 each month.
If he sold AED 18,5385 in merchandise in one month, what was his commission and total salary
for that month?


Percentages involving Of And More than
These words can cause confusion and will lead to errors if they are not properly understood.
Example
Suppose your monthly spending triples from 4000 dhs per month to 12000 dhs per month.
You can describe this in two ways using percentages:
a) Using more than
The percentage change = new value old value x 100
old value
=
12000 4000
100
4000

= 200 %
So, you can say that your new spending is 200% more than your old spending.

b) Using of
A direct fractional comparison of the two values shows that:
New value 12000
= = 3
old value 4000

so, the percentage comparison is
New value 12000
x 100 = x 100 = 300 %
old value 4000

So, you can say that your new spending is 300% of your old spending.
Also, your new spending is three times your old spending.
And the actual increase is 12000 4000 = 8000 dhs.

SAQ
Suppose the value of a painting increases from $80,000 to $100,000. Calculate the percentage
increase using more than and then using of.

Example
A computer drops in price from AED 6000 to AED4500.
a) Write down the actual decrease
b) Calculate the percentage change in terms of less than.
c) Calculate the percentage change in terms of of.

This means:
a) The actual decrease = 6000 4500 = 1500 (AED)

b) The percentage change = new price old price x 100
old price
=
4500 6000
100
6000

= 25 %
So, you can say that the new price of the computer is 25% less than the old price.

c) A direct fractional comparison of the two values shows that:
New price = 4500 = 0.75
old price 6000

so, the percentage comparison is

New price 4500
x 100 = x 100 = 75%
old price 6000

So, you can say that new price of the computer is 75% of the new price.
Also, the new price is three quarters of the old price.


SAQ
A Business College registered 450 students in 2010 and 375 in 2011.
a) Write down the actual decrease in the number of students.
b) Calculate the percentage change in terms of less than.
c) Calculate the percentage change in terms of of.

Relationship between of and more than

Notice that there is a relationship between the of value and the more than value.

Examples

25% more than something means 125% of something.

25% less than of something means 75% of something.

100% more than of something means 200% of something
[Also, 100% more than of something means 2 times something]

SAQ

45% more than something is

59% less than something is

150% more than something is

75% of something is

300% of something is
Relationship Between Of and More Than

If the compared value is P% more than the reference value,
then it is (100 + P) % of the reference value.

If the compared value is P% less than the reference value,
then it is (100 P) % of the reference value.

A word of warning!

DONT CONFUSE OF WITH OFF

OF means a part of a whole

OFF means a part taken off a whole. OFF is a discount.

Example

30% OF 540 dhs is 540 x 0.3 = 162 dhs

30% OFF 540 dhs is (540 30% OF 540 dhs) = 540 162 = 378 dhs

This can also be written as an of statement

SAQ

A car is advertised for AED 145,000 with 25% off. What does the car cost to buy?

SAQ

Fatima bought a car which was advertised at AED 145000, but she only paid 75% of that price. How
much did she buy the car for?

Percentages Changes of Percentages

A problem often occurs when percentages are compared with percentages.

The results are not obvious.
Example

cccSuppose you spent 10% of your income on shoes last year and 12% of your income on shoes this
year, how much did your spending on shoes increase as a percentage of your income?

Actual increase = 2%

Percentage increase =
12 10
100 20%
10
=

Therefore your spending has increased by 20% over last year.

This often comes at surprise, but it must be true.

Example

Suppose inflation falls from 21.5% to 20% in one year . What is the percentage decrease in
inflation?

Actual decrease = 1.5%

Percentage increase =
20 21.5
100 6.977%
21.5
=

Therefore inflation decreases by 6.977% over the year
(This would normally be rounded to 7%).

Example

Suppose you spent 20% of your income on shoes last year and 10% of your income on shoes this
year, how much did your spending on shoes decrease as a percentage of your income?

Actual decrease = 10%

Percentage decrease =
10 20
100 50%
20
=

Therefore your spending has decreased by 50%.

Remember:
%change =

Remember:
%change =


SAQ
Suppose you spent 15% of your income on shoes last year and 30% of your income on shoes this
year, how much did your spending on shoes increase as a percentage of your income?

SAQ
Suppose you spent 30% of your income on clothes last year and only 15% of your income on
clothes this year, how much did your spending on clothes decrease as a percentage of your
income?

SAQ
Suppose inflation rises from 14% to 15.5% in one year . What is the percentage increase in
inflation?


Unit 1

Section 1.1 Percentages in Business
Exercises


Unit 1 Exercises on Percentages:

Skills (I)

Percentages, Fractions and Decimals

1. Complete the following table:

Fraction
(Simplest form)
Decimal

Percentage

5
1

0.9
1%
0.12
85%
5
3

0.25
70%
0.01
8
5

12.5%
4
3
2
360%
0.125
3
1


Skills (II)
1. What is 20% of 3,000 ? 2. What is 30% of 5,000 ?
3. What is 15% of 400 ? 4 What is 12% of 35 ?
5. What is 75% of 600 ? 6. What is 10% of 45 ?
7. What is 35% of 5,600 ? 8. What is 17.5% of 1,000 ?

11. 100 is what percent of 200 ? 12. 250 is what percent of 2,000 ?
13. 75 is what percent of 400 ? 14. 3 is what percent of 200 ?
15. 60 is what percent of 720 ? 16. 1,500 is what percent of 12,000 ?
17. 100 is what percent of 12,00? 18. 5 is what percent of 200?
19. 17 is what percent of 500? 20. 11 is what percent of 3,600?

25. What is 175% of 6,000 ? 26. What is 300% of 300 ?
27. What is 1000% of 5 ? 28. What is 500% of 1,000 ?
29. What is 100% of 0.5 ? 30. What is 200% of 0.5 ?


Mental Exercises [Try these problems without a calculator, then check with your calculator]
47. What is 25% of 400 ? 48. What is 10% of 4,000 ?
49. What is 1% of 200? 50. What is 2% of 400 ?

Unit 1 Applications (I) Exercises on Tax and Discount 1

Applications

1. A restaurant advertises a special offer of 12% discount on meals. But, the restaurant also adds a
tax of 17.5% to the bill. If your bill comes to AED754, how much will you pay for your meal?
2. A restaurant advertises a special offer of 15% discount on meals. But, the restaurant also adds a
tax of 12.5% to the bill. If your bill comes to AED1250, how much will you pay for your meal?
3. Sometimes restaurants add service charge to the bill and then add another tax (sometimes a
Tourist tax) to that. Suppose you are dining and your bill comes originally to AED1250, and
the service charge is 10%. How much will the bill come to after the service charge is 6 pt
If the tourist tax is 6%, how much will the bill come to after the tourist tax is added.
4. Would it matter whether the tourist tax is added first, then the service charge?
Show how you came to your decision.
5. Suppose you are dining and your bill comes originally to AED855, and the service charge is
16%. How much will the bill come to after the service charge is added?
If the Tourist tax is 8%, how much will the bill come to after the tourist tax is added.
6. Would it matter whether the tourist tax is added first, then the service charge?
Show how you came to your decision.
If the Tourist tax is 5%, how much will the bill come to after the tourist tax is added?
How much extra will you pay for your meal?
If the Tourist tax is 8%, how much will the bill come to after the tourist tax is added?
How much extra will you pay?
9. Questions 7 and 8 raise a very important point: The extra amount you pay is not just the sum of
the two percentage.
That is, the extra amount you pay is not 15% extra nor is it 20% extra.
What single tax would make the bill come to the total amounts in question 7 and 8?
10. If a hotel gives a discount of 20% but has a tax of 16%, how much would you pay for a room
which normally costs AED2,500?
11. If there were four people in your group, how much would you have to pay for a seven night
stay?


12. A hotel room is advertized as AED 3,700 with a 17% discount. The hotel also adds a tax of
12.5% to the bill. How much would you pay for a five night stay?

13. A store is having a sale. A handbag is advertized as costing AED3,400 with 30% discount.
(i) How much would you pay for the bag?
(ii) How much would you be saving?

14. Generalizing.
Write down the formula for the total amount paid C, when the service charge (as a decimal) is s,
and the tourist tax (as a decimal) is t.


