1

Math for Business

Chapter 1: Linear Equations

1.1. Introduction to algebra:

PRACTICE

3. A specialist paint manufacturer receives $12 for each pot sold. The initial set-up cost for the
production run is $800 and the cost of making each tin of paint is $3.
(a) Write down a formula for the total profit, π, if the firm manufactures x pots of paint and sells y pots.
(b) Use your formula to calculate the profit when x = 1000 and y = 800.
(c) State any restrictions on the variables in the mathematical formula in part (a).
(d) Simplify the formula in the case when the firm sells all that it manufactures.

1.2. Further Algebra:

7
Fraction:
8

7 is called numerator; 8 is called denominator

7 14 21
= = : all fractions are equivalent (nhớ chỉ rút nhân tử chung mới triệt và mẫu số ≠ 0 – ra
8 16 24
kết quả luôn đem về dạng tối giản)
Equation: 5x + 3 = 2x – 6 (luôn xét tập xác định)
Inequalities : 5x + 3 > 6 (chú ý + - thì cả 2 vế bth nhưng nhân số âm thì đổi chiều và chia thì
phải xét tập xác định)
PRACTICE

4. The design costs of an advertisement in a glossy magazine are $9000 and the cost per cm2 of print is
$50.
(a) Write down an expression for the total cost of publishing an advert which covers x cm2.

(b) The advertising budget is between $10 800 and $12 500. Write down and solve an inequality to
work out the minimum and maximum area that could be used.

DINH HOANG TU 1
 2

1.3. Graph of Linear equations:

x-axis: Trục Ox
y-axis: Trục Oy
Origin (O): gốc tọa độ
Coordinate: điểm
Ex: A(2;3), B(-1;4)
Linear equation: dx + ey = f
Coefficient: hệ số
3 = 2a + b
y = ax + b 4 = -a + b If e ≠ 0 => y=ax + b
a: slope of the line ; b: intercept

PRACTICE

5. A taxi firm charges a fixed cost of $4 plus a charge of $2.50 a mile.

(a) Write down a formula for the cost, C, of a journey of x miles.

(b) Plot a graph of C against x for 0 ≤ x ≤ 20.

(c) Hence, or otherwise, work out the distance of a journey which costs $24.

1.4. Algebraic solution of simultaneous linear equations:

Elimination method: cân bằng 2 hệ ptrinh về 1 nghiệm rồi giải
Chú ý: luôn thử lại kết quả khi tìm ra được x, y (hoặc z)

6. Solve the following systems of equations:

(a) x - 3y + 4z =5 (1) (b) 3x + 2y - 2z = -5 (1)
2x + y + z =3 (2) 4x + 3y + 3z = 17 (2)
4x + 3y + 5z = 1 (3) 2x - y + z = -1 (3)

DINH HOANG TU 2
 3

1.5. Supply and Demand Analysis:

f(x) = ax + b  P = aQ + b / Q = aP + b
(D): P = aQD + b: Demand function
(S): P = cQS + d + t: Supply function (t: tax)
impose: +t VP Supply
deduct/subsidy: -t VP Supply
PRACTICE

7. The demand and supply functions of a good are given by

P = -5QD + 80
ax + by = c
P = 2QS + 10
where P, QD and QS denote price, quantity demanded and quantity supplied respectively.
(1) Find the equilibrium price and quantity P'= 33.6
P = -5Q + 80
(a) graphically P = 30
Q = 10 0.85P = 2Q + 10 Q'= 9.28
(b) algebraically

(2) If the government impose, as tax, 15% of the market price of each good, determine
the new equilibrium price and quantity 15% market price -> t = 15%P
P = 2QS + 10 + t = 2QS + 10 + 15%P
=> 0.85P = 2Q + 10 $5 each good -> t = 5
8. The demand and supply functions of a good are given by
tc = P' - P
P = -3QD + 60
tf = t - tc = t - (P' - P)
P = 2QS + 40
respectively. If the government decides to impose a tax of $t per good, show that the
equilibrium quantity is given by
Q = 4 - 1/5t
and write down a similar expression for the equilibrium price. t = 5
(a) If it is known that the equilibrium quantity is 3, work out the value of t. How much
of this tax is paid by the firm?
(b) If, instead of imposing a tax, the government provides a subsidy of $5 per good, find
the new equilibrium price and quantity

