Mathematics for Finance work sheet

Chapter one
1. Write examples of linear equation.
2. You are visiting Baltimore, MD and a taxi company charges a flat fee of $3.00 for using the
taxi and $0.75 per mile.
a) Write an equation that you could use to find the cost of the taxi ride in Baltimore, MD.
Let x represent the number of miles and y represent the total cost.
b) How much would a taxi ride for 8 miles cost?
c) If a taxi ride cost $15, how many miles did the taxi travel?
3. Suppose that when a company produces its product, fixed costs are $12,500 and variable
costs are $75 per item. Write the total cost function if x represents the number of units
produced and Y represents total cost.
4. Suppose that the cost (in dollars) for a product is C= 21.75x+ 4890. What is the marginal
cost for this product, and what does it mean?
5. The math department sponsors a Math Family Fun Night each year. In the first year, there
were 35 participants. In the third year, there were 57 participants.
a) Write an equation to predict how many participants at any given year.
b) How many participants are predicted for the 5th year?
6. Biologists have found that the number of chirps some crickets make per minute is related to
temperature. The relationship is very close to being linear. When crickets chirp 124 times a
minute, it is about 68°F. When they chirp 172 times a minute, it is about 80°F.
a) Find an equation for the line that models this situation.
b) How warm is it when the crickets are chirping 150 times a minute?
6. Mary invested her total savings of $3,400 in two accounts. Her mutual fund account earned
8% last year and her CD earned 5%. If her total interest for the year was $245, how much
was in each account?
7. Suppose that the total cost function for an MP3 player is linear, that the marginal cost is $54,
and that the total cost for 50 players is $8700.
a) Write the equation of this cost function and then graph it.
8. A company manufactures and sells bookcases. The selling price is $54.90 per bookcase. The
total cost function is linear, and costs amount to $50,000 for 2000 bookcases and $32,120 for
800 bookcases.
a) Write the equation for revenue.
b) Write the equation for total costs.
9. A company charting its profits notices that the relation-ship between the number of units
sold, x, and the profit, P, is linear. If 200 units sold results in $3100 profit and 250 units sold
results in $6000 profit, write the profit function for this company. Find the marginal profit.
10. A linear cost function is C(x) =30x+5180.
a) What are the slope and the C-intercept?
b) What is the marginal cost, and what does it mean?
c) How are your answers to (a) and (b) related?
d) What is marginal cost if 50 are currently being produced? What is it if 100 are currently
being produced?
11. A linear revenue function is TR=27x.
a) What is the slope?
 b) What is the marginal revenue, and what does it mean?
c) What is marginal revenue if 50 are currently being sold? If 100 are being sold?

12. One safe investment pays 10% per year, and a more risky investment pays 18% per year. A
woman who has $145,600 to invest would like to have an income of $20,000 per year from
her investments. How much should she invest at each rate?
13. Suppose a radio manufacturer has the total cost function C(x) =45x+1850 and the total
revenue function R(x) =80x.
a) What is the equation of the profit function for this commodity?
b) What is the profit on 30 units? Interpret your result.

14. Suppose that a firm manufactures MP3 players and sells them for $50 each. The costs
incurred in the production and sale of the MP3 players are $200,000 plus $10 for each player
produced and sold. Write the profit function for the production and sale of x players.
15. Suppose the profit function for a product is linear and the marginal profit is $5. If the profit
is $200 when 125 units are sold, write the equation of the profit function.

16. A manufacturer sells a product for $10 per unit. The manufacturer’s fixed costs are $1200
per month, and the variable costs are $2.50 per unit. How many units must the manufacturer
produce each month to break even?

17. Suppose a computer manufacturer has the total cost function C(x) = 85x +3300 and the total
revenue function R(x) =385x.
a) What is the equation of the profit function for this commodity?
b) What is the profit on 350 items?
c) How many items must be sold to break even?