Applications (II)

Exercises

1. Al Salam Computers had AED 2,534,000 in sales last year and spent AED 4,759 on advertising.
What percentage was spent on advertising?
2. Asma bought a sofa for AED 93000 plus 12% sales tax. How much was the tax?
3. Al Bada Gyms announced that 43 of their staff would lose their jobs in one months time. This is
35% of their staff. What is the size of their total work force?
4. Mobility Mobile Shops are having a 17.5% off sale. What will the markdown on a mobile
costing AED 600?
5. Ajman population at over 262,000; Population up by 12,000 and Emiratis account for 16%. Posted on
16/08/2011 [UAE The Official Website News]
a) What is the percentage increase of the Ajman population?
b) What is the number of Emiratis in this increase?
7. A shop reduces the price of a laser printer from AED 800 to AED 720. What percent markdown
can the shop advertise?
8. All Shammas investments are in two banks. She has AED 125,000 invested in one bank and the
other 45% invested the other bank. What is the total amount of her investments?
9. Khaloud earned AED 240,000 last year and she will be given a 5.5% raise this year. What will
be her new yearly salary?
10. Ghada invested AED 3,000 in the stock market last year. Today its value is AED 3,750. What
was the percent increase?
11. A bookstore offers 20% off all books. If a book normally sells for AED 150, what will the sale
price be?
12. The label on a sofa says 15% OFF, and the price tag says AED 9,300. What was the price
before the discount?
13. Salama will receive a 5% increase in pay this month and a 6% increase next month. What will
be her total percent increase over these two months?
14. A kitchen company receives a discount of 30%, followed by a 20% discount from its suppliers.
What is the total percent discount?
15. If a hotel gives a discount of 20% but has a tax of 16%, how much would you pay for a room
which normally costs AED2,500?

16. If there were four people in your group, how much would you have to pay for a seven night
stay?
17. A hotel room is advertized as AED 3,700 with a 17% discount. The hotel also adds a tax of
12.5% to the bill. How much would you pay for a five night stay?
18. A store is having a sale. A handbag is advertized as costing AED3,400 with 30% discount.
(i) How much would you pay for the bag?
(ii) How much would you be saving?
19. What will be the effect on AED 300 of a 10% increase, followed by a 10% decrease.
20. A supplier normally offers a 30% discount. Due to competition, he wants to increase the
discount to 40%. What additional discount is needed?
[Hint: Consider the result of one percent decrease followed by another.]


Skills (III)

Find each percent change.

1. a 12% increase followed by a 16% increase.
2. a 25% decrease followed by a 12% decrease.
3. a 15% increase followed by a 12% decrease.
4. a 20% decrease followed by a 17% increase.
5. a 20% increase followed by a 20% decrease.
6. a 50% decrease followed by a 50% decrease.
7. a 10% increase followed by a 10% increase followed by a 10% increase.
8. a 5% decrease followed by a 5% decrease followed by a 5% decrease.
9. the additional percent increase needed to change a 7% increase to a 14% increase.
10. the additional percent decrease to change a 9% decrease to a 15% decrease.


Applications (II) Compounding

1. Hessa will receive a 5% increase in pay this year and a 6% increase next year. What is her
percent increase for the two years combined?
2. A kitchen company receives a 30% discount from its supplier, followed by a 20% discount.
What is the total percent discount?

3. A government plans a 4% increase in education expenditure from 2011 for the next five years.
What will be the total percent increase in expenditure?

If the expenditure in 2011 was AED 140 billion, what was the expenditure in the last year?
4. The Ministry of Transport in a country as to make cuts of 3% in its budget for each year over
the next four years. What will be the total percent reduction be?

If the Ministrys budget was AED 12.5 million at the beginning of the cuts, what was the final
budget?

5. A supplier normally offers its clients 25% discount. Due to competition, the supplier wants to
increase the discount to 40%. What additional discount is needed


Applications (III) Commission

1. Fatima earned 3.5% commission on sales of AED 45,780. What was her commission?
2. Ahmed earns 7% commission on the sale price of each villa he sells. If he sells 3 villas and the
total amount comes to AED2,345,500, what will his commission be?
3. A salesman monthly salary is made up of a basic salary of AED 21,570 and 4.5% commission on
all her sales. If one month her sales come to 15,590, what will her salary for that month be?
4. Nouras owns an estate agent and she pays herself 6.5% commission on the amount she earns
in sales each month. In a particular month she sells 1 villa for AED 2,580,000; two studio
apartments for AED1,1345,000 each and a 3-bedroom apartment for AED 2,159,500. What will
be her total earnings that month?
5. Fahad works for a recruitment agency. His monthly salary is made up of a basic salary of AED
25,678 and a commission for every person recruited to a company of 8.4% of his salary. If he
recruits three people in a particular month, what will be his total salary?


Skills (IV)
1. What is 75% more than 2100? 2. What is 75% of 2100?
3. What is 20% less than 650 4. What is 20% of 650?
5. What is 175% of 2100? 6. What is 80% of 650?
7. What is 120% of 650? 8. What is 25% of 650?
9. What is 100% more than 20? 10. What is 100% of 20?
11. What is 0% of 300? 12. What is 0% less than 300?
13. What is 200% of 25? 14. What is 200% more than 25?
15. What is 1% of 100? 16. What is 1% less than 100?

In the following exercises compete the sentences using more than or less than:
1. 45% of something is

2. 135% of something is

3. 500% of something is (how many times more than?)

4. 3 times something is (what percentage more than?)

5. One-quarter more than something is (what percentage of?)

6. One-third less than something is (what percentage of?)

7. One-half of something is (what percentage less than?)

8. One-and-a-half times something is (what percentage of?)


Skills (V)
In questions 1 to 12, what is the total percentage change?
(State whether it is a decrease or an increase)
1. 40% to 50% 2. 50% to 40%
3. 75% to 50% 4. 50% to 75%
5. 2% to 3% 6. 3% to 2%
7. 25% to 26% 8. 76% to 75%
9. 120% to 150% 10. 6% to 0%
11. A change from 20% to 22%, followed by a further change to 24%
12. A change from 50% to 40%, followed by a further change to 20%
13. What is the new percentage figure when a figure of 20% is increased by 5%?
14. What is the new percentage figure when a figure of 20% is decreased by 5%?
15. What is the new percentage figure when a figure of 20% is increased by 100%?


COL112
Business

Unit 1
Section 1. 2
Constant Growth and Percentage Growth

University College
Zayed University


Unit 1
Section 1.1.2 Constant Growth and Percentage Growth


1.1.2 Constant Growth and Percentage Growth

Solving the problem
This is an ideal problem for Excel. Open a new workbook in Excel.
Part (a) is fairly easy to calculate.
In week 1 the company is producing 1200 computers.
In week 2 the company will produce 1200 + 80 = 1280 computers.
In week 3 the company will produce 1200 + 80 + 80 = 1200 + 80 x 2 = 1360 computers
And so on (Keep the pattern)
In week 10 the company will produce 1200 + 80 x 9 = 1920 computers
Therefore, in week 10 the company will be producing 1,920 computers.
To write this out a bit more mathematically:
Let A be the number of computers made (production value) in week 10.
Then, A = 1200 + 80 x 9

Part (b) is also not too bad. Use Excel to complete this table.

Week 1 2 3 4 5 6 7 8 9 10 Total
Computers 1200 1280 1360

Part (c)

There is a mathematical way, but we will use Excel.
Extend the table by increasing the week numbers until production exceeds 5,000 per week.

Production will reach 5,000 computers (per week) in week 49
Case Study 2.1
At a certain time a company produces 1,200 computers each week and then increases
its production by 80 computers each week after that.

(a) How many computers will it be producing per week in week 10?
(b) What will be the total number of computers the company has produced in week
10?
(c) Use Excel to find in what week production will reach 5,000 per week.


Solving the problem
Part (a) is fairly easy to calculate.
In week 1 the company is producing
In week 2 the company will produce .
In week 3
In week 8 the company will produce
Therefore, in week 8 the company will be producing computers.
To write this out a bit more mathematically:
Let A be the number of computers made (production value) in week 8.
Then, A =
Part (b) is also not too bad. Use Excel to complete the table.

