Applied Mathematics

Class 12
Formulas Sheet
Numbers, Quantification
and Numeric Application
 Congruence Modulo
Modulo Operator :
When we divide integer a by integer b (≠ 0), we have a = bq + r, where q,r ∈ I , 0≤ 𝑟 < b. Here a is dividend, b is
divisor, q is quotient and r is remainder.
Modulo arithmetic is the arithmetic of remainders So, it can also be expressed as a mod b = r
For example: When 15 is divided by 6, the remainder is 3.So, we write 15 mod 6 = 3.
Congruence Modulo :
Let a and b be two integers and n be an integer greater than 1, then a is said to be congruent to b modulo n iff n
divides the difference of a and b i.e a ≡ b (mod n), if there exists an integer 𝜆 such that a-b = 𝜆 𝑛.
For example: 49 ≡ 14 (mod 5) Here, 49-14 is an integral multiple of 5 i.e 49-14 = 5x7
Properties of Addition in Modulo Arithmetic:
(1) If a+b=c, then a (mod n) + b (mod n) ≡ c (mod n) or (a+b) (mod n) ≡ a (mod n) + b (mod n).
(2) If a ≡ b (mod n), then a+k ≡ (b+ k) (mod n),
(3) If a ≡ b (mod n) and c ≡ d (mod n), then (a + c) ≡ (b+d) (mod n).
Properties of Multiplication in Modulo Arithmetic:
(1) If a .b=c, then a (mod n). b (mod n) ≡ c (mod n) or a. b (mod n) ≡ a (mod n). b (mod n).
(2) If a ≡ b (mod n), then a.k ≡ (b. k) (mod n),
(3) If a ≡ b (mod n) and c ≡ d (mod n), then (a . c) ≡ (b.d) (mod n).
Properties of Exponent in modulo arithmetic:
(1) If a ≡ b (mod n), then 𝑎𝑘 ≡ 𝑏 𝑘 (modn)
Equivalence Class :
For x ∈ Z we define the equivalence class of X w.r.t. (mod m) by the following:
[X] = {a ∈ Z | a ≡ X (mod m)}
For example, if m=3, X = 0, Then, [0] = {a ∈ Z | a ≡ 0 (mod 3)} = {0,± 3,±6,…}
Similarly for X = 1 , [1] = {a ∈ Z | a ≡ 1 (mod 3)} = {…, -5, -2, 1, 4, 7, …}

Addition Modulo m
Given two positive integers a and b, the addition modulo m denoted as +𝑚 (where m is any positive integer) is
defined as
𝑎 + 𝑏 𝑚𝑜𝑑𝑚 𝑖𝑓 𝑎 + 𝑏 ≥ 𝑚
a +𝑚 b = ቊ
𝑎+𝑏 𝑖𝑓 𝑎 + 𝑏 < 𝑚
Subtraction Modulo m
Given two positive integers a and b, the Subtraction modulo m denoted as −𝑚 (where m is any positive integer) is
defined as
𝑎 − 𝑏 𝑚𝑜𝑑𝑚 𝑖𝑓 𝑎 − 𝑏 ≥ 𝑚
a −𝑚 b = ቊ
𝑎−𝑏 𝑖𝑓 𝑎 − 𝑏 < 𝑚
Multiplication Modulo m
Given two positive integers a and b, the Multiplication modulo m denoted as 𝑥𝑚 (where m is any positive integer) is
defined as
𝑎𝑏 𝑚𝑜𝑑𝑚 𝑖𝑓 𝑎𝑏 ≥ 𝑚
a 𝑥𝑚 b = ቊ
𝑎𝑏 𝑖𝑓 𝑎𝑏 < 𝑚
 Alligation or Mixture
Allegation means mixing two or more items in some ratio .
Type 1. suppose we have to item of different price. The price per unit of cheaper item is denoted by c and price per
unit of dearer (costly) item is denoted by d We mix these two items in some ratio to produce a mixture at desired
price (mean price) say m then
𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑜𝑓 𝑐ℎ𝑒𝑎𝑝𝑒𝑟 𝑖𝑡𝑒𝑚 𝐶𝑃 𝑜𝑓 𝑑𝑒𝑎𝑟𝑒𝑟 𝑖𝑡𝑒𝑚−𝑚𝑒𝑎𝑛 𝑝𝑟𝑖𝑐𝑒 𝑑−𝑚
= =
𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑜𝑓 𝑑𝑒𝑎𝑟𝑒𝑟 𝑖𝑡𝑒𝑚 𝑚𝑒𝑎𝑛 𝑝𝑟𝑖𝑐𝑒−𝐶𝑃 𝑜𝑓 𝑐ℎ𝑒𝑎𝑝𝑒𝑟 𝑖𝑡𝑒𝑚 𝑚−𝑐

For better understanding we can express as ::

CP of Cheaper (c) CP of Dearer (d)
Mean Price (m)
d-m m-c
Type II (Repeatd Dilution) This formula is used to calculate the pure quantity of a liquid left after n number of
repeated dilution. Suppose a vessel contain x units of liquid from which y units are taken out and replaced by
𝒚
water. “ After n number of repeated dilutions the quantity of pure liquid = x( 1- ) n
𝒙
 Boats and Streams
Let speed of boat in still water be x km/h and speed of stream be y km/h, time taken by downstream be t1 and time
taken upstream be t2 , downstream speed be u and upstream speed be v

Downstream speed (u) = (x + y) km/h, Upstream speed (v) = (x - y) km/h

𝑢+𝑣 𝑢−𝑣
Speed of the boat in still water x = and speed of the stream y =
2 2

When the distance covered by the boat in downstream is same as the distance covered by the boat upstream,
𝑡2 𝑥+𝑦 𝑥 𝑡2+𝑡1
then, = or =
𝑡1 𝑥 −𝑦 𝑦 𝑡2 −𝑡1
Suppose a boat goes d km downstream in t1 hours and covers the same distance d km upstream in t2 hours, then
Average speed downstream speed x upstream speed/ speed in still water
𝑥+𝑦 (𝑥 −𝑦) (𝑥 2 − 𝑦 2 )
= =
𝑥 𝑥

If a boat tales t hours to row to a certain place d km apart and returns back, then
𝑡(𝑥 2 − 𝑦 2 )
distance between two places (d) =
2𝑥

If a boat takes t hours more in going upstream than downstream for covering the same distance d then
𝑡(𝑥 2 − 𝑦 2 )
distance between two places (d) =
2𝑦
 PiPes and Cisterns
To understand the problem of pipes and cisterns we should know the terms given below::

Inlet : An inlet is a pipe which is connected with a tank or a cistern or a Reservoir which fiils it.

outlet or leak : An outlet is a pipe which is connected with the tank or a cistern or Reservoir which empties it.