DINH HOANG TU 3
 Chapter 2: Non-linear Equations

2.1. Quadraric equations:

Quadraric equations: y = ax2 + bx + c
 a > 0  U shaped
 a < 0  inverted U shaped
Discriminant: = b2 – 4ac

> 0  Equation has 2 solutions (Lưu ý: Khi làm bài Q, P chỉ nhận nghiệm dương)

= 0  Equation has 1 solution

< 0  No solutions
PRACTICE

1. A firm’s monthly cost for paying cleaners’ wages is $47 250. Under a new pay deal each
cleaner earns $375 more each month. If the new pay deal goes through, the firm realises
that it will need to reduce the number of cleaners by 3 if it is to cover its costs within
the existing budget. What is the monthly salary of a cleaner before the pay rise?

2. Given the supply and demand functions

P = QS2 + 10QS + 30
P = -QD2 - 8QD + 200
calculate the equilibrium price, correct to 2 decimal places.
The demand equation is P = 6Q + 8
2.2. Revenue, Cost and Profits: TR = PQ = (6Q + 8)Q = 6Q2 + 8Q
π = TR – TC (profit: π; break even: π = 0)
TR = PQ (P: giá trị của 1 món hàng; Q: số món hàng bán ngoài thị trường)
TC = FC + (VC)Q = ACxQ (FC: fixed cost – lands, equipments, factory,…; VC: variable cost)
𝑭𝑪 each/a/per
AC = + 𝑽𝑪
𝑸

*Muốn tìm Q tại max profit: trung bình cộng Q của 2 điểm cực trị

DINH HOANG TU 4
The installation cost of a machine is $600, and the material cost and labor cost of each machine is $3 and $5
respectively. Find the total cost
FC= 600
VC= 8
PRACTICE

3. Given the following total revenue functions, find the corresponding demand functions:
a) TR = 50Q – 4Q2 b) TR = 10

4. Find an expression for the profit function given the demand function
2Q + P = 25
pi = TR - TC
and the average cost function = PQ - AC.Q
32 = (25-2Q)Q - 32-5Q
AC = +5 = 20Q - 2Q2 - 32
𝑄

Find the values of Q for which the firm

(a) breaks even pi = 0
(b) makes a loss of 432 units pi = -432
(c) maximises profit. pi ' = 0 20 - 4Q = 0 <=> Q = 5

pi'' < 0 -4 < 0 (true)

2.3. Indices and logarithms
M = bn  bn is the exponential form of M to base b
n: index, power or exponent

0
If M = bn then logbM = n
b =1
logb(x × y) = logbx + logby
1
b-n = logb(x ÷ y) = logbx − logby
𝑏
𝑛
b1/n = √𝑏 logbxm = m logbx
bm × bn = bm+n
Cobb – Douglas production function: Q = 𝐴𝐾 𝛼 𝐿𝛽 = 𝑓 (𝐾, 𝐿)
bm ÷ bn = bm−n 𝑓 (𝜆𝐾, 𝜆𝐿) = 𝐴(𝜆𝐾)𝛼 (𝜆𝐿)𝛽 = 𝐴𝜆𝛼+𝛽 𝐾 𝛼 𝐿𝛽 Homogenous function
(bm)n = bmn 𝛼 + 𝛽 < 1 : decreasing return to scale
(ab)n = anbn 𝛼 + 𝛽 = 1 : constant return to scale
𝛼 + 𝛽 > 1 : increasing return to scale

DINH HOANG TU 5
PRACTICE

5. Show that each of these functions is homogeneous and state the degree of homogeneity:
𝐾2 +𝐿2 (c) 𝑓(𝐾, 𝐿) = 𝐴[𝑎𝐾 𝑚 + 𝑏𝐿𝑚 ]𝑛/𝑚
(a) 𝑓(𝐾, 𝐿) = 𝐾+𝐿
𝐿
𝐾2 +𝐿2 (d) 𝑓(𝐾, 𝐿) = 𝐾𝐿2 𝑔 (𝐾) where g is a general
(b) 𝑓(𝐾, 𝐿) = 𝐾𝐿𝑙𝑛 ( )
𝐾𝐿 function