Week Total
Computers

Part (c)
There is a mathematical formula for calculating the total number of computers produced, but here
we will use Excel.
Answer
Self -Assessment Question (SAQ)
At a certain time a company produces 1,500 computers each week and then
increases its production by 90 computers each week after that.

8?
(c) Use Excel to find in what week production will reach 5,000 per week.


Graph of the data for Case Study 2.1
A very important thing to be able to do is to see on a graph this relationship between production
value and number of weeks .
This is the graph of compute production against weeks for constant growth.
The graph looks like a straight line.
And in fact it is.
This is because production increases by a constant amount each week.


Solving the problem
Part (a)
In week 2 the company will produce 1200 + (1200 x 0.05) = 1200 + 60 = 1260 computers.
In week 3 the company will produce 1260 + (1260 x 0.05) = 1260 + 63 = 1323 computers.
In week 4 the company will produce 1323 + (1323 x 0.05) = 1323 + 66.15 = 1389.15 computers.
In week 5 the company will produce 1389.15 + (1389.15 x 0.05) = 1389.15 + 69.46 = 1458.61

And so on . . .
This time the pattern is easy to continue, but it is not easy to see a formula.
If we want to know how many computers are made in week 10, we have to do this calculation
another 5 times.
We need a different approach this time and we will use some extra mathematics.

5% = 0.05
Case Study 2.2
Another company produces 1,200 computers each week and then increases its
production by 5% each week after that.

10?
(c) Use Excel to find in what week production will reach 5,000.


Lets start again.
In week 2 the company will produce 1200 + 1200 x 0.05 = 1200(1 + 0.05)
= 1200(1.05) = 1260 computers.
In week 3 the company will produce 1260 + 1260 x 0.05 = 1260(1.05)

= 1200(1.05)(1.05)
= 1200(1.05)
2
= 1323 computers.
3
= 1389.15 computers.
And so on . . . Keep the pattern.

In week 10 the company will produce 1200(1.05)
9
= 1861.16 computers
= 1861 actual computers

Part (b) is also not too bad. Use Excel to complete the table.

Week 1 2 3 4 5 6 7 8 9 10 Total
Computers 1200 1260 1323 1389

Part (c)

There is a mathematical formula for calculating the total number of computers produced, but here
we will use Excel.


Production will reach 5,000 computers (per week) in week 31
Remember:
1260 = 1200(1.05)

In week 1 the company is producing computers.





Part (b) is also not too bad now.

Week

Total
Computers

Part (c)

SAQ

8?
(c) Use Excel to find in what week production will reach 5,000.


Graph of the data for Case Study 2.1
A very important thing to be able to do is to see on a graph this relationship between production
value and number of weeks .
This is the graph of compute production against weeks for percentage growth.
The graph looks like a straight line.
And in fact it is not.
This is because the effect of percentage increases do not become obvious in the initial stages.

This looks like a straight line, but later we will see that it definitely is not.

Plot the data from the SAQs in Excel in a similar way.


SAQ 2.1
The company produced 1,500 computers in week 1 and increased production each week by 90.

SAQ 2.2
The company produced 1,500 computers in week 1 and increased production each week by 4%.

It looks like increasing production by a constant amount is better than increasing by a percentage.
But look how long it takes the constant increase to get to 5,000 per week compared with the
percentage increase. (40 weeks for constant growth and 32 weeks for percentage growth)
Something is going on here!

After 8 weeks
production is 2130
After 8 weeks
production is 1974

Solving the problem
Part (a) is fairly easy.
In week 2 the company will produce 1200 + 80 = 1280 computers.
In week 3 the company will produce 1200 + 80 + 80 = 1200 + 80 x 2 = 1360 computers
And so on (Keep the pattern)
In week 10 the company will produce 1200 + 80 x 9 = 1920 computers
Therefore, in week 10 the company will be producing 1920 computers.
What we want is to be able to write this out mathematically.
Let A be the number of computers made (production value).
Then, A = 1200 + 80 x 9.
Taking this further, we can generalize.
Let n be the number of weeks.
Then, we can write, that in week n, the number of computers produced in the nth week is:-
An = 1200 + 80(n1)
Now, we can now work out the production value for any number of weeks.

The problem above is an example of a very important topic in mathematics.

Case Study 2.1 REVISITED. GENERALIZATION.
At a certain time a company produces 1,200 computers each week and then increases
its production by 80 computers each week after that.

10?
(c) In what week will production reach 5,000?


The Mathematics of Constant Growth
Arithmetic Series (or Arithmetic Progression)
The numbers :
1200, 1280, 1360, 1440, 1520, 1600, 1680, 1760, 1840, 1920
(taken from the production values for constant growth) form a sequence of numbers.
In mathematics a sequence is a list of numbers which follow a definite rule or pattern.
In this case:
the difference between each consecutive number is the same (constant) .
This is called the common difference of the sequence, and we use the letter d to stand for this.
This type of sequence is called an arithmetic sequence.
Also, there is a first number (in mathematics, we say first term), and we use the letter a to stand for
this.
From the example we saw that if we wanted to find how many computers would be produced in the
nth week was
An = 1200 + 80(n1)

Generalizing further

If we let An be the value of the nth term.
If we let a be the first term,
and d be the common difference.
Then,
An = a + (n1)d

So, we can write the general arithmetic sequence as:-
a , a + d , a + 2d , a + 3d , . . . , a + (n1)d
And now we can use this formula to find any term of an arithmetic sequence.

n
th
term
1
st
term

Example 2.1
Find the 50
th
term of the sequence
25, 40, 55, 70, . . .

From the first four terms, we can write:
a = 25, d = 15
So, if we let the 50
th
term be A50
A50 = 25 + 15(49) = 760

Example 2.2
Find the 10
th
term of the sequence
70, 50, 30, 10, . . .

From the first four terms, we can write:
a = 70, d = 20
So, A10 = 70 + 9(20) = 110

[Check this using Excel]

SAQ
Find the 25
th
term of the sequence:
1, 11, 21, 31, . . .
[Check using Excel]
SAQ
Find the 10
th
term of the sequence:
132, 120, 108, 96, . . .
[Check using Excel]

Part (b). What will be the total number of computers the company has produced in week 10?

This needs more thinking about

This time, we get a mathematical series of terms:

1200 + 1280 + 1360 + 1440 + . . . up to week 10.
Or,
1200 + 1280 + 1360 + 1440 + 1520 + 1600 + 1680 + 1760 + 1840 + 1920

How can we calculate the sum?
This is no problem with a calculator and even easier with Excel.
But what if the company wanted to know the total number of computers produced in a year!
(52 weeks)
Eventually we would want a formula.

In other words we would want to:-

The next step will take us towards a formula.

The numbers:
1200 + 1280 + 1360 + 1440 + 1520 + 1600 + 1680 + 1760 + 1840 + 1920
form a series of numbers.

A series is the sum of the terms of a sequence.

Since the difference between consecutive terms is the same (common difference)

This type of series is called an arithmetic series.

Generalize

Formula For The Sum Of An Arithmetic Progression. (AP)
The formula for the sum of an arithmetic series became well known after a young boy in a
mathematics class in about 17** astounded his teacher by working out the answer to the question,
What is the sum of the first 100 numbers? in his head!
His name was Leonard Euler (pronounced Oiler) and he became one the most important
mathematicians of all time.
We will approximately follow his method .
Let the total number of computers produced be S (for sum).

Then, S = 1200 + 1280 + 1360 + 1440 + 1520 + 1600 + 1680 + 1760 + 1840 + 1920
By reversing the order we get:
also S = 1920 + 1840 + 1760 + 1680 + 1680 + 1520 + 1440 + 1360 + 1280 + 1200

Now, add both sets of numbers together:
2S = (1200 + 1920) + (1280 + 1840) + (1360 + 1760) + . . . + (1920 + 1200)
So, 2S = 3120 + 3120 + 3120 + 3120 + 3120 + 3120 + 3120 + 3120 + 3120 + 3120

So, we can write:
2S = 3120 x 10

That is, = =
10
3120 15600
2
S

Therefore, the total number of computers produced at the end of 10 weeks is 15,600.