Basic concept and formula

𝟏
1. If an inlet pipe can fill a tank in x hours then part of the tank filled by pipe in 1 hour =
𝒙
𝟏
2. If an outlet pipe can empty a tank in y hours then part of the tank emptied by a pipe in 1 hour = .
𝒚
3. If a pipe can fill a tank in x hours and another pipe can empty the full tank in y hours, then on opening both the pipes
a. Case 1 : when y > X
𝟏 𝟏 𝒙𝒚
the part of the tank filled in 1 hour = - ⇒ the time taken to fill the tank =
𝒙 𝒚 𝒚−𝒙
a. Case 2 : when x > y
𝟏 𝟏 𝒙𝒚
The part of the tank emptied 1 hour = - ⇒ the time taken to empty the tank =
𝒚 𝒙 𝒙−𝒚
4. If a pipe can fill the tank in x hours and another pipe can fill the same tank in y hours then on opening both the pipes together :
𝟏 𝟏 𝒙𝒚
the part of the tank filled in 1 hour = + ⇒ the time taken to fill the tank =
𝒙 𝒚 𝒙+𝒚
5, If a pipe can fill the tank in x hours and another pipe can fill the same tank in y hours but a third pipe can empty the full tank in z hours, then
opening all the pipes together:
𝟏 𝟏 𝟏 𝒙𝒚𝒛
the part of the time field in 1 hour = + - ⇒ the time taken to fill the tank =
𝒙 𝒚 𝒛 𝒚𝒛+𝒛𝒙−𝒙𝒚
 Races and Games
Starting point: A point from where the race start is called the starting point.
Finish point or Winning point or Goal : A point where race finishes is called the finish point or winning point or goal.
Winner : A person who first reaches the finish point is called winner .
Dead heat : If all the participant reach the finish point at the same instant of time then this situation is called dead heat .
suppose A and B are two participants in a race
A gives B a start of x metres means A start the race from the starting point whereas B start the race X metres ahead of A i.e. to
cover a distance of 100 metre A will cover 100 metre while B cover (100–x) metres.
A beats B by x metres means when A reach the finish point B is behind A by x metres i.e. in 100m race A has covered 100 metre
while B has covered only (100 – x) m.
Games : A game is a structured form of play . Games are sometimes played only for enjoyment sometimes for achievement or
reward . Games can be played alone or in teams .winning or losing a game is mainly based on points , goals or runs scored by a
player or a team.
A game of 100 means that the person among the participants who scores 100 points first is the winner . suppose A and B are
two participants in a game . A score 100 points while B scores only 70 points then we say that A beat B by 30 points or A can
give B 30 points.
 Partnership
When two or more persons join hands to manage and operate a business and share its profits and losses, then
this arrangement is known as partnership and the persons who join hands are called partners.
There are mainly two types of partners.
(1) Working partner. A partner who invest money and resources etc. in the business and manage the business is
called working partner. Working partner gets incentive for his work.
(2) Sleeping partner. A partner who only invests money and resources etc. in the business and has nothing to
do with management of business is called sleeping partner.
Types of Partnership
There are various types of partnership but here we shall discuss only two types of partnership.
1. Simple Partnership : In this type of partnership, the partners invest equal money for different time period or
invest unequal money for same time period.
(1) Equal investment for different time period : When partners invest equal amount for different time
periods then their profit or loss is distributed according to the time period of the investment.
Profit or loss 𝛼 Time (Investment constant)
Suppose two partners A and B invest Rs x each for time t, and t2 respectively then
𝐴′ 𝑠 𝑠ℎ𝑎𝑟𝑒 𝑜𝑓 𝑝𝑟𝑜𝑓𝑖𝑡 𝑜𝑟 𝑙𝑜𝑠𝑠 𝑡1
=
𝑩′ 𝑠 𝑠ℎ𝑎𝑟𝑒 𝑜𝑓 𝑝𝑟𝑜𝑓𝑖𝑡 𝑜𝑟 𝑙𝑜𝑠𝑠 𝑡2
(1) Unequal investment for same time period : When partners invest unequal amount for same time periods then
their profit or loss is distributed according to the amount of the investment.
(2) Profit or loss 𝛼 Investment ( Time constant)
Suppose two partners A and B invest x and y respectively for time t then
𝐴′ 𝑠 𝑠ℎ𝑎𝑟𝑒 𝑜𝑓 𝑝𝑟𝑜𝑓𝑖𝑡 𝑜𝑟 𝑙𝑜𝑠𝑠 𝑥
=
𝑩′ 𝑠 𝑠ℎ𝑎𝑟𝑒 𝑜𝑓 𝑝𝑟𝑜𝑓𝑖𝑡 𝑜𝑟 𝑙𝑜𝑠𝑠 𝑦
Compound Partnership: In this type of partnership, the partners invest unequal amount for different time periods.
Profit or loss 𝛼 Investment x Time
Suppose A invests Rs x for time t1 and B invests Rs y for time t2, then
𝐴′ 𝑠 𝑠ℎ𝑎𝑟𝑒 𝑜𝑓 𝑝𝑟𝑜𝑓𝑖𝑡 𝑜𝑟 𝑙𝑜𝑠𝑠 𝑥𝑡1
=
𝑩′ 𝑠 𝑠ℎ𝑎𝑟𝑒 𝑜𝑓 𝑝𝑟𝑜𝑓𝑖𝑡 𝑜𝑟 𝑙𝑜𝑠𝑠 𝑦𝑡2
Numerical inequality
 BASIC CONCEPTS AND IMPORTANT RESULTS
The real numbers or two algebraic expressions connected by the signs < , > , ≤ 𝑜𝑟 ≥ is called an Inequalities.
Inequality which do not involve variables are called numerical inequalities.

