J.J Reddick

809 WordsMar 24, 20134 Pages
What is rounding? Rounding a number means approximating it. A rounded number is often easier to use, understand, and remember than the precise number. In MyFinanceLab most of our answers are rounded decimal numbers. A decimal number has three parts: The whole number part, the decimal point and the decimal part. For example: [pic] So, in order to round a decimal number we basically round the decimal part of it. These are the two basic steps for rounding decimals to a place value to the right of the decimal point Step 1: Locate the digit 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…show more content…
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 solving the expression [pic]we leave it unrounded and use as many digits as possible in its decimal part. | |The same 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 have resulted | |in round-off errors. So, to avoid this, use as many decimal places as your calculator is capable of displaying. | Tips: If you want 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
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