[Check this in Excel]
Notice that 3120 came from 1200 + 1920.

In other words, 3120 is sum of the first term and the last term.
There are 10 terms here

Lets look at the solution to the problem again.

We found that the sum of the 10 terms was:

( )
10
S 3120
2
=
which we can write as:

( )
10
S 1200 1920
2
= +

Generalizing

Let n be the number of terms in the AP.
Let a be the first term
Let l be the last term
Let Sn be the sum on n terms . (l is the letter ell)

then, ( )
n
n
S a l = +
2

In words:

But, suppose we dont know the last term.
Suppose we only know the first term and the common difference.
Can we still find the sum of n terms.
The answer is yes; we just need some algebra.

Step 1: the last term l is the nth term.

Therefore, l = a + (n1)d

Step 2: we can write:

( )
( )
n
n
n
S a a n d
n
S a n d
(
= + +

(
= +

1
2
2 1
2

The sum of n terms of an arithmetic series is
half the number of terms multiplied by the sum of the first term and the last term.

Recall:
n
th
term of an
arithmetic
sequence is:-
An = a + (n1)d


Example 2.3
Find the 15
th
term and the sum of the first 15 terms of the arithmetic series
36, 48, 60, 72, 84, . . .
From the first four terms, we can write
a = 36, d = 12
Let A15 be the 15
th
term.
Then, A15 = 36 + 14(12) = 204

Let S15 be the sum of the first 15 terms,
Then

S ( ) ( ) , ( = + =
15
15
2 36 14 12 1 800
2

Example 2.4
Find the sum of the first 12 terms of the arithmetic series
100, 75, 50, 25, . . .
From the first four terms, we can write
a = 100, d = 25
So if we let S12 be the sum of the first 12 terms,
S ( ) ( ) ( = + =
12
12
2 100 11 25 450
2

SAQ
5, 20, 35, 50, . . .

SAQ
125, 120, 115, 110, . . .

Always
check with
Excel!

Part (c) In what week will production reach 5,000?

This is more difficult and involves algebra.

From part (a), we know that there is a simple formula to find the production after n weeks.

The formula is :
An = a + (n1)d

Now in this problem we dont know how many weeks it will take to reach a production of 5,000.
In other words, the number of weeks is an unknown.
So, we use a letter from the alphabet in place of the number.
Let n be the number of weeks it takes to reach a capacity of 5,000.
In this case,
a = 1200, d = 80
So, the equation becomes:

n
n
n
n
n
n
n
n
( )
( )
( )
( )
.
.
.
= +
=
=
=
=
=
= +
=
5000 1200 80 1
5000 1200 80 1
3800 80 1
80 1 3800
3800
1
80
1 47 5
47 5 1
48 5

Therefore, Production will reach 5,000 in week 49.

The applications of arithmetic series play an important part in business mathematics.
We will visit arithmetic series again in this course.
It is important to know these formulas.


Part (c) In what week will production reach 5,000?

From part (a), we know that there is a simple formula to find the production after n weeks.

The formula is :
An = a + (n1)d

In this case,
a = d =

Therefore, Production will reach 5,000 in week .
Self -Assessment Question (SAQ)
At a certain time a company produces 1,500 computers each week and then increases its
production by 90 computers each week after that.
(b) What will be the total number of computers the company has produced in week 8?
(c) Use the formula for the sum of n AP to find in what week production will reach 5,000 per
week.


Solving the problem
Part (a)
We saw that there is a method of calculating the 10
th
term
In week 2 the company will produce 1200 + 1200 x 0.05 = 1200(1 + 0.05)
= 1200(1.05) = 1260 computers.
= 1200(1.05)(1.05)
= 1200(1.05)
2
= 1323 computers.
3
= 1389.15 computers.

In week 10 the company will produce 1200(1.05)
9
= 1861.16 computers
= 1861 actual computers

What we want is to be able to write this formula out more mathematically.
Let G be the number of computers made (production value).
Then in week 10,
G = 1200(1.05)
9

Taking this further, we can generalize.
Let n be the number of weeks.
Then, we can write, that in week n, the number of computers produced in the nth week is:-
Pn = 1200(1.05)
(n1)

Now, we can now work out the production value for any number of weeks.
Case Study 2.2 REVISITED. GENERALIZATION

10?
(c) In what week will production reach 5,000?

5% = 0.05
Remember:
1260 = 1200(1.05)

The Mathematics of Percentage Growth
Geometric Series (or Geometric Progression - GP)

This problem is another example of a very important topic in mathematics.
The numbers:
1200, 1260, 1323, 1389, 1458, 1531, 1608, 1688, 1772, 1861
form a sequence of numbers also (but, a different sequence from that in Example 2.)
In this case: the ratio between each consecutive number is the same.
This means that: . , . , . , = = =
1260 1323 1389
1 05 1 05 1 05
1200 1260 1323
and so on
This is called the common ratio of the sequence, and we use the letter r to stand for this.
This type of sequence is called an geometric sequence.
Also, there is a first number (in mathematics, we say first term), and we use the letter a to stand for
this.
From the example we saw that if we wanted to find how many computers would be produced in the
nth week was
Gn = 1200(1.05)
(n 1)


If we let Gn be the value of the nth term.
If we let a be the first term,
and r be the common ratio.
Then, the nth term of the geometric sequence is:

Gn = a r
(n 1)

So, we can write the general geometric sequence as:-
a, ar, ar
2
, ar
3
, ar
4
, . . . , ar
(n1)

n
th
term
1
st
term
2
nd
term

Example 2.5
Find the 9
th
term of the geometric sequence:
2, 6 , 18, 54 , . . .
a = 2 , r =
6
2
= 3
Let 9
th
term be G9.
Then, G9 = 2 x 3
8
= 13,122

Example 2.6
Find the 7
th
, , , ,
1 1 1
1
2 4 8
which is the same as 1 , 0.5 , 0.25 , 0.125 , . . .
a = 1 , r = =
1
1
2
1 2
which is the same as a = 1 , r = 0.5

So, G7 = 1 x
| |
=
|
\ .
6
1 1
2 64
which is the same as G7 = 1 x (0.5)
6
= 0.015626

SAQ
Find the 5
th
5, 1, , . . .

SAQ
Find the 5
th
6, 24, 96, 376, . . .

Part (b)
The formula for the sum of series
1200 + 1260 + 1323 + 1389 + . . . + 1772 + 1861
is too difficult to prove at this stage, but we will give it and use Excel to verify the results.

Let Sn be the sum of the first n terms of the geometric sequence.

Then Sn =
( )
n
a r
r
1
1

This is can be proved, but the mathematics is more difficult than for arithmetic series.

So, 1200 + 1260 + 1323 + 1389 + 1458 + 1531 + 1608 + 1688 + 1772 + 1861

is S10 =
( )
.
.
10
1200 1 05 1
1 05 1
= 15,093

Therefore, the total production after 10 weeks 15,093 computers.

[Use Excel to check this.]


Example 2.6

Find the 8
th
term and the sum of the first 8 terms of the geometric series
12, 36, 108, 324, . . .
Since we are told that this is a geometric sequence.
a = 12 , r =
36
12
= 3
Let G8 be the 8
th
term of the sequence.
Then, G8 = 12 x 3
7
= 26,244

Let the sum of the first 8 terms be S8
Then, S8 =
( )
8
12 3 1
3 1
= 39,360

Example 2.7
Find the 6
th
term and the sum of the 6
th
term of the geometric sequence
5 , 1 , 0.2 , 0.04 , 0.008 , . . .

a = 5 , r = 0.2
Let G6 be the 6
th
Then, G6 = 5 x 0.2
5
= 0.0016

Let the sum of the first 6 terms be S6
Then, S6 =
( )
.
.
6
5 0 2 1
0 2 1
= 6.2496

SAQ
Find the sum of the first seven terms of the geometric sequence:
3, 15, 75,375, . . .

Notice that
S6 = = 6.2496 also.
also.
SAQ
Find the sum of the first 5 terms of the geometric sequence:
10, 5, , . . .