Properties of inequalities : Let x, y and be real numbers.

1. Addition property: Adding same real number to both sides of an inequality does not change the sign of
inequality.

2. Subtraction property: Subtracting same real number to both sides of an inequality does not change the sign of
inequality .

3.Multiplication property: Multiplying both sides of an inequality by the same positive real numbers does not
change the sign of inequality.

Multiplying both sides of an inequality by the same negative real number reverses the sign of inequality

4. Division property: Dividing both sides of an inequality by the same positive real number does not change the
sign of inequality.

Dividing both sides of an inequality by the same negative real number reverses the sign of inequality
 5. Transitive property:
If x < y and y < z then x < z,
If x > y and y > z , then x > z
6. Comparison property:
If x=y+z and z > 0, then x > y
If x=y+z and z < 0, then x < y

Reasoning Inequality:
A statement consisting of group of elements with certain coded relationship denoted by < , > , = , ≤ , ≥ is called
masoning inquality. To solve these type of inequalities, the table given below shows the conclusion based on priority order.

Statement Conclusion
• A >B>C , A > B ≥ C, A ≥B > C,A = B > C , A > B = C • A>C
• A <B<C , A < B≤ C, A≤ B < C,A = B < C , A < B = C • A<C
• A ≥ B ≥ C , A = B ≥ C, A ≥ B = C • A > C or A = C , i.e. A ≥ C
• A≤B≤C,A=B≤C,A≤B=C • A < C or A = C , i.e A ≤ C
• A < B > C , A ≤ B > C, A < B ≥ C , • No Conclusion
• A>B<C,A≥B<C,A>B≤C
Relation between AM and GM between two numbers a and b

𝑎+𝑏
AM = and GM = 𝑎𝑏
2
AM – GM ≥ 0
AM ≥ GM
Inequalities involving modulus functions :

Modulus Function
If x is any real number, then modulus function is defined as:

𝑥 , 𝑖𝑓 𝑥 ≥ 0
𝑥 = ቊ
−𝑥 , 𝑖𝑓 𝑥 < 0
Some facts about modulus function: If x, y ∈ R, then
(i)|x| ≥ 0 i.e. modulus of a real number is either positive or zero, it can never be negative.

(ii) |x| = 0 iff x=0.

(iii) |-x| = |x|

(iv) x = |x| iff x ≥ 0 and x < |x| iff x < 0.

(v) |xy| = |x||y|

𝑥 |𝑥|
(vi) = , 𝑦 ≠ 0
𝑦 |𝑦|
Inequalities involving modulus are defined as: If l is any positive real number and x ∈ R, then
(i) |x| < l iff -l < x < l i.e. iff x ∈ (-l,l)

(ii) |x| ≤ l iff -l ≤ x ≤ l i.e. iff x ∈ [-l,l].

(iii) |x| >l iff either x < -l or x > l i.e. iff x = (-∞, -l) U (I,∞).

(iv) |x| c l iff either x ≤ -l or x ≥ l i.e. iff x = (-∞, -l] U [I,∞).

Some facts about inequalities involving modulus: If x, y ∈ R, then
(i) |x+y| ≤ |x| + |y|

(ii) |x - y| ≤ |x| + |y|

(iii) |x| < |y| iff x2 < y2.

(iv) |x| ≤ |y| iff x2 ≤ y2

(v) |x| > |y| iff x2 > y2.

(vi) |x|≥|y| iff x2 ≥ y2

MatriCes
Matrix - A rectangular arrangement of mn elements in the form of an ordered set of m rows,
each row consisting of an ordered set of n elements is called a matrix of order m x n (mxn is
read as m by n)
If A is a matrix of order m x n, then it is usually written in the following

A=

A = [𝑎𝑖𝑗]𝑚𝑥𝑛 ,1 ≤ i ≤ m,1 ≤ j ≤ n
Comparable matrices ::
The matrices are said to be comparable (or compatible) iff each one of them contains as
many row and columns as the other. i.e they have same order

Equal matrices::
Two matrices A= [𝑎𝑖𝑗]𝑚𝑥𝑛 and B = [𝑏𝑖𝑗]𝑚𝑥𝑛 are said to be equal (written as A= B) iff
(i) they are of the same order, and
(ii) 𝑎𝑖𝑗= 𝑏𝑖𝑗 for all i and j
Type of matrices::
(i)Row Matrix - A matrix having only one row is called row matrix

(ii) Column matrix -A matrix having only one column is called column matrix.

(iii) Null or zero matrix or void Matrix – An m x n matrix is called a zero matrix whose each
elements is zero is called a zero matrix and dented by O.
(iv) Square Matrix - A Matrix in which the number of row equals the number of column say n, is called a square matrix of order
n. Thus A = [𝑎𝑖𝑗]𝑚 𝑥 𝑛 Is a square matrix if m = n.
The elements 𝑎𝑖𝑗 of a square matrix a for which i= j i.e. 𝑎11 , 𝑎22, ….𝑎𝑛𝑛 are called diagonal elements and the line joining these
elements is called the principal diagonal or leading diagonal of matrix A

(v) Diagonal matrix: A square matrix A = [𝑎𝑖𝑗]𝑚 𝑥 𝑛 is called a diagonal matrix iff all its non diagonal elements are zero . The
diagonal elements may or may not be zero . Thus a square matrix A is a diagonal matrix if 𝑎𝑖𝑗 = 0 when i ≠ j

(vi) Scalar matrix -A diagonal matrix in which all diagonal elements are equal is called a scalar matrix ,

(vii) Identity matrix - A scalar matrix in which each diagonal element is unity is called identity matrix or unit matrix. It is denoted
by I
 Operations on matrices
Addition of matrices:
If A and B are two matrices of the same order then their sum A+B is the matrix obtained by adding the corresponding
elements of A and B

Subtraction of matrices:
If A and B are two matrices of the same order then their difference A-B is the matrix obtained by subtracting the
corresponding elements of A and B

