On the test, your grade will be based on the quality and depth of your responses in the timed environment (the test must be turned in when time is called). Questions will mainly consist of

The test will be a mixture of computational questions as well as critical reasoning and reflection involving the "big picture." You will be expected to answer questions about activities from class, lab and homework.

For instance, in part a) you might be asked for a monthly loan payment, in part b) the total paid, in part c) the first month's interest... So review the lump sum, periodic payment and loan payment scenarios as well as the total paid/put in, the total interest, the first months interest, "simple" interest...

You can expect to have real-life scenarios that are similar to those we have seen.

For table 2, when paying extra, the 2nd row is

325 538.51 0.79 537.71 -385.27

which is also the first row of the amortization table with a negative balance. To calculate the total interest in this case,

325*538.51 - 385.27 - 84212,

ie the number of months times the monthly payment minus the overpayment that last month minus the original loan amount.

For the test, you might need to

You should review

lump sum philosophy,

periodic payment derivation and periodic payment philosophy

loan payment derivation and loan payment philosophy. You should be able to answer questions like where the 1 comes from in the lump sum formula, where the -1 comes from in periodic payment, where the negative power comes from in the loan formula by philosophically expaining what these stand for/represent in the context of how we obtained the formulas. We also had clicker questions on what algebraic operations were useful.

You will also be asked to look at examples from the finance segment and discuss the similarities with the following themes:

Lisa:

.05= 100 (1+ .023/n)

It was impossible to construct a solution since the unknown compounding period appeared both in the power and what was being raised to the power. So algebraic techniques cannot construct a solution [even logs aren't powerful enough for this problem]. Goal Seek in Excel also was not powerful enough to solve this for us, and gave us an answer that did not make sense, so we used the Equation Solver in Excel along with common sense and a "guess and check" perspective - this is not a constructivist proof, as it does not show us how or why it works. Instead the computer (or we) guesses and checks until it finds an answer [and then we use common sense to evaluate whether that answer suffices].

For instance, a question could be phrased like:

Similar questions would ask about the other themes. Real-life considerations can be ill-defined and have multifaceted aspects. Whether it is counting the number of stars, understanding why the Franklin funds never earns 5%, or many of the other concepts, many cases require the critical and creative analysis of a variety of interpretations in order to fully consider the implications.

Here are a few words of encouragement that are adapted from