Part (c)

Once again, the solution to this problem is too difficult to solve mathematically at this stage, but we
can solve it using Excel.
To find out when production exceeds 5,000 we can use two methods in Excel.
Method 1.
We can call this the Drag and See method.
What we do here is to set up the formula for the geometric progression that gives us the production
value in each week and copy the formula down until the production value reaches 5,000 or greater.

Therefore, production reaches 5,000 in week 31.

Production reaches 5,000 in week - .

=1200*(1.05)^(A2-1)
Dragging the formula in cell B2
down we finally reach the cells
which contain 31 (weeks)and
5186 (production value).

SAQ

8?
(c) Use the drag and see and then the solver method in Excel to find in what
week production will reach 5,000.


Method 2

This method uses Excels way of solving equations.
From part (a), we know that there is an formula to find the production after n weeks.
The equation is
Gn = ar
(n1)
In this case,
a = 1200, r = 1.05
5,000 = 1200(1.05)
(n1)
And we want to know what n is.

Using solver , with a = 12000 and r = 0.05, the solution is: 30.25
Therefore, production reaches 5,000 in week 31 .

Formula:
=1200*(1.05)^(G7-1)
SAQ
Using solver , with a = 15000 and r = 0.04, the solution is:
Therefore production reaches 5,000 in week .


Lets summarize what we have done so far.
The problems Case Study 2.1 and Case Study 2.2 were about a company producing computers.
In Example 2, the company increased its production by a constant amount each week, while in
Example 3 the company increased its production by a percentage of its previous weeks amount
each week.
We can write the results down.

There are some important results here.
1. A constant increase in production means more computers in week 10 than percentage increase.
2. A constant increase in production means more total number of computers produced after week 10
than percentage increase.
3. But, a constant increase in production takes longer to reach a value of 5,000 than percentage
increase.

THE QUESTION IS WHY?
WHAT IS HAPPENING?

The results become clear when we plot the graphs using Excel.
We will plot both sequences of numbers on the same graph.

Exercise
1. Plot the graph of the production values for both examples up to week 10.
What do you notice?
Case Study 2.1 Constant Increase
Result:
1. Arithmetic sequence
2. Formula for nth term:
An = a(n1)d
where a = first term, d = common difference
3. Production in week 10 = 1920
4. Formula for sum of n terms

5. Total after week 10 = 17,600
6. No. of weeks to reach 5,000 = 49

Case Study 2.2 Percentage Increase
Result:
1. Geometric sequence
2. Formula for the nth term:
Gn = ar
(n1)

where a = first term, r = common ratio
3. Production in week 10 = 1861
4. Formula for sum of n terms

5. Total after week 10 = 15,093
6. No. of weeks to reach 5,000 = 31


Graph of Production Values for Week 1 to Week 10

Graph of Production Values for Week 1 to Week 20



Unit 1
Section 1.2 Constant Growth and Percentage Growth
Exercises


Constant Growth and Percentage Growth Applications
Exercises
1. At a certain time a company manufactures 600 TVs each week and then decides to increase its
production by 25 TVs each week after that.
Part (a)
(i) How many TVs will it be manufacturing per week in week 8?
(ii) What will be the total number of TVs the company has manufactured in week 8?
(iii) In what week will production of TVs reach 1,200?
Part (b)
If the company had decided to increase the number of TVs manufactured by 3% per week,
answer the following questions.
(i) How many TVs will it be manufacturing per week in week 8?
(ii) What will be the total number of TVs the company has manufactured in week 8?
(iii) In what week will production reach TVs 1,200?
Part (c)
(i) Which would be the better decision up to week 8? Explain your answer.
(ii) Use Excel to plot the graphs of TVs manufactured from week 1 to week 8 on the same
axes.
(iii) Estimate the week in which the number of TVs produced would be the same. What
happens after this week?

2. At a certain time a company is producing 5,600 greetings cards per day. The company decides
to increase its output by 6% each day.
Part (a)
(i) How many greetings cards per day will it be on day 12?
(ii) What will be the total number of greetings cards per day the company has produced by
day 12?
(iii) On what day will production of greetings cards per day reach 12,000?
Part (b)
If the company had decided to increase the number of greetings cards per day produced by
450 greetings cards per day
(i) How many greetings cards per day will it be producing per day on day 12?
(ii) What will be the total number of greetings cards per day company has produced by day
12?
(iii) On what day will production reach greetings cards per day 12,000?
Part (c)
(i) Which would be the better decision up to day 12? Explain your answer.
(ii) Use Excel to plot the graphs of greetings cards per day produced from day 1 to day 12 on
the same axes.
(iii) Estimate the day on which the number of greetings cards produced would be the same.
What happens after this day?

3. The government of a certain oil-producing country is trying to predict the oil requirements in
the year 2020. In 2011, the consumption was 10.4 millions of barrels per year. Two consultant
agencies are asked to forecast the countrys oil requirements. They are:
Forecast 1. Increases of 350,000 barrels per year.
Forecast 2. Increases by 6% each year.
Use series to calculate the forecasts from each agency for the following years:
(a) The number of barrels of oil required in 2015, 2020, 2030.
(b) The total number of barrels used from 2011 to 2030.

4. An e-market company is planning to expand into two new markets. Based on extensive market
research, the projections for each market are as follows:
Market 1: the number of customers will increase by 800 per year.
Market 2: the number of customers will increase by 7% each year.
If the number of customers at the start of 2007 is 7600 in Market 1 and 5200 in Market 2, use
series to calculate for each market.
(a) The number of new customers in 2020.
(b) The number of customers in 2020.
(c) What will happen in the long run?


Arithmetic Progressions and Geometric Progressions
Skills
Exercises
1. (a) State whether the following sequences are APs or GPs or neither.
If they are APs or GPs, state the value of the first term and the common difference or
common ratio.
(i) 5, 8, 11, 14, . . .
(ii) 2, 8, 32, 128, . . .
(iii) 4, 4.5, 5, 5.5, . . .
(iv) 100, 98, 96, 94, . . .
(v) 0, -15, -30, -45, . . .
(vi) 100, 50, 25, 12.5, . . .
(vii) 2, 9, 16, 22, . . .
(viii) 1, 4, 9, 16, . . .
(b) For each of the APs or GPs in part (a):
(i) Calculate the value of the 10
th
(ii) Calculate the sum of the first 10 terms.
(iii) In parts (i) and (iii) calculate the first term which is greater than 100.

2. Find the sum of the first 12 terms of the series: 50 + 45 + 40 + 35 + . . .
3. Find the sum of the first 8 terms of the series:
1 3 5 7
4 4 4 4
+ + + +

4. Find the sum of the first 10 terms of the series:
1 1 1 1
3 9 27 81
+ + + +
5. Find the value of the 25
th
term of the sequence: 180, 162, 145.8, 131.22 , . . .
6. Find the sum of the first 11 terms of the series: 10 + 8 + 6 + 4 + . . .
In questions 7 9 use Excels drag and see function, or the Equation Solver, or algebra, to answer
the questions.
7. Given that 1 + 2 + 3 + 4 + . . . = 78, find the number of terms we need to give 78.
10. Use Excel to investigate the sum of the series below for more and more terms.
1 1 1
1
2 4 8
+ + + +
Make a guess at the sum of the series as you add more and more terms.




COL112
Business

Unit 1
Section 1.3
Large and Small Numbers

University College
Zayed University



Unit 1
Section 1.1.3 Large and Small Numbers


1.1.3 Large and Small Numbers

Look in any newspaper, watch any current affairs TV program, look at your bank statements(!?)
and you will soon become aware of the number of times the words million, billion, and trillion
are mentioned.
If you want to be able to understand these numbers and calculate with them, then you must know
about how our number system works.
Dealing With Large (And Small) Numbers
Number Systems
Over the thousands of years of human cultural and scientific development many types of number
systems evolved. Almost all of them have died out and some of the ones that remain are there only
because historical accident and they are of limited use. (Roman, Babylonian, to name but two)
The system which has proved the most useful and powerful is the place value system.
Place Value System
The place value system is based on 10 and its powers. Using the place value system, only the digits
1, 2, 3, 4, 5, 6, 7, 8, 9 and 0 (zero) are needed.
The value of a digit depends on its place in the number itself.
This means that the digit 7 can be represent the number:
7 tens; 7 thousands; 7 trillion; 7 hundredths; 7 millionths;
depending on where it is in the number.
The position of the digit 7 gives it its value in the number.