2.4 The exponential and natural logarithm functions

Exponential function: f(x) = ex; e = 2.718 281. . . .
Natural logarithm: A logarithm to base e; if M = en then n = ln M.
PRACTICE

6. The value of a second-hand car reduces exponentially with age, so that its value $y after
t years can be modelled by the formula
y = 𝐴𝑒 −𝑎𝑡
If the car was $50 000 when new and was worth $38 000 after 2 years, fi nd the values
of A and a, correct to 3 decimal places.
Use this model to predict the value of the car
(a) when the car is 5 years old
(b) in the long run

DINH HOANG TU 6
 Chapter 3: Mathematics for Finance
Giá mới: 120.000 VNĐ
3.1. Percentage: Giá cũ: 50.000 VNĐ
=> Scale: 2.4
𝑁𝑒𝑤 𝑣𝑎𝑙𝑢𝑒
Scale factor = = 1 +/- % => Tăng 140% (240% - 100%)
𝑂𝑙𝑑 𝑣𝑎𝑙𝑢𝑒

Khi đề bài có 2 scale khác nhau thì tính mỗi scale rồi nhân lại với nhau sẽ ra overall scale
Scale 1: 1 + 10% = 1.1
Scale 2: 1 - 20% = 0.8
PRACTICE => Overall scale: 1.1 x 0.8 = 0.88
=> Percentage change: 0.88 -1 = -0.12 => Decrease 12%
1. The price of a good increase by 10% and decrease by 20%, find the percentage change in price?

2. Find the new values when

(a) $16.25 is increased by 12%

(b) the population of a town, currently at 113 566, rises by 5%

(c) a good priced by a firm at $87.90 is subject to a sales tax of 15%

(d) a good priced at $2300 is reduced by 30% in a sale, and then increase by 15%.

(e) a car, valued at $23 000, depreciates in 1st year by 18% , and 2nd year by 32%. Is it the same with the
depreciation by 50% after 2 years?

𝑉𝑎𝑙𝑢𝑒 𝑖𝑛 𝑦𝑒𝑎𝑟 𝑡
Index number = scale factor from base year x 100 = 𝑥 100
𝑉𝑎𝑙𝑢𝑒 𝑖𝑛 𝑏𝑎𝑠𝑒 𝑦𝑒𝑎𝑟

 Base-weighted index (or Laspeyres index) : xét Q theo base year, P thay đổi từng năm

Nominal  Current – weighted index (or Paasche index): Q và P thay đổi

price Inflation (lạm phát) : average percentage change of G&S in given years

Year 2003 2004 2005 2006 2007 2008

Price 230 242 251 257 270 284

Inflation 4% 3% 2.5% 2% 2%

Real Price 246.38 249.26 251 250.73 258.25

230x1.04x1.03 242x1.03 257/1.025 270/(1.02x1.025)

Index number 98.16 99.3 99.89 102.89

100
(real price)

DINH HOANG TU 7
 Ex: Xét 2005 là base year:

2003: Real price = 230 x 1.04 x 1.03 = 257

2006: Real price = =
1.025
2004: Real price = 242 x 1.03 =
270
2007: Real price = =
2005: Real price = 251 1,025 𝑥 1.02

Lưu ý: + Nhân hay chia đều là scale factor

+ Chú ý base year real price = nominal price và nếu trước base thì nominal price
nhân overall scale tới base, sau base thì nominal price chia overall scale tới base

Nominal price: giá thô (chưa dính inflation) và đề thường cho

Real price: gía sau khi đã lạm phát

PRACTICE

3. An antiques dealer tries to sell a vase at 45% above the $18 000 which the dealer paid
at auction.
(a) What is the new sale price?
(b) By what percentage can the dealer now reduce the price before making a loss?