Properties of matrix addition: If A, B and C are matrices of same order, then

(i) A + B = B + A (Commutative law)
(ii) (A + B) + C = A + (B + C) (Associative law)
(iii) For any matrix A there exists a zero matrix O of the same order such that A + O = O + A = A where O in called the additive
identity of the matrices.
(iv) For any matrix A there exists matrix -A such that A+ (-A) = 0 = (-A)+ A where (-A) is additive inverse of the matrix A
(v) A+B=A+C then B=C (left cancellation law )
(vi) B+A =C+A then B=C (Right Cancellation laws)
Multiplication of a matrix by a scalar (number)
If k is any scalar (number) and A is any matrix then the matrix which is obtained by multiplying every element of A by
k is called the scalar multiplication of A by k and it is denoted by kA

Properties of scalar multiplication :

If A & B are matrices of the same order and 𝜆 , 𝜇 are any two scalars, then

(i) (𝜆 + 𝜇 ) A = 𝜆𝐴 + 𝜇 A

(ii) 𝜆(A + B) = 𝜆 A + 𝜆 B

(iii) 𝜆(𝜇 A) =(𝜆𝜇)A = 𝜇 (𝜆) A

(iv) (- 𝜆𝐴) = - (𝜆𝐴 ) = 𝜆 (-A)

Properties of matrix multiplication ::
If A. B and C are three suitable matrices and λ is any scalar, then
(i) AB ≠ BA (not commutative)

(ii) (AB)C = A(BC)(Associative law)

(iii) IA=A=AI, where I is identity matrix f

(iv) A(B+C)= AB+ AC

(v) If AB = AC then ⇏ B = C (Cancellation law is not applicable)

(vi) 𝜆AB = (𝜆𝐴 ) B = A (𝜆𝐵)

(vii) If AB= 0, then it does not mean that A = O or B = 0, again product of two non zero matrices may be a zero matrix.

(viii) If A and B are two matrices such that AB exists, then BA may or may not
 Positive integral powers of a matrix.
The positive integral powers of a matrix A are defined only when A is a square matrix. Also them 𝐴2 = AA , 𝐴3 = AAA = 𝐴2 A.
Also for any positive integers m, n
(i) 𝐴𝑚 𝐴𝑛 = 𝐴𝑚+𝑛
(ii) (𝐴𝑚 )^n = 𝐴𝑚𝑛 = (𝐴𝑛 )^m
(iii) 𝐼 𝑛 = 𝐼

Matrix polynomial
If f(x) = 𝑥 2 - 3x + 2 is a polynimial and A is a square matrix then
F(A) = 𝐴2 - 3A + 2I is a matrix polynomial , where I is the identity matrix
Of same order as that of A
Transpose of a matrix
Let A be a m x n matrix then transpose of A denoted by A’ or 𝐴𝑡 is the matrix obtained by interchanging its row and column . A’
is an n x m matrix

Properties of transpose
Let A and B be tum suitable matrices, then
(i) (A’)’ = A

(ii) (A±𝐵)’ = A’ ± B’

(iii) (kA’) = kA’

(iv) (AB)’ = B’A’

(v) (ABC)’ = C’B’A’

 Symmetric and skew-symmetric matrices
(i) Symmetric matrix ; A square matrix A is called symmetric matrix if A’ = A

(ii) Skew-symmetric matrices : A square matrix A is called skew-symmetric matrix if A’ = -A

Important
(i) Every element in the principal diagonal of a skew symmetric matrix is always zero

(ii) If A is square matrix then A + A’ is symmetric and A- A’ is skew symmetric matrix

(iii) Every matrix a can be uniquely expressed as the sum of symmetric and skew symmetric matrix i.e. A = ½ (A + A’)
+ ½ (A - A’)
 Invertible matrices
Let A be a square matrix of onder n. then A is called invertible (or inversible) iff there exists a square matrix B of order n such
that AB=I =BA, where I being unity matrix of order n In such a case, we say that the inverse of matrix A is B and we write 𝐴−1 =
𝐵.

If a square matrix has an inverse, then it is unique.

DETERMINANTS
To every square matrix A = [ 𝑎𝑖𝑗 ] of order n , 𝑎𝑖𝑗 𝜖 𝑅, we can associate a unique real number caller determinant of
matrix A and denoted by det A = |A|

Value of a determinant::
1. 1x1 determinant

2. 2x2 determinant

3. 3x3 determinant
 Minors and CofaCtors
Minor ::
Minor is a determinant of order n , n ≥ 2, then the determinant of order n-1 obtained from the determinant after deleting ith
row and jth column is called the minor of the element 𝑎𝑖𝑗 , and it is, usually denoted by 𝑀𝑖𝑗 , where i =1, 2, 3 ….n and j = 1, 2,
3…...n

Cofactor ::
If 𝑀𝑖𝑗 , is the minor of the element 𝑎𝑖𝑗 , in the determinant , then the number (−1)𝑖+𝑗 𝑀𝑖𝑗 , is called the cofactor of the element
𝑎𝑖𝑗 it is usually denoted by 𝐴𝑖𝑗 , or 𝐶𝑖𝑗
 Properties of determinants::

Property 1. If each element in a row (or column) of a determinant is zero, then the value of determinant is zero.

Property 2. If each element on one side of the principal diagonal of a determinant is zero, then the value of the determinant is
the product of the diagonal elements.

Property 3. The value of a determinant remains unchanged if its rows and columns are interchanged
Property 4. If any two rows for columns) of a determinant are interchanged, then the value of the determinant changes by minus
sign only.

Property 5 If each element of any (row or columns) of a determinant are identical or proportional , then the value of the
determinant is zero.

Property 6. If each element of any one row (or a column) of a determinant is multiplied by the same number k, then the value of
the new determinant is k times the value of the original determinant.
Property 7. If each element of a row (or a column) of a determinant consists of a sum of two or more terms, then the
determinant can be expressed as the sum of two or more determinants whose other rowes (or columns) are not altered.

Property 8. If to each element of a row (or a column) of a determinant be added the equi multiples of the corresponding
elements of one or more rows for columns), then the value of the determinant remains unchanged.
Property 9. The sum of the products of elements of any row (or column) with the cofactors of the corresponding elements of
some other row for column) is zero.

Property 10. If A and B are square matrices of the same order, then |AB| = |A||B|.