SAQ
In the numbers below, write down the place value of the digit 7.
70 ; 57,625 ; 7,500,000,001 ; 0.0735 ; 0.105007.


Usually we do not write
the + symbol for
positive exponents

But we always write the
symbol for negative
exponents
Exponential Notation (Scientific Notation)

When dealing with very large numbers we can use the fact that our number system is based on the
powers of ten to shorten the way we write - and speak them.
For example
3,000
=
(3 x 1000) + (0 x 100) + (0 x 10) + (0 x 1)
=
3 x 1000 = 3 x 10
3

When we write 1000 as 10
3
we are using the exponential form.
The small 3 raised to the right of the 10 is called the exponent and the 10 is called the base.

An easy way to think of the exponential form is to think of numbers to the left of the decimal point
as multiples of ten while numbers to the right of the decimal point as divisions by ten:

100000 = 10 x 10 x 10 x 10 x 10 = 10
+5
= 10
5
10000 = 10 x 10 x 10 x 10 = 10
+4
= 10
4

1000 = 10 x 10 x 10 = 10
+3
= 10
3
100 = 10 x 10 = 10
+2
= 10
2

10 = 10 = 10
+1
= 10
1 = 1 = 10
0
= 1
0.1 = 1/10 = 10
1
0.01 = 1/100 = 10
2
0.001 = 1/1000 = 10
3

0.0001 = 1/10000 = 10
4

0.00001 = 1/100000 = 10
5

Some terms for numbers that come up many times in business and finance are:

One Million = one thousand thousand = 10
6

One Billion = one thousand million = 10
9
One Trillion (US) = one million million = 10
12

Look at these website:-
www.onlineconversion.com/large_numbers.htm
http://www.onlineconversion.com/finance.htm

Add them to your favorites.

Calculator Mathematics

How Calculators Deal With Large and Small Numbers.

In-class activity

1. Large Numbers

Use your calculator to perform the following calculations and record the results.

Punch in: 5000 X 1000000 and record the result.

Now, punch in 5000 X 10000000000 and record the result.

On the Casio fx-82MS scientific calculator, the output display for that calculation is:

(Yours might be slightly different.)

This is because 50,000,000,000,000 (the full answer) cannot fit into the 10 spaces in the calculator
display.
The calculator is displaying the result in what is called scientific notation or exponential form.
It is a shorthand way of writing the result.
That is: 5.0 x 10
13
= 5.0 x 10000000000000 = 50,000,000,000,000

Say that in words and then write it in words.

5.
x10

1 3

Next:
Punch in 2.567 x 500000000 and record the result.

Now, punch in 2.567 x 5000000000 and record the result.

Write the number out in full.

Now say it and then write it in words.

Punch in 25.67 x 5000000000 and record the result.

Write the number out in full.

Now say it and then write it in words.

What do you think will be the result if you punch in 256.7 x 5000000000 ?
Write down what you think and then use your calculator to check.

Nice and simple.

But, beware of calculator surprises.


Your calculator does well in the first calculation; the difference is only 35.

But on the second calculation the difference is 35,000.

If the numbers represented dollars or dirhams, a lot of money (to you and me) has disappeared!

Things can get worse.

The more multiplications and divisions that are involved, the more numbers disappear.
SAQ
On your calculator multiply 2,478,454,321 by 365 and write down the digits in the display.
On Excel multiply 2,478,454,321 by 365 and write down the answer. (The correct answer!)
Now write down the calculator answer in full.
Now subtract the answer from Excel and the full answer from the calculator .
SAQ
This time,
On your calculator multiply 2,478,454,321 by 365000 and write down the digits in the display.
On Excel multiply 2,478,454,321 by 365000 and write down the answer. (The correct answer!)
Now write down the calculator answer in full.
Now subtract the answer from Excel and the full answer from the calculator .

2. Small Numbers

Use your calculator to perform the following calculations and record the results.

Punch in: 1 2 and record the result.

Now, punch in 1 200 and record the result.

On the Casio fx-82MS scientific calculator, the output display for that calculation is:

(Yours might be slightly different.)

This is because the Casio displays decimal answers in exponential form.
It is a shorthand way of writing the result.
It means
5.0 x 10
-3
, which is the same as 5.0 x 0.001 = 0.005
Also, 5.0 x 10
-3
is the same as 5.0 x 1/1000 = 0.005
And also, 5.0 x 10
-3
is the same as 5.0 1000 = 0.005

Without your calculator, write down what you think will be the display on your calculator for the
following calculations.

1 2000
1 20000
1 20000000
Now check with your calculator.

5.
x10

-0 3


Division causes many problems if you dont know what youre doing. It often happens when using a
calculator or Excel. The calculator or Excel can give answers which are not exact.

Punch in 2000 800 and record the result.

This answer is correct.
We know this is correct because of the relationship between multiplication and division.
For example:
36 3 = 12 and 3 x 12 = 36
This relationship is obvious in this case. But it works for all numbers.

36 3 = 12 and 3 x 12 = 36

In this case: 200 800 = 0.25 and 800 x 0.25 = 200

Write this down as a full decimal.

Here is a shortcut to the answer.
2.5 x 10
-05
= 0.000025
Start with 2.5 and move the decimal point five places to the left.
2.5
0.25
0.025
0.0025
0.00025
0.000025
This is a very useful shortcut, but never forget why it works.

So, to check division:-
Take the two numbers around the =sign and multiply them.
The answer should be the first number in the division.

Rounding and Approximating


Write the answer you see on the calculator display here.

Try the check for division using the number in the display as the answer.

That is:
1 9 =

9 x =

The display is NOT 1 !

This example is trivial, but it happened because when 1 is divided by 9, the answer is a non-
terminating decimal.
In other words, it goes on forever.
1 9 = 0.11111111111111111111111111111111111111 to infinity.

This means that wherever you stop writing 1 there are still an infinite number of ones left.
In the case of the Casio, it cuts off the 1s after the ninth one.
So, when you stop writing 1s, you have approximated the answer.
You have not got the exact answer.
Which means that the rule for checking division will not work exactly!
Things get more serious when you are dealing with approximations of large (and small) numbers.


Approximations
Very often in business and finance, large numbers are written in a shortened form in terms of
millions, billions, even trillions. Government departments, economic analysts, etc. use these
shortened ways of writing down numbers all the time.
This always means that the figures that are made public are never exact.
They are always approximations.
To understand how to deal with these figures you must know about approximations and rounding.

Rounding Decimals
There are many times when the number of decimal places in a number is greater than the
calculation needs. It is not often that we need to know our weight to the nearest thousandths of a
kilogramme, for example; or the gross national product of a country to the nearest 100 dollars.
We round the decimal part of a decimal number in nearly the same way as we round whole
numbers. The only difference is that we drop digits to the right of the rounding place, instead of
replacing these digits by 0s.

ROUNDING DECIMALS TO A PLACE VALUE TO THE RIGHT OF THE DECIMAL POINT

Step 1. Locate the digit to the right of the given place value.

Step 2 If the digit is 5 or greater, add 1 to the digit in the given place value and drop all digits to its
right. If this digit is less than 5, drop all digits to the right of the given place.

Example 1:
Round 736.2359 to the nearest tenth.

Step 1 Locate the digit to the right of the tenths place.

736. 2 359 2 is in the tenths place.
3 is the digit to the right. (This is in the hundredths place).

Step 2. Since the digit to the right of the tenths place is less than 5, we drop it and all the digits
to its right.

Thus, 736.2359 rounded to the nearest tenth is 736.2


Example 2:
Round 736.2359 to the nearest hundredth.

Step 1 Locate the digit to the right of the hundredths place.

736.2 3 59 3 is in the hundredths place.
5 is the digit to the right. (This is the thousandths place)
Step 2. Since the digit to the right is 5, we add 1 to the digit in the hundredths place and drop all
the digits to the right of the hundredths place.