4. Table below shows the prices of a good for each year between 2009 and 2014

Year 2009 2010 2011 2012 2013 2014

Price ($) 40 48 44 56 60 71

(a) Work out the index numbers, correct to 1 decimal place, taking 2010 as the base
year.
(b) If the index number for 2015 is 135, calculate the corresponding price. You may
assume that the base year is still 2010.
(c) If the index number in 2011 is approximately 73, find the year that is used as the
base year

DINH HOANG TU 8
5. Table beside shows government expenditure (in
billions of dollars) on education for four consecutive Year
2004 2005 2006 2007
years, together with the rate of inflation for each
Spending 236 240 267 276
year. Inflation 4.7 4.2 3.4
(a) Taking 2004 as the base year, work out the index numbers of the nominal data given in the third
row of the table. real price
(b) Find the values of expenditure at constant 2004 prices and hence recalculate the index numbers
of real government expenditure.
(c) Give an interpretation of the index numbers calculated in part (b).

Mock 5 - 5

3.2. Compound interest:

Ex: Gửi tiền vào ngân hàng 10.000.000 VNĐ, lãi suất 10%/năm

Simple interest: mỗi năm rút ra 1 triệu tiền lãi như nhau
S = P(1 + nr)
Compount interest: tiền lãi năm sau sẽ tiếp vào tiền vốn, do đó năm tới sẽ tính 10% từ vốn
11.000.000 VNĐ, năm tới nữa sẽ tính vốn từ 12.100.000 VNĐ,…
S = P (1 + r)n
Principal: vốn ban đầu (P)
Future value: total sum in the future (S)

Lưu ý: trong 2 công thức trên n = số năm, r = lãi suất (đã tính của % như là 0.8, 0.5)

Công thức tổng quát cho compounded: 8% compounded monthly

=> k = 12
𝒓
S = 𝐏 (𝟏 + )𝒌𝒏
𝒌

k = 1: annually k = 4: quarterly k = 52: weekly

k = 2: semi – annually k = 12: monthly k = 365: daily

Continous compounding: lãi kép liên tục

S = Pern

DINH HOANG TU 9
 Lưu ý: n lúc này tính theo year

Annual percentage rate (APR): chỉ số lãi hằng năm cần trả (bao gồm lãi + chi phí khác)
Annual equivilent (effective) rate (AER): tiền lãi khi gửi mỗi năm được bao nhiêu

𝒓
Invest/Save: chọn highest AER AER/APR = (𝟏 + )𝒌 – 1
𝒌

Borrow/Loan/Lend: chọn lowest AER EAR = 𝒆𝒓 – 1

PRACTICE

6. A piece of machinery depreciates in value by 5% a year. Determine its value in 3 years’ time
if its current value is $50 000.
P r = 9% n=8
7. A principal, $7000, is invested at 9% interest for 8 years. Determine its future value if the
S=?
interest is compounded
(a) annually (b) semi-annually (c) monthly (d) continuously Pern
k=1 k=2 k=12
8. Which of the following savings accounts offers the greater return?
Account A: an annual rate of 8.05% paid semi-annually
Account B: an annual rate of 7.95% paid monthly

9. A car depreciates by 40% in the first year, 30% in the second year and 20% thereafter.
I buy a car for $14 700 when it is 2 years old.
(a) How much did it cost when new?
(b) After how many years will it be worth less than 25% of the amount that I paid for it?

10. Simon decides to buy a new sofa which is available at each of three stores at the same
fixed price. He decides to borrow the money using each store’s credit facility.
Store A has an effective rate of interest of 12.6%. r = 12.6% => AER = 12.6%
Store B charges interest at a rate of 10.5% compounded continuously. AER = e10.5% -1 = 11%
Store C charges interest at a rate of 11.5% compounded quarterly AER = (1 + 11.5%/4)^4 -1 = 12%

11. Find the APR of a loan if the monthly interest rate is 1.65%. Give your answer correct to 2
decimal places.

DINH HOANG TU 10
 save at the beginning/end of each period (month,
year)

3.3. Geometric series:

Geometric series : cấp số nhân (vd: 3, 9, 27, 81, 243,… – multiply 3 each time)
Arithmetic progression: cấp số cộng (vd: 4, 6, 8, 10,… – add 2 each time)

2 dạng bài: Gửi tiết kiệm hàng kì và trả nợ hằng kì

Sinking fund: Gửi tiền hằng kì (cùng số tiền – cùng kì – cùng lãi suất)
Đặc điểm: Mỗi kì tiết kiệm 1 khoản A để lấy tổng S cuối n kì với r%  Quy tất cả về S
(future value)
 If the payment is made at the beginning of each period then:

