THE INSTITUTE OF FINANCE MANAGEMENT (IFM)

Computer Science and Mathematics Department

Business Mathematics
MTU 07101

TOPIC 1: Review of algebra

 Topics
1. Basics of algebra in business relating problems
2. Graph plotting and solving equations, inequalities
and functions in business
3. Elements of calculus in economics
4. Matrix in business
5. Sequences and series in business
6. Time value of money
Contents of Basics of Algebra
1. Exponents
2. Logarithms
3. Permutation
4. Combination
5. Binomial expansions
Exponents
Exponents
Definition
• An exponent refers to the number of times a number
is multiplied by itself.
4
• Consider 16 2 2 2 2 2
4
i.e 16 2

where “4 is the power of 2”.

“2” is a base
“4” is an exponent
24 is a power
Exponents
• Therefore the general form of exponents can
be written as
y = am
where “m is the power of a”.
“a” is a base
“m” is an exponent
am is a power
Examples
Indicate power, base and exponent
1. 35
2. 5-3
3. (n+1) k
2
1 3
. 
4.  2

5. (-2)2
Properties of exponents
m n m n
1. a a a
m n m n
2. a a a

3. a 
m n
a mn

4. ab  n
a b n n

m
a am
5.    m
 b b
Special case of exponent
1 m
6. m
a
a
7. a 1 a 0
0

8. a q
  a
q p

m 2
9. X X , then m 2
If the bases are the same take the exponent equal.
Examples on exponents
Simplify the following
0.3 
2
3 7
y y
3 3
1. 4.

n
 1
  
1 0.4710
2.  8 8 5. 0.47 6

y 
3 5 16
3 2
3. 6.
Examples cont...
7.Express using positive exponent a  7
2 2
8. Simplify  1  1
   
 2   4 

9.Find the value of x or y

i. ( 2 x  1 )(3 y 1 ) (3 4 )( 2 5 )

( 3 x  1)
ii.  1
  1
 3
2y  y
iii.  1   1
  
1
3  5 y 
 9  3 27
LOGARITHMS
 Logarithms
Definition
• The logarithm of a number to a given base is the
index or the power to which the base must be raised
to produce the number , i.e., to make it equal to the
given number.
• Given the exponential form x = an .This can be
written as
log a x n
we read as ‘n’ is the logarithm of the number ‘x’ to
base ‘a’
 Logarithms
• Consider the expression, 16 = 24
• An alternative way of writing this expression is
log2 16= 4
This is stated as “log to base 2 of 16 equals 4”.

• We see that the logarithm is the same as the power or

index in the original expression.
• It is the base in the original expression which
becomes the base of the logarithm.
Logarithm…
• The following are equivalent statement

i. 64 82 equivalent to log 8 64 2

ii. log 3 27 3 equivalent to 33 27

Question
write down the equivalent statements to
1. log2x= 8
2. log2(2/4)= y
 Laws of logarithms
• If x = an equivalently log a x n

Also 10 101 equivalently log10 10 1

similarly log 2 2 1 is equivalently to 2 21

• Generally we have log a 1

a
 Laws of logarithms
1. Logarithms of product
log a x  log a y log a xy
2. Logarithms of Quotient
x
log a x  log a y log a
y

3. Logarithms of power of number

m
log a x m log a x
4. Logarithm of a radical
p
n p p
log x log x n
 log x
n
 Fifth law of logarithm
4. Law of change of base.
log a x
log y x 
log a y

1
Also, log x y
log y x
Examples on logarithm
1. Write the following in logarithmic form

1 2 1
2
i. 6 36 ii 2 4
 iii. 27 3

16 9

2 . Write the following in exponential form

i) 1 log 9 ii
81 log 7 49 2
2
iii) log 0.000001  6
10
Examples...
3. Evaluate the following
1
log 8
64 log 2 8
i. ii.

4. Write 30  following
log 6the log 6 10 expression as a single term

log 5  log 4
log 3 the
5. Solve 3 log 3 5 x  9 
following
7x 
Examples…

6. Solve for y from the following

1. 2 log y log 4  log(2 y  3)

2. log( y  27)  log y 1

7. Solve for x

log10 x  log10 ( x  1) 1
PERMUTATION
Arranging ‘n’ unlike objects in a line
• The number of ways of arranging ‘n’ unlike objects
in a line
Example
• Number of ways of arranging 5 people in a row

5 4 3 2 1
5 x4x3x2x1= 120

Definition of factorial notation

n!n n  1n  2n  3 3 2 1

Example 2
• The letters A,B,C can be arranged as
The arrangements are:
A B C
B A C
C A B
A C B
B C A
C B A
• Therefore the number of arranging 3 letters is
3 2 1 3!6
Question
• How many ways are there to arrange
6 books on a shelf?
 Permutation
Definition
• A permutation of ‘n’ different objects takes ‘r’
a time is an arrangement of ‘r’ out of ‘n’
objects while paying attention to the order in
which ‘r’ objects are arranged.
Arrangement of Objects some being a Like
(similar)
• Arrangement of ‘n’ objects of which ‘p’
are like, ‘q’ are like, ‘r’ are alike, is given
by
n!

p!q!r!
Example 1
• The letters A, A, A, D can be arranged as
A A A D
A A D A
A D A A
D A A A

n! 4!
 
p! 3!

4
Example 2
• Find the number of arrangements that can be
made out of the word “ASSASSINATION”
Solution
n = 13 , A= 3, S=4, N=2,I=2
n!
n Pr 
A!S!N!I!
13!

3!4!2!2!
n Pr 10810800
Exercise
• How many ways can the word be written?

1. MOROGORO
2. MATHEMATICS
3. DIFFERENT
 Permutation…
• Permutation (arrangement) of different objects
without repetition of any given object in any
one set more than once. Denoted by
n n!
Pr 
(n  r)!
• Also nPr denoted as nPr, or P(n, r)
 Permutation…
• The number of permutations of ‘n’ different
things taken ‘r’ at a time in which each thing
are repeated ‘r’ times in any arrangement is
given by
nr
Example 1
• In how many ways can three places be filled with the
letters A, B, C, D, E, F, G
Solution.
n= 7, r=3
7 7!
P3 
(7  3)!
7!

4!
7 7!
P3 
(7  3)!
Example 2
• There are 4 seats on a bench in how many ways
can 9 people be arranged on the bench?
Solution.
Given, n = 9 and r = 4
n n!
Pr 
n  r !
9 9!
P4 
9  4 !
9 8 7 6 5!
n Pr  3024
5!
Example 3
• How many three letter “words” can be
formed using 8 letters if
a) Repetition is not allowed
b) If repetition is allowed
Solution
a) n n!
Pr 
n  r !
8 8!
P3 
8  3!
8!

5!
8
P3 336
Solution …
b) With repetition

8 8 8
512
COMBINATION
 Combination
• Definition
A combination of ‘n’ different objects taken ‘r’
at a time is the selection/ choice / combination
of ‘r’ objects out of ‘n’ objects without
minding the order of the objects are arranged.

n n!
Cr 
(n  r)!r!
 Combination
• Example 1
Two letters out of four letters A, B, C, D are selected
at random. How many ways can this be done?

• Solution
AB, AC, AD, BC, BD, CD.
i.e. 6 combinations or selection
solution
Using the formula, n = 4 and r = 2
n n!
Cr 
(n  r)!r!

4 4!
C2 
( 4  2)!2!

4 3 2 1

2 12 1
4
C 2 6
Example 2
• In a certain organization three top leaders
are to be chosen from 5 people. How
many ways can this be done?
Solution
• Given, n = 5 and r = 3
n n!
Cr 
(n  r)!r!
5 5!
C3 
(5  3)!3!
5 4 3 2 1

2 13 2 1

5
C 3 10
Example
• From 6 boys and 4 girls,5 are to be selected for
admission for a particular course. In how
many ways can this be done If there must be
exactly 2 girls?
More examples
a. In how many ways can 4 white and 3 black
balls be selected from a box containing 20
white and 15 black balls.

b. From 7 BACC students and 5 BBF students a

committee of 5 is to be formed. In how many
ways can this be done so as to include at-least
one BACC student.
Binomial Expansions
 Binomial Expansions..
• A binomial is an algebraic expression
containing 2 terms.
• Example:- (x + y) is a binomial
 Binomial Expansions
• We sometimes need to expand binomials as follows:-
(a + b)0= 1
(a + b)1= a+b
(a + b)2= a2+2ab+b2
(a + b)3= a3+3a2b+3ab2+b3
(a + b)4= a4+4a3b+6a2b2+4ab3+b4
(a + b)5= a5+5a4b+10a3b2+10a2b4+5ab4+b5
 Pascal’s Triangle
• Consider
1
1 1
1 2 1
1 3 3 1
1 4 6 4 1
1 5 10 10 5 1
• You can use this pattern to form the coefficients,
rather than multiply everything out as we did
 Pascal triangle cont…
Observations
• Each row begins with one and ends with one
• Each element in the triangle except one are the
sum of the two elements
 Properties of binomial expansion
(a + b)n
i. There are n+1 terms.
ii. The first term is an and the last term is bn.
iii. Progressing from the first term to the last, the
exponent is ‘a’ decreases by 1 from term to term while
the exponent of ‘b’ increases by 1. In addition, the
sum of the exponent of ‘a’ and ‘b’ in each term is ‘n’.
iv. If the coefficient of each term is multiplied by the
exponent of ‘a’ in that term, and the product is divided
by the number of that term, we obtain the coefficient
of the next term
 Binomial theorem formula
• The binomial theorem states that, when ‘n’ is a
+ve integer, then
a  b
n
a n n C1a n  1bn C 2a n  2 b 2  ...n C r a n  r b r  ... n C n  1 ab n  1  b n

• The general term t r 1 n C r a n  r b r

where n C r is the coefficient of the (r+1)th term

 Example 1
• Find the Binomial expansion of (2x  3y 2 ) 4

Solution
Let a = 2x , b = 3y2
a  b
n
a n n C1a n  1bn C 2a n  2 b 2  ...n C r a n  r b r  ...n C n  1ab n  1  b n

2 4 4 4 3
 
(2x  3y ) (2x )  C1 (2x ) 3y  C 2 (2x ) 3y  C3 2x  3y
2 4 2
 
2 2 4 1
   (3y )
2 3 2 4

2 4 4 4 3
 
(2x  3y ) (2x )  C1 (2x ) 3y  C 2 (2x ) 3y  C3 2x  3y
2 4 2
 
2 2 4 1
   (3y )
2 3 2 4
Example 2
Find the 3rd term in the expansion of (2x  3y 2 ) 4
Solution
Let a = 2x , b = 3y2
n n r r
Then n term, t r 1  C r a b
th

where r+1 =3, r = 2 and n = 4

4 4 2 2 2
t 21  C 2 (2x ) (3y )
4 2 4
t 3  C 2 4x 9 y
Example 3
20
• Given (2  3x)
i. Write down the 10th term of the expansion
ii. Find the coefficient of the 8th term of the
expansion above.