Thus, 736.2359 rounded to the nearest hundredth is 736.24

1)

2)

3)

4)
SAQ
1) Round 12.0459 to the nearest hundredth.
2) Round 123.7817 to the nearest tenth.
3) Round 123.7817 to the nearest thousandth.
4) Round 10.00797 to the nearest ten thousandth.


Handling millions, billions and trillions.

What does it mean to say that a countrys Gross National Income is $179.44 billion?
If you write it out without the billion it is 179,440,000,000.
However, all those zeros are there, not because this is the true value of the GNI, but because
number is an approximation of the true GNI.
Someone thought that the other digits were not significant .

For example

1,258,460,000 is
one billion, two hundred and fifty eight million, four hundred and sixty thousand.
So writing this in billion form it would be:
1.25846000 billion
Or
1.25846 billion (since now the zeros are decimals of a billion)
It can be argued that the four hundred and sixty thousand is so small compared with the whole
figure that it isnt worth bothering about.
In fact it is only 0.037% of the whole amount.

So, if we think that the 460000 is not significant, we would write
1.258 billion
And if we thought the 8,460,000 was not significant, (0.67% of the amount)
Then we would write:
1.26 billion
And that is where it is probably best to stop the approximations.
(58,460000 is 4.6% of the amount.)
We say that:
1.25846 billion is correct to the nearest ten thousand .
1.2585 billion is correct to the nearest one hundred thousand.
1.258 billion is correct to the nearest one million.
1.26 is correct to the nearest ten million

Going further,
1.3 billion is correct to the nearest one hundred million
1 billion is correct to the nearest billion.

4,563,487,500 = billion

a)
b)
c)
d)
e)
f)
g)

a)
b)
SAQ
Write down 4,563,487,500 in billion form in full.
Now write down the amount to the nearest:
a) thousand
b) ten thousand
c) one hundred thousand
d) one million
e) ten million
f) hundred million
g) billion.
SAQ
Write down
a) 56,345,284,579,500 in trillion form to the nearest ten billion.
b) 456,379,754,000 in trillion form to the nearest ten billion.

Rounding and Truncating
(Or, the Perils of Cutting off the Ends of Numbers.)
Consider the amount $346,473,352.
In millions of dollars this is $346.473352million
Now, it is possible to approximate this, but every time an approximation is made, money
disappears.
For example, approximating this to $346.47335million means that only $2 disappears.
Approximating to $346.47million means that $335 has disappeared
But approximating to $346.4million means that $7,335 has disappeared
If you make your approximation a little better, $346.5million, then $2665 has disappeared.
(Why?)
Moral: Be careful when you approximate.
Those decimal places may hold a lot of money.

SAQ
How much money will disappear if AED 35,453,700,000 is written as 35.4 billion?

Unit 1
Section 1.3 Large and Small Numbers
Exercises


Unit 1 Large and Small Numbers
Exercises1.
Write the amounts in the second column of the table as amounts in trillions of dollars.

2. Write the amounts in the second column in exponential notation.

Country
Gross National Income
(GNI)
GNI
($ trillions)
United States: $9,780,000,000,000
Japan: $4,520,000,000,000
Germany: $1,940,000,000,000
United Kingdom: $1,480,000,000,000
France: $1,380,000,000,000
China: $1,130,000,000,000
Italy: $1,120,000,000,000
Canada: $682,000,000,000
Russia: $253,000,000,000
Saudi Arabia: $181,000,000,000
Pakistan: $60,047,300,000
New Zealand: $51,000,100,000
United Arab Emirates: $49,205,100,000

Country
Gross National Income
(GNI)
GNI
(a x 10
b
)
United States: $9,780,000,000,000
Japan: $4,520,000,000,000
Germany: $1,940,000,000,000
United Kingdom: $1,480,000,000,000
France: $1,380,000,000,000
United Arab Emirates: $49,205,100,000

3. Add together the GNI amounts from USA, Russia and the UAE
(a) in full form
(b) in $ trillion form.

4. Write the amounts in the second column as amounts in millions of dollars.

Country
Oil Production
(bbl/day)
Oil Production
(bbl/day)
( $ millions)
Russia: 10,120,000
Saudi Arabia: 9,764,000
United States: 9,056,000
Iran: 4,172,000
China: 3,991,000
Canada: 3,289,000
Mexico: 3,001,000
United Arab Emirates: 2,798,000
Brazil: 2,572,000
Kuwait: 2,494,000
Venezuela: 2,472,000
Iraq: 2,399,000
Norway: 2,350,000

5. Add the bbl/day data for the top five listed countries in $millions.


6. Write the following numbers in the form specified.
For example.
$345,678,900 million to the nearest ten thousand = $345.68 million

a) AED 2,456,789,370: in millions to the nearest thousand.
b) AED 346,637,800,000 in millions to the nearest hundred thousand.
c) $123,436,467,800,500 in billions to the nearest billion.
d) 45,789,456,000 in billion to the nearest ten million.

7. What is $3.45billion plus $5.67billion?
8. What is AED135.7million plus AED 2.46billion?
(Caution! You cannot add millions to billions directly)
9. What is 45.46billion minus 45.46million?
10. If a state decides to cut its $32.8 billion defence spending by 30% what will the new amount
be?
Write down the following numbers in full:
11. 1.23 x 10
3

12. 4.56789 x 10
5
13. 0.5 x 10
15

14. 3.169362465 x 10
1

15. 5.123456789 x 10
10




COL112
Business

Unit 1
Section 1.4
Elementary Mathematical Modeling in Business

University College
Zayed University

Unit 1
Section 1.1.4 Elementary Mathematical Modeling in Business


1.1.4 Elementary Mathematical Modeling in Business
What is Mathematical Modeling?
A model of an object is something that looks like the object but is not the actual object.
Everyone is familiar with dolls and model cars. Architects and engineers build model buildings or
bridges before constructing the actual structure. Machine parts are modeled by draftspersons, and
nurses learn anatomy from models of the human body before working on the real thing.
All models have two important features. The first is that a model will contain many features of the
real object. The second is that a model should be easier to work with than the real thing so that we
can understand the real object better.
In a similar way, a mathematical model is a mathematical structure that contains the important
aspects of a given situation.

A mathematical model may be an equation or a set of equations, a graph, table, chart, or any of
several other similar mathematical structures.

The process of examining a given situation or "real-world" problem and then developing an equation,
formula, table, or graph that correctly represents the main features of the situation is called
mathematical modeling.
The thing that makes "real-life" problems so difficult for most people to solve is that they appear to be
simple on the surface, but are often complicated with many possible variables. You have to study the
problem and then try to connect the information given in a problem to your mathematical knowledge
and to your problem-solving skills. To do this, you have to build a mental picture of just what is going
on in a given situation. This mental picture is your model of the problem.
In the real world, construction and interpretation of mathematical models is a very important use of
mathematics.


Mathematical Modeling.
Everybody is a mathematical modeler.
Almost anytime you do anything with numbers in your own life you are being a mathematical
modeler. When you calculate the time it will take you to get to a classroom from another room you
are modeling time. Whenever you decide which hotel is offering the best value for rooms and
facilities you are doing (very elementary) financial modeling.

These are very, very simple examples but nevertheless they illustrate that mathematical modeling is
all around. It is especially important for you in business and finance.

More realistic examples would be: plotting graphs from given data to find a relation between
quantities, trying to predict the profitability of a company, estimating population growth in a
country, or predicting the future sales of a particular product.

The words relation, predict and estimate all indicate that some modeling is happening.
Relationships
When we see a pattern in a set of data, for example on a scatter diagram, we say that the two
variables in the scatter diagram are related.
When the pattern suggests a relationship in which one variable depends on another, we want to
find out all we can about the relationship.
In mathematics, a function is used to represent the dependence of one quantity on another.

The Function Machine

The concept of a function can be made simpler using a function machine, in which an imaginary
machine takes a number, the input, and performs operations, on the number, the function, and then
gives another number, the output.

* We have to be careful here because not all relationships are functions.
Definition
A function is a rule that takes a certain number as input and then gives an output number
for each input. *
f

input

output


Examples of Elementary Mathematical Modeling

Example 4.1 Modeling Tutoring Payments
Consider the following simple situation: A computer training institute is offering a rate of 90
dirhams per hour for tutoring. You wish to know how much money you would earn for different
amounts of time if you wanted a job.

You could start by making a table.

Hours worked (n) 0 1 2 3 4 5
Money earned (M) 0 90 180 270 360 450

Notice that the inputs are the set of numbers {0, 1, 2, 3, 4, 5};
and the outputs are the set of numbers {0, 90, 180, 270, 360, 450}.
The input is called the independent variable and the output is called the dependent variable.
We say that money earned depends on the unit hours worked.
Or, money earned is a function of hours worked.

In this case the function can be stated as
The amount of money earned is 90 times the number of hours worked

Using the function machine:

f:
90 times

input

output

Money earned
270

Hours worked
3


To make a mathematical model, as soon as you can, assign variables to the quantities you are
working with.
For example, in this case:
Let the number of hours worked be n.
(The variable n is the independent variable.)
Let the amount of money you would earn by tutoring be M.
(The variable M depends on the number of hours worked and so we write M = f(n))
This means that the amount of money earned for tutoring n hours is M.
Because of this we call M the dependent variable.
The notation f(n) is a very useful one because it gives us a simple way of expressing the amounts of
money earned for a certain number of hours.
For example: f(3) represents the amount of money earned by working 3 hours.
That is, f(3) = 270 (from the table).

In words In dirhams
f(2) . f(2) = ..
f(4) .. f(4) = ..
f(0) .. f(0) = ..

Notation
In this case: we started off by calling the function f , and we write:

M = f(n)

Money
Earned

is a function of
Hours worked
SAQ
In the example above, what do the following represent ?
f)2) ; f(4) ; f(0)

Plotting this on a scatter plot using Excel lets us see what the relationship is more clearly.

The points appear to lie on a straight line.
As the values of the independent variable increase,
so the values of the dependents variable increase.

The next step might be to find the function representing this relationship.
It is easy to see that to calculate the money earned we just:-
multiply the number of hours worked by 90
In the language of functions:

M = 90n

or:

f)n) = 90n

Hours (n)
M
o
n
e
y

E
a
r
n
e
d

(
M
)

This type of function is called an increasing function.

The idea of a function is very important

Table 1. Retail sales over a 6-month period
Month 1 2 3 4 5 6
Unit Price (p) 84 108 120 180 156 132
Sales Volume (S) 920 840 800 600 680 760

Notice that the inputs are the set of numbers {84, 108, 120, 180, 156, 132};
and the outputs are the set of numbers {920, 840, 800, 600, 680, 760}.

The input is called the independent variable and
the output is called the dependent variable.

We say that sales depends on the unit price.

Or sales are a function of unit price.

The set of all inputs is called the domain and the set of all outputs is called the range of the
function.
We need to start putting this into mathematical form.

We will start off by calling the function f , and write:

S = f(p)

Sales

are a function of

Unit price
Example 4.2
Over 6 months a store has recorded the unit price of an item and the sales volume (that is,
the number of items sold) at the end of each month. The

Plotting this on a scatter plot using Excel lets us see what the relationship is more clearly.

It looks very much like the points lie on a straight line. (Try it with a ruler)
As the values of the independent variable increase,
so the values of the dependents variable decrease.

This time it is not so easy to find the function.
But we can still say something about the relationship between sales and unit price.
In this case: f(84) represents the sales when unit price is AED84.
That is, f(84) = 920 (from the table).

In words In sales
f(120) . f(120) = ..
f(180) .. f(180) = ..
Notice that in this case, we do not have the data for sales when the unit price is AED 0.
f(0) .. f(0) = unknown.
This does not mean that we cannot find the function representing the relationship between sales
and unit price. We just need some extra mathematics. (Unit 2).

SAQ
In the example above, what do the following represent ?
f)120) ; f(180) ; f(0)
This type of function is called a decreasing function

Table for TransCab Taxi Fares

Plot the points on the graph.

From the table you can get a pattern for the distance travelled and the taxi fare.
Journey (km) Fare (dhs)
5 4 + 3.5 x 5 = 21.5
8 4 + 3.5 x 8 = 32
10 4 + 3.5 x 10 = 39
20 4 + 3.5 x 20 = 74
Generalizing:
x 4 + 3.5x
Journey (km) 0 5 8 10 20
Taxi Fare (dhs)
Case Study 4.1
TransCab Taxis cost 4 dhs for the standing charge, then 3.5 dhs for every km of the
journey.
Make a table of the cost of taking a taxi and travelling 5km; 8km; 10 km and 20km.
Include 0km in the table.


As you can see:

It is an increasing function.
From the pattern, it becomes obvious that there is a formula which gives the cost of the taxi fare if
you know the distance of your journey.
Generalizing
Let the distance of the journey be d.
Let the cost of the taxi fare be C.
Then the function is: C = f(d)
That is: C = 4 + 3.5d [ or, C = 3.5d + 4 ]
When the graph of this function is plotted the points all lie on a straight line.
The function is a linear function.

The function relating Taxi fare to distance of the journey is written
C = 4 + 3.5d or, C = 3.5d + 4
Business people often use the first form , while mathematics people mostly use the second form.
We will use both forms.
In the mathematical treatment of functions it is often written:
y = 3.5x + 4

C = 3.5d + 4
Cost of the journey is a function of the distance of the journey
Remember:
y = mx + c


In mathematics, we often say that y = 3.5x + 4 is the equation of the straight line.

a) Table for cost of hiring a car
No. of days hire (D) 0
Cost of Hire (C)

b) To find the pattern and the function
Days Cost (dhs)
1
5
14
30
Generalizing:
x
Let the number of days hire be D.
Let the cost of the hire car be C.
Then the function is: C = f(D)
[ or ]

c) The equation of the straight line is

d) Use Excel to plot the straight line graph.
SAQ
The cost of hiring a car is 100 dhs standing charge, then 80 dirhams per day for every day of
hire.
a) Complete the table to find the cost of hiring a car for 1 day, 5 days, 14 days and 30 days.
(What would you put for 0 days?)
b) Check that this is linear function from the pattern in the table.
c) Find the equation of the straight line.
d) Use Excel to plot the graph of the straight line.

d) Your graph should look like this:

An interesting point is the value you get for 0 days of hire from the function.
It doesnt make sense in reality, but it is correct mathematically.
Additional questions.
1. How much would it cost to hire a car for 20 days?
[Use the function and then check using the graph.]
2. How much would it cost to hire a car for 60 days?
[Notice, you cant use the graph this time.]
3. Use the graph to find out for how many days you can hire the car for 2100 dhs.

C = 80D + 100
Remember:
y = mx + c


a) Table for maximum grade
Hours Late (L) 0
Maximum Grade (G)

b) To find the pattern and the function
Hours late Maximum Grade
0
1 100 5 x 1 = 95
3
5
10
Generalizing:
x
Generalizing further.
Let the number of hours late be H.
Let the maximum grade be G.
Then the function is: G = f(H(
[ or ]

c) The equation of the straight line is

d) Use Excel to plot the straight line graph.
SAQ
A mathematics teacher gives her students an assignment and gives the students the date and time
when the assignment must be in.
The teacher states that the assignment will be graded out of 100 and that if the students dont hand
the assignment in on time, then every hour after that she will deduct 5 points. This means that if a
student hands in the assignment 1 hour late, the maximum grade she can get is 95.

a) Complete the table to find the students maximum grade after 1 hour; 3 hours; 5 hours and 10
hours.
(What would you put for 0 hours late?)
b) Check that this is linear function from the pattern in the table.
c) Find the equation of the straight line.
d) Use Excel to plot the graph of the straight line.


d) Your graph should look like this.

This time the function is decreasing.
The way that this shows itself in the function is with the negative sign ( ).

Additional Questions
1. If one student was 7 hours handing in the assignment, what would be her maximum grade?
2. What would be the maximum grade a students could get if she handed her work in 12 hours
late?
3. How many hours would it take before the student was not able to get a grade at all?

G= 100 5H
Remember:
y = mx + c


COL112 Unit 1 Mathematical Thinking and Modeling in Business

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COL112 Mathematical Modeling For Business Unit 1 Section 1.

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