A A A A A A

 If the payment is made at the end of each period then:

(𝟏 + 𝒓)𝒏 − 𝟏
𝑺 = 𝐴 + 𝐴(1 + 𝑟)+𝐴(1 + 𝑟 )2 + ⋯ + 𝐴(1 + 𝑟 )𝑛−1 =𝑨
𝒓
A A A A A

12. An individual saves $5000 in a bank account at the beginning of each year for 10 years. No
further savings or withdrawals are made from the account. Determine the total amount saved if
the annual interest rate is 8% compounded:
P = 5000
(a) annually n = 10
r = 8%
(b) semi-annually

(c) continously Mock 2 -3

DINH HOANG TU 11
 Loans: Vay tiền 1 khoản L ngay hiện tại, và trả 1 khoản A sau mỗi cuối n kì, và sau đó kì
cuối cùng khoản tiền vay còn lại = 0
Đặc điểm: Ban đầu nhận khoản L, trả khoản A định kỳ, lưu ý lúc đo L có compound

1st payment: L(1 + r) – A

2nd payment: [L(1 + r) – A](1 + r) – A

= L(1 + r)2 – A(1 + r) – A

3rd payment: [L(1 + r)2 – A(1 + r) – A](1 + r) – A

= L(1 + r)3 – A(1 + r)2 – A(1 + r) – A

…
nth payment: L(1 + r)n – A(1 + r)n-1 – … – A(1 + r) – A = T

𝐿(1 + 𝑟)𝑛 = 𝐴(1 + 𝑟)𝑛−1 + 𝐴(1 + 𝑟)𝑛−2 + ⋯ + 𝐴

𝒓 𝒌𝒏 𝑳
𝒓 𝒌𝒏 (𝟏 + ) − 𝟏 𝑨=
A: số tiền 𝑳 (𝟏 + ) − 𝑻 = 𝑨 𝒌 𝒓
phải trả 𝒌 𝒓 𝟏 − (𝟏+ )−𝒌𝒏
𝒌
mỗi kỳ 𝒌 𝒓
𝒌

Payout figure: Payout Figure is the present value of all remaining repayments (số tiền mình còn
nợ sau một khoản thời gian trả nợ). After A years (x payments), the payout figure is:
𝒓
𝟏=−𝑷𝑽
(𝟏 +=𝒓)𝑨 ( −𝒏 𝟏 − (𝟏 + )−𝒚 Trong đó:
𝒌
𝑳
𝑷𝑽 = 𝑨 (
𝑹𝒆𝒎𝒂𝒊𝒏𝒊𝒏𝒈
𝐱 𝐱 ) 𝒓 ) x: period đề hỏi
Mock 1 - 6
𝒓 𝒌 y: period còn lại

13. Determine the monthly repayments needed to repay a $100 000 loan which is paid back over
25 years when the interest rate is 8% compounded annually.

14. A prize fund is set up with a single investment of $5000 to provide an annual prize of $500.
The fund is invested to earn interest at a rate of 7% compounded annually. If the first prize is

DINH HOANG TU 12
awarded 1 year after the initial investment, find the number of years for which the prize can be
awarded before the fund falls below $500.

15. A person invests $5000 at the beginning of a year in a savings account that offers a return of
4.5% compounded annually. At the beginning of each subsequent year an additional $1000 is
invested in the account. How much will there be in the account at the end of ten years?

16. Monthly sales figures for January are 5600. This is expected to fall for the following 9
months at a rate of 2% each month. Thereafter sales are predicted to rise at a constant rate of 4%
each month. Estimate total sales for the next 2 years (including the first January).

17. A person wishes to save a regular amount at the beginning of each month in order to buy a car
in 18 months’ time. An account offers a return of 4.8% compounded monthly. Work out the
monthly savings if the total amount saved at the end of 18 months is $18,000.

