J.J Reddick

What is rounding? Rounding a make sense means approximating it. A go number is often easier to use, understand, and remember than the precise number. In MyFinanceLab most of our practices ar rounded ten-fold numbers. A decimal number has three spots The whole number part, the decimal site and the decimal part. For example pic So, in order to round a decimal number we basic eachy round the decimal part of it. These be the two basic steps for rounding decimals to a attitude value to the right of the decimal point Step 1 Locate the image to the right of the given place value.Step 2 If this digit is 5 or greater, add 1 to the digit in the given place value and delete all digits to its right. If this digit is less than 5, delete all digits to the right of the given place value. For example Round 736. 2359 to the closest hundredth. Solution Step 1 We locate the digit to the right of the hundredths place Step 2 Since the digit to the right is 5, we add 1 to the digit in the hundr edths place and delete all digits to the right of the hundredths place.Thus, 736. 2359 rounded to the ne arst hundredth is 736. 24 Rounding in MyFinanceLab In MyFinanceLab we use input dictations to intend the place value to which you must round your nett answer(s). For example Lets say your final answer is 736. 2359. You must land 736. 2 if the input schooling is Round to the nearest tenth. You must enter 736. 24 if the input instruction is Round to the nearest hundredth. Note Other typical input instruction in MyFinanceLab isRound to the nearest cent if the final answer is in currency units. You should enter 736. 236 if the input instruction is Round to three decimal places. Now, lets use a simple Time quantify of Money (TVM) question you may encounter in MyFinanceLab. Problem Example Comparing Interest for unhomogeneous Compounding Periods.If $1,000 is invested at 8% mingleded yearly, monthly, what is the amount after 5 year? (Round to the nearest cent. ) To authorize this problem without using a pecuniary calculator or a spreadsheet, we need to use the compound interest, future value, formula pic where, i = r/m FV = future value at the end of n periods PV = present value r = annual treasure m = number of compounding periods per year i = rate per compounding period n = Total number of compounding periods Solution a. Compounding annually means that there is one interest payment period per year. So, n = 5 and i = r = 0. 08. pic pic pic Therefore, rounded to the nearest cent, the final answer is $1,469. 33 b. Compounding monthly means that there are twelve interest payments per year. So, n = 12(5) = 60 and i = 0. 08/12 = pic pic pic Therefore, rounded to the nearest cent, the final answer is $1,489. 85 This TVM example helps us to understand a basic rounding principle in MyFinanceLab Do not round until the final answer. As you can see in part a. after resolve the expression picwe leave it unrounded and use as many digits as possible in its decimal part. The said(prenominal) happens in part b with the other exponential expression. Take another look at part b. because rounding i to a small number of decimal places, such as 0. 007 or 0. 0067, would sop up resulted in round-off errors.So, to avoid this, use as many decimal places as your calculator is capable of displaying. Tips If you necessitate to calculate TVM problems, mathematical calculations are relatively straightforward. However, as you will see, TVM calculations are easier using a financial calculator or spreadsheet. But, no matter what method you use equation, financial calculators, or spreadsheets, you get the equal answer because they all use the same formula and concept. These are some tips for solving TVM questions. Calculator Tips cast your calculator to display at least five decimal places or to floating decimal place (nine decimal places). Set your calculator to one payment per year. go under this setting if necessary. Set your calculator to the end mode. Adjust this setting if necessary. Excel Tips Take advantage of the formula help that Excel offers. If you are lost, click on Help. Be careful about rounding variables. For example, suppose youre dealing with the interest rate 6. 99% compounded monthly. This means you will need to enter the interest rate per month, which is = 6. 99%/12, and since you are performing division in the cell, you need to put an = sign before the division is performed. Dont round the result of 0. 0699/12 to 0. 58 and enter 0. 58 as i. Instead, enter =6. 99%/12 or as a decimal =0. 0699/12 for i.