Investment Return Calculations and Senior School Mathematics

• Published in: Australian senior mathematics journal Vol. 24; no. 1; pp. 7 - 17
• Main Authors: Fitzherbert, Richard M, Pitt, David G. W
• Format: Journal Article
• Language: English
• Published: Australian Association of Mathematics Teachers (AAMT) 01.01.2010; The Australian Association of Mathematics Teachers, Inc
• Subjects: Analysis; Business Education; College Mathematics; Computation; Course Descriptions; Equations; Foreign Countries; Interest rates; Investments; Mathematical Logic; Mathematical models; Mathematics; Mathematics Instruction; Methods; Numerical solutions; Outcomes of Education; Rate of return; Student Educational Objectives; Study and teaching; Undergraduate Students; Validity; Australia
• ISSN: 0819-4564; 1839-4809

Businesses and individuals both like to make money from their investments. Individuals may focus on the return they earn in their at call savings accounts, in their term deposits or from their share portfolios. Businesses have similar interests to individuals in this way but may also be interested in the return they can expect to earn from a new business venture. Why, from a financial perspective, would a business proceed with a venture that can only promise a return on investment which is lower than it could earn in a risk-free savings account? The methods for calculating returns on investments are taught to undergraduate level business students. In this paper we demonstrate how such calculations are within the scope of senior school students of mathematics. In providing this demonstration we hope to give teachers and students alike an illustration of the power and the utility of the mathematics they are working with in the senior school classroom which in turn can be a source of motivation for them.