3.4. Investment appraisal:

Net present value (NPV): Giá trị hiện tại ròng => dùng khi có P0, FV  PV, xem market
rate là interest rate và so sánh NPV để xem có nên đầu tư:

077 =
NPV PV – P0
9168028

PV: present value

C1 C2 C3 C4 C5

t=0 1 2 3 4 5

𝑪𝟏 𝑪
𝟐 𝑪𝒏
PV = +077 9168028
𝟐
+⋯+
(𝟏+𝒓) (𝟏+𝒓) (𝟏+𝒓)𝒏

P0: initial outlay (khoản đầu tư ban đầu)

♫ If NPV > 0: worth to invest (PV > P0)

♫ If NPV = 0: neutral
♫ If NPV < 0: not worth to invest (PV < P0)

DINH HOANG TU 13
 Internal rate of return (IRR): Tỉ suất thu nhập nội bộ => dùng khi NPV = 0, tính
interest rate và so sánh interest rate với market rate xem có nên đầu tư:

𝑪𝟏 𝑪 𝟐 𝑪𝒏
P0 = + 077 9168028
𝟐
+⋯+
(𝟏+𝒓𝑰𝑹𝑹 ) (𝟏+𝒓𝑰𝑹𝑹 ) (𝟏+𝒓𝑰𝑹𝑹)𝒏

♫ If rIRR > rmarket : worth to invest

♫ If rIRR < rmarket : not worth to invest Mock 5 - 1

Lưu ý: Mock 1 - 5

 Nếu đề không yêu cầu thì dùng NPV

 Luôn mang về PV để so sánh
Annuity: a series of regular equal cash flows

Ex: $1,000 per month for 360 months

19. A project requires an initial investment of $7000, and is guaranteed to yield a return of
$1500 at the end of the first year, $2500 at the end of the second year and $x at the end
of the third year. Find the value of x, correct to the nearest $, given that the net present
value is $838.18 when the interest rate is 6% compounded annually.

20. A small business promises a profit of $8000 on an initial investment of $20 000 after 5 years.
(a) Calculate the internal rate of return.
(b) Would you advise someone to invest in this business if the market rate is 6% compounded
annually?

DINH HOANG TU 14
 Chapter 4: Differentiation

4.1. The derivative of a function:

∆𝑦
Slope (Gradient) = : hệ số góc
∆𝑥

O x

Tangent: tiếp tuyến

𝑓 ′ (𝑎):: f dashed of a: hệ số góc của đồ thị tại x = a
𝑓(𝑥) = 𝑥 𝑛 then 𝑓 ′ (𝑥) = 𝑛𝑥 𝑛−1
𝑑𝑦
Or 𝑦 = 𝑥 𝑛 then = 𝑛𝑥 𝑛−1
𝑑𝑥

Differentiation: the process of finding derived function symbolically

4.2. The derivative of a function:
First – order derivative: 𝑓 ′ (𝑥)
Second – order derivative: 𝑓 ′ ′(𝑥)
 𝑓 ′ (𝑥0 ) > 0: tại điểm x0 giá trị hàm số đang tăng (đồng biến)
 𝑓 ′ (𝑥0 ) < 0: ________________________ giảm (nghịch biến)
 𝑓 ′ (𝑥0 ) = 0: _________ hàm số đang ở đỉnh chuẩn bị đổi chiều
 𝑓 ′′ (𝑥0 ) > 0: hàm số đạt cực tiểu tại x0
 𝑓 ′′ (𝑥0 ) < 0: ____________ đại _____

DINH HOANG TU 15
 If h(x) = c𝑓(𝑥) then h′(x) = c𝑓 ′ (𝑥)

If 𝑓(𝑥) = c then 𝑓 ′ (𝑥)’ = 0

If h(x) = f(x) + g(x) then h′(x) = f ′(x) + g′(x)

If h(x) = f(x) − g(x) then h′(x) = f ′(x) − g′(x)

4.4. Further rules of differentiation:

Ex: y = (5x + 4)8

In which y = u8 and u = 5x + 4

𝑑𝑦
= 8u7 𝑑𝑦 𝑑𝑦 𝑑𝑢
𝑑𝑢
= x = 8(5x+3)7 x 5 = 40(5x+3)7
𝑑𝑥 𝑑𝑢 𝑑𝑥
𝑑𝑢
=5
𝑑𝑥

DINH HOANG TU 16