Corollary: I𝐴𝑛 | = |𝐴|𝑛

Area of a triangle:
Area of a triangle with vertices ( 𝑥1 , 𝑦1 ) ( 𝑥2 , 𝑦2 ) and ( 𝑥3 , 𝑦3 ) is given by
𝑥1 𝑦1 1
Area = ½ 𝑥2 𝑦2 1
𝑥3 𝑦3 1
If area of triangle is 0 then given points are collinear
Adjoint of a square matrix::
Let A be a square matrix of order ≥ 2, then the adjoint of A is the transpose of cofactor of matrix A and it is denoted by adj A

Properties of adjoint :

If A and B are square matrices of same order n , then

(i) adj(AB) = (adjB) (adjA)

(ii) Adj (𝐴𝑡 ) = (𝐴𝑑𝑗)𝑡

(iii) Adj(adjA) = |𝐴|𝑛−2 A

(iv) |AdjA| = |𝐴|𝑛−1 , |A| ≠ 0

(v) |A adjA| = |𝐴|𝑛

(vi) A(AdjA) = |A|I = (adjA)A

 singular Matrix
(i) Let A be a square matrix then a is called singular iff |A| = 0 otherwise A is said to be non singular matrix if |A|
≠0

inverse of a Matrix
A square matrix A of order n is invertible of there exists a square matrix of the same order such that AB = I = BA
in such a case we say that the inverse of matrix A is B and we write 𝐴−1 = B
 Properties of inverse of a matrix
1. Every invertible matrix possesses a unique inverse

2. If A is an invertible matrix, then inverse of 𝐴−1 = A

3. A square matrix is invertible iff it is non singular i.e . |A| ≠ 0

𝑎𝑑𝑗𝐴
4. If A is a non singular matrix, then 𝐴−1 = |𝐴|

5. If A and B are two invertible matrices of the same order, then AB is also invertible and
(𝐴𝐵)−1 = 𝐵 −1 𝐴−1

6. If A is an invertible matrix, then A’ is also invertible and (𝐴′ )−1 = (𝐴−1)’

1
7. If A is an invertible matrix, then |𝐴−1 | = |𝐴|
Solution of system of linear equations using inverse of a matrix (Matrix Method)
A sysem of linear equations may have a unique solution, or many solutions, or no solution at all; it has a solution
(whether unique or not) the system is said to be consistent. If it has ne solution, it is called an inconsistent system.
(i) if A is non-singular i.e.|A| ≠ 0, then given system has a unique solution given by X = 𝐴−1B and system is called consistent.
(ii) If A is singular i.e. |A] = 0, then we calculate (adj A)B.
case 1: If |A|= 0 and (adj A)B = O, then the system is consistent and has infinitely many solutions
Case 2: If |A|=0 and (adj A) B ≠ O, then the given system has no solution. If system of equations has no solution then system is
called inconsistent.
Cramer Rule
Conditions for consistency of a (non-homogeneous) system of two linear equations in two unknowns.
The following three cases arise:
D₁ D₂
(1) If D ≠ 0, the system is consistent and independent, and has a unique solution given by x = 𝑎𝑛𝑑 𝑦 =
𝐷 𝐷
(2) If D = 0 and either of D₁ , D₂ is non-zero, then the system is inconsistent and it has no solution.
(3) If D = D₁ = D₂ = 0, then the system is consistent and dependent, and has infinitely many solutions.

Conditions for consistency of a (non-homogeneous) system of three linear equations in three unknowns.
The following three cases arise:
D₁ D₂
(1) If D ≠ 0, the given system is consistent and independent, and has a unique solution given by x = 𝑦 = and
𝐷 𝐷
D3
z=
𝐷
(2) If D = 0 and atleast one of D1, D2, D3 is non-zero, then the system is inconsistent and it has no solution.
(3) If D = D₁ = D₂ = D3 = 0, then the system may or may not be consistent. In case the system is consistent, then it
will have an infinite number of solutions and the system is dependent.
Differentiation
 Differentiation
Some Basic Differntiation::
𝑑
1. ( 𝑥 𝑛 ) = n 𝑥 𝑛−1
𝑑𝑥
𝑑
2. 𝑑𝑥
(constant) = 0
𝑑
3. 𝑑𝑥
(x) = 1
𝑑 1
4. 𝑑𝑥
( 𝑥)=
2 𝑥
𝑑 1 𝑛
5. ( ) = - 𝑛+1
𝑑𝑥 𝑥 𝑛 𝑥
𝑑
6. (𝑒 𝑥 ) = 𝑒 𝑥
𝑑𝑥
𝑑
7. (𝑎 𝑥 ) = 𝑎 𝑥 loga
𝑑𝑥
𝑑 1
8. 𝑑𝑥
(logx) =
𝑥
𝑑
9. (𝑥 𝑥 ) = 𝑥 𝑥 (logx+1)
𝑑𝑥
 Rules of differentiation
1. Addition Rule
𝑑
(( f(x) + g(x)) = f’(x) + g’(x)
𝑑𝑥

2. Subtraction Rule
𝑑
(( f(x) - g(x)) = f’(x) - g’(x)
𝑑𝑥

3. Product Rule
𝑑
( f(x) g(x)) = f’(x) g(x)+ f(x)g’(x)
𝑑𝑥

4. Quotient Rule
𝑑 𝑓(𝑥) f’(x) g(x)− f(x)g’(x)
( )= 2
𝑑𝑥 𝑔(𝑥) (𝑔(𝑥))

5. Chain Rule
𝑑 𝑑 𝑑𝑡
(f(t)) = f(t) .
𝑑𝑥 𝑑𝑥 𝑑𝑥
 logarithMiC differentiation
Properties of log :
1. logb mn= logbm + logbn
𝑚
2. Logb ( )= logbm – logbn
𝑛
3. Logb mp = Plogbm
4. loga 1 = 0.
5. Logb b = 1
6. Logb bx = x
When to use logarithMiC differentiation
1. If there are more than 2 function are in multiplication or division
2. If exponent of variable is also variable
 Differentiation of Implicit Functions
If the variable x and y are connected so that it is not possible to express y as a function of x , then y is said to be an implicit
function of x

Differentiation of Parametric functions

When x and y are connected with some other variable then we say x is called parametric function of y and y is
called parametric function of x For ex x = f(t) and y = g(t) , here t is called the parameter

Higher order derivative

Function First order derivative Second order derivative Third order derivative

F(x) F’(x) F’’(x) F’’’(x)

y Y’ Y’’ Y’’’

y 𝑦1 𝑦2 𝑦3

y 𝑑𝑦 𝑑2𝑦 𝑑3𝑦
𝑑𝑥 𝑑𝑥 2 𝑑𝑥 3
 Application
of Derivative
 Derivative as rate measure
In science, business and economics there are variables one depending on the other such as
distance and time, cost and production, revenue and production, price and demand etc. In all
these examples we are interested in the rate at which one variable changes with respect to other
to know the micro details of relation between these variables.

if y = f(x) is a real function then,

𝑑𝑦
=Rate (or instantaneous rate) of change of 'y' with respect to 'x'
𝑑𝑥
 Tangents and normals
➢ Slope of the tangent = dy/dx
➢ Slope of normal = - dx/dy
➢ If the tangent is parallel to x-axis, then dy/dx = 0
➢ If the tangent is parallel to y-axis, then dx/dy = 0
➢ Equations of the tangent , y- 𝑦1 = slope of tangent ( x- 𝑥1 )
➢ Equation of the normal is (y- 𝑦1 ) = slope of normal (x- 𝑥1 ).
➢ If two lines are parallel then 𝑚1 = 𝑚2
➢ If two lines are perpendicular then 𝑚1 x 𝑚2 = -1
➢ If 𝑚1 = 𝑚2 then two curves touch each other
➢ If 𝑚1 x 𝑚2 = -1 then two curves are orthogonal.
𝑚1 −𝑚2
➢ Angle of intersection of two curves tan𝜃 =
1+𝑚1 𝑚2
 Increasing and Decreasing Functions
Increasing function :
Let f be real valued action defined in an internal D (a subset of R), then f is called an
increasing function, in an interval 𝐷1 (a subset of D) iff 𝑥1 < 𝑥2 ⇒ 𝑓 𝑥1 ≤ 𝑓(𝑥2 ) and f is called
strictly increasing function in 𝐷1 iff 𝑥1 < 𝑥2 ⇒ f(𝑥1 ) < f(𝑥2 )
Decreasing function::
Similarly, f is called an increasing function, in an interval 𝐷1 (a subset of D) iff 𝑥1 > 𝑥2 ⇒
𝑓 𝑥1 ≥ 𝑓(𝑥2 ) and f is called strictly increasing function in 𝐷1 iff 𝑥1 < 𝑥2 ⇒ f(x1) > f(𝑥2 )

Sign of f’(x) Nature of function

F’(x) > 0 Strictly Increasing
F’(x) ≥ 0 Increasing
F’(x) < 0 Strictly Decreasing
F’(x) ≤ 0 Decreasing
 Monotonic function ::
A function f(x) is said to be monotonic on (a, b) if it is either strictly increasing or strictly decreasing on (a,b).

If a function is neither increasing nor decreasing then it is not a monotonic function

Method of Interval
Wavy Curve Method ::
The wavy curve method (also called the method of intervals) is a strategy used to solve inequalities . The method uses
the fact that f(x)/g(x)​ can only change sign at its zeroes and vertical asymptotes, so we can use the roots of f(x) and g(x) to
sketch a graph of the function over different intervals.
 MaxiMa and MiniMa
Local Maxima and Local Minima
First Derivative Test
➢ f(x) is decreasing in the left neighbourhood of ‘c’ and increasing in the right neighbourhood of ‘c’ (or f’(x) changes its sign
from negative to positive as x increases through ‘c’), also f(c) is a local minimum value of f(x).
➢ f(x) is increasing in the left neighbourhood of ‘c’ and decreasing in the right neighbourhood of ‘c’ (or f’(x) changes its sign
from positive to negative as x increases through ‘c’), also f(c) is a local maximum value of f(x).
➢ If f’(x) does not change sign as x increases through ‘c’, then c is neither a point of local maximum nor a point of local
minimum. Such a point is a point of inflexion.

Second Derivative Test

➢ Find the critical point by putting f’(x)= 0. take these points as c
➢ Use second derivative test to find the local maxima or local minima
➢ If f’’(c) > 0 then it has point of local minima
➢ If f’’(c) < 0 then it has point of local maxima
➢ If f’’(c) = 0 and f’’’(x) ≠ 0 then it has point of inflexion

Absolute Maximum and absolute minimum value

the absolute maximum or absolute minimum of a function f in closed Interval [a,b]. Find the values of f at the points of
all the three categories listed above. The maximum of these value is the absolute maximum and the minimum of these values is
the absolute minimum of the function
 Cost & Revenue Functions
Cost function::
The total cost in usually called cost or cost function and is denoted by C or C(x) , x I number of quantity
produced, C= FC + VC where FC is fixed cost and VC is variable cost
Average cost::
Average cost is the total cost divided by the number of units produced .Thus, Average cost (AC) = C/x
Demand function:: x = f(p) or p = f(x)
Revenue function:: R(x) = x.p
Average revenue ::
AR = R/x = px/x = p, Thus average revenue is the same as price per unit.
Profit Function::
P(x) = R(x) – C(x)
Thus Average Profit = Average revenue – Average cost
Breakeven analysis::
The breakeven point is the level of production where the revenue from sales is equal to the total cost of
production. At this point the company makes neither profit or losses, thus, at breakeven pint R(x)-C(x)=0 ie. P(x)=0.
Marginal Cost (MC)::
The marginal cost (MC) is defined as the rate of change of total cost with respect to x. it is also called approximate cost
𝑑 𝑑𝑐
of one additional unit. Thus MAC = 𝑑𝑥(C) = 𝑑𝑥
Marginal Average Cost (MAC) ::
𝑑
The marginal average cost is defined as the rate of change of average cost (AC) with respect of x. Thus, MAC = (AC) =
𝑑𝑥
1
(MC-AC)
𝑥
Marginal Revenue (MR)::
𝑑 𝑑𝑅
The marginal revenue (MR) is defined as the rate of change of (total) revenue with respect to x . Thus MR = 𝑑𝑥R = 𝑑𝑥 . Note that
the marginal revenue is the approximate revenue of one additional unit of sale of the product.

In a purely competitive environment p remains constant. So dp/dx = 0 ⇒ MR = p = AR

In a monopolistic economy p decreases with increase in x, so, dp/dx < 0 ⇒ MR < AR

Integrals
 BasiC integration
𝑛 𝑥 𝑛+1
• ∫ 𝑥 dx = +C
𝑛+1
• ∫ dx = x + C
1
•∫ dx
= log|x| + C
𝑥
• ∫ 𝑒 dx = 𝑒 𝑥 + C
𝑥
𝑎𝑥
• ∫ 𝑎 𝑥 dx = +C
𝑙𝑜𝑔𝑎
1
•∫ dx = 2 𝑥 + C
𝑥
 Substitution Method
𝐹(𝑎𝑥+𝑏)
• If ∫ f(x) dx = F(x) + C then ∫ f(ax+b) = +C
𝑎
(𝑓(𝑥))𝑛+1
• ∫ (𝑓 𝑥 )𝑛 f’(x) dx = +C
𝑛+1
𝑓′(𝑥)
• ∫ dx = log|f(x)| + C
𝑓(𝑥)

• Selection of proper substitution

• 1. Try to identify the function f(x) whose derivative is given in question , put f(x) =
t and then integrate
• 2. If exponent of f(x) is in fraction then put f(x) = t and then integrate
• 3. is x is replaced by some other function in logx or 𝑒 𝑥 then put that function t
and integrate
 Integration By Partial Fraction
Proper rational function Partial fraction

𝑝𝑥+𝑞 𝐴 𝐵
, a≠b + 𝑥−𝑏
(𝑥−𝑎)(𝑥−𝑏) 𝑥−𝑎

𝑝𝑥 2 +𝑞𝑥+𝑟 𝐴 𝐵 𝐶
, a≠b≠c + 𝑥−𝑏 + 𝑥−𝑐
(𝑥−𝑎)(𝑥−𝑏)(𝑥−𝑐) 𝑥−𝑎

𝑝𝑥+𝑞 𝐴 𝐵
(𝑥−𝑎)2
+ (𝑥−𝑎)2
𝑥−𝑎

𝑝𝑥 2 +𝑞𝑥+𝑟 𝐴 𝐵 𝐶
, a≠b 𝑥−𝑎
+ (𝑥−𝑎)2 + 𝑥−𝑏
(𝑥−𝑎)2 (𝑥−𝑏)

𝑝𝑥 2 +𝑞𝑥+𝑟 𝐴 𝐵𝑥+𝐶
, 𝑥 2 +bx+c can’t be factorised 𝑥−𝑎
+ 𝑥 2 +𝑏𝑥+𝑐
(𝑥−𝑎)(𝑥 2 +𝑏𝑥+𝑐)
 Some Special Integrals
1 1 𝑥−𝑎
• ∫ dx = log| |+ C
𝑥 2 −𝑎2 2𝑎 𝑥+𝑎

1 1 𝑎+𝑥
• ∫ dx = log| |+ C
𝑎2 −𝑥 2 2𝑎 𝑎−𝑥

1
• ∫ dx = log| x + 𝑥 2 + 𝑎2 | + C
𝑥 2 +𝑎2

1
• ∫ dx = log| x + 𝑥 2 − 𝑎2 | + C
𝑥 2 −𝑎 2

𝑥
• ∫ 𝑥 2 + 𝑎2 dx = 𝑥 2 + 𝑎2 + ½ 𝑎2 log|x + 𝑥 2 + 𝑎2 |+C
2

𝑥
• ∫ 𝑥 2 − 𝑎2 dx = 𝑥 2 − 𝑎2 - ½ 𝑎2 log|x + 𝑥 2 − 𝑎2 |+C
2
 integration By Parts
• ∫ 𝑓 𝑥 𝑔 𝑥 𝑑𝑥 = 𝑓(𝑥)∫ g(x)dx–∫ {f’(x)∫ g(x)dx}dx +C, Where f(x) is first
and g(x) is second function
• How to choose first and second function
• I – Inverse trigonometric function
• L– Logarithmic function
• A– Algebraic function
• T– Trigonometric function
• E– Exponential function
• ∫ (f(x)+f’(x))𝑒 𝑥 dx = f(x) 𝑒 𝑥 + C
 Definite Integrals
Let f be continuous function defined on the closed interval [a,b] and F(x) be an antiderivative of f(x) . Then
𝑏 𝑏
∫𝑎 𝑓 𝑥 𝑑𝑥 = 𝐹(𝑥)] = 𝐹(𝑏) − 𝐹(𝑎)
𝑎
𝑏
Steps of calculating ∫𝑎 𝑓 𝑥 𝑑𝑥)
(i) Find the indefinite integral ∫ 𝑓 𝑥 𝑑𝑥 . 𝑙𝑒𝑡 𝑡ℎ𝑖𝑠 𝑏𝑒 𝐹(𝑥)
𝑏
(ii) Evaluate 𝐹(𝑏) − 𝐹(𝑎) which is equal to the value of ∫𝑎 𝑓 𝑥 𝑑𝑥)
 Properties of Definite Integrals
𝑏 𝑏
• 1. ∫𝑎 𝑓 𝑥 𝑑𝑥 = ∫𝑎 𝑓 𝑡 𝑑𝑡
𝑏 𝑎
• 2. ∫𝑎 𝑓 𝑥 𝑑𝑥 = - ∫𝑏 𝑓 𝑥 𝑑𝑥
𝑏 𝑐 𝑏
• 3. ∫𝑎 𝑓 𝑥 𝑑𝑥 = ∫𝑎 𝑓 𝑥 𝑑𝑥 + ∫𝑐 𝑓 𝑥 𝑑𝑥
𝑏 𝑏
• 4. ∫𝑎 𝑓 𝑥 𝑑𝑥 = ∫𝑎 𝑓 𝑎 + 𝑏 − 𝑥 𝑑𝑥
𝑎 𝑎
• 5. ∫0 𝑓 𝑥 𝑑𝑥 = ∫0 𝑓 𝑎 − 𝑥 𝑑𝑥
2𝑎 𝑎 𝑎
• 6. ∫0 𝑓 𝑥 𝑑𝑥 = ∫0 𝑓 𝑥 𝑑𝑥 + ∫0 𝑓 2𝑎 − 𝑥 𝑑𝑥
2𝑎 𝑎
• 7. ∫0 𝑓 𝑥 𝑑𝑥 = 2∫0 𝑓 𝑥 𝑑𝑥 if f(2a-x) = f(x)
2𝑎
∫0 𝑓 𝑥 𝑑𝑥 = 0 if f(2a-x) = -f(x)
𝑎 𝑎
• 8. ∫−𝑎 𝑓 𝑥 𝑑𝑥 = 2∫0 𝑓 𝑥 𝑑𝑥 if f(-x) = f(x) or f(x) is even
𝑎
∫−𝑎 𝑓 𝑥 𝑑𝑥 = 0 if f(-x) = -f(x) or f(x) is odd
 Marginal Functions
• C(x) = ∫ 𝑀𝐶 𝑑𝑥 + 𝐶
𝑐(𝑥)
• AC =
𝑥
• R(x) = ∫ 𝑀𝑅 𝑑𝑥 + 𝐶
• R(x) = px
𝑅(𝑥)
• P= , where p is demand
𝑥
 Consumer Surplus & Producer Surplus
𝑥0
• C. S = ∫0 𝐷 𝑥 𝑑𝑥 − Xo.Po
𝑥0
• P. S = Xo.Po − ∫0 𝑆 𝑥 𝑑𝑥
• At Equillibrium D(x) = S(x)
Differential Equation
 Differential Equation
• Order and Degree of a Differential Equation The order of a differential
equation is the order of the highest order derivative of the dependent
variable with respect to independent variable appearing in the equation. If
each term involving derivatives of a differential equation is a polynomial
(or can be expressed as polynomial), then the highest exponent of the
highest order derivative is called the degree of the differential equation.
• If any term of a differential equation cannot be expressed as a polynomial
in the derivative (or derivatives), then the degree of the differential
equation is not defined.
General and particular solutions of a Differential Equation
General Solution
The function involving the variables and independent arbitrary constants is called the general solution of the
differential equation. nth order of differential equation has n arbitrary constant .

Particular Solution
A solution obtained from the general solution by giving particular values to arbitrary constants is called a
particular solution of the differential equation. A particular solution in two variable does not contain any
arbitrary constant
 groWth and deCay Model
• Most common growth and decay models is exponential growth and
decay. Exponential growth or decay is a process that occurs when the
instantaneous rate of change (i.e. derivative) of a quantity with
respect to time is proportional to the quantity itself. Exponential
growth and decay can be seen in number of natural applications
such as population growth, compound interest, radioactive decay,
carbon dating or Newton's law of cooling etc
Probability
Random variables : A random variable is a function whose domain is the sample space of a random experiment
whose range is a subset of real members. Its values are determined by chance i.e. by the outcomes of a random
experiment.

Probability distribution of a random variable : A description giving the values of a random variable along with the
corresponding probabilities is called the probability distribution of the random variable. More generally, if X is a
discrete random variable which can assume values x1 , x2 , x3 ………xn with probabilities P1 ,P2, P3,……..Pn then
the probability distribution can be represented in tabular form as
X x1 x2 ……. xn
P(X = xi) p1 p2 ……. pn

where P(X = xi) i.e. pi lies between 0 and 1, and Σpi, = 1.

Mean, variance and standard deviation of a random variable.

If X is a (discrete) random variable which can assume values x1 , x2 , x3 ………xn with corresponding
probabilities P1 ,P2, P3,……..Pn then the mean or average or expected value or expectation is denoted by or E(X)
and is defined as mean =𝝁= P1x1,+ P2x2 + P3x3, +---+ Pnxn = 𝜮𝒑𝒊𝒙𝒊
Variance is denoted by 𝜎 2 and is defined as 𝝈𝟐 = 𝜮 pi (𝒙𝒊 − 𝝁)𝟐 . Also 𝝈𝟐 = 𝜮pi𝒙𝒊𝟐 - (𝜮𝒑𝒊𝒙𝒊)𝟐
Standard deviation = 𝝈 = 𝒗𝒂𝒓𝒊𝒂𝒏𝒄𝒆
Bernoulli trials and binomial distribution:
If a random experiment consists of n trials, then these trials are called Bernoulli's trials if they
satisfy the following conditions
(i) n is finite and is defined before the experiment begins.
(ii) each trial has only two possible outcomes, usually called success and failure,
(iii)the result of any trial is independent of the results of all other trials, and
(iv)the probability of success p does not change from trial to trial.
P+q=1
Binomial distribution
If there are n Bernoulli trials in a random experiment and X is the random variable denoting the
number of success in these n trials, X varies from 0 to n. If p be the probability of a success and
q be the probability of failure so that p+q-1, then the probability of getting r successes and (n-r)
failures is given by P(X=r)= 𝑛𝑐𝑟 𝑝𝑟 𝑞 𝑛−𝑟 where r = 0, 1, 2, ….. n
Mean, variance and standard deviation of binomial distribution :
mean = 𝜇= np
variance = 𝝈𝟐 = npq
standard deviation σ = 𝑛𝑝𝑞
POISSON DISTRIBUTION:
If n is large while the probability p of occurance of an event is close to zero the event is
called a rare event. Some example of such situation in daily life are traffic problem with
repeated occurance of event such as accidents whose probability is very small, fault and
breakdown in industry, typographical error in book and so on….
The poisson distribution is the limiting form of Binomial distribution when no. of trials is
very large
𝜆𝑟 −𝜆
𝑃 𝑟 = 𝑒
𝑟!

Recurring formula for Probability f Poisson distribution

𝜆
∴𝑃 𝑟+1 = 𝑃 𝑟 , 𝑟 = 0, 1, 2, … ∞
𝑟+1

Mean and Variance of Poisson Distribution

𝑀𝑒𝑎𝑛 = 𝜆
𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒 = 𝜆
standard deviation σ = 𝑣𝑎𝑟
Normal Distribution
It is also called Gaussian distribution. It is a bell shaped curve symmetric about a vertical line through the
mean. For Normal distribution curve
Mean = median = mode

normal density function

1 𝑥−𝜇 2
1
𝑓 𝑥 = 𝑒 2 𝜎 )
− (
, −∞ < 𝑥 < ∞
𝜎 2𝜋

Standard Normal Distribution

If 𝜇 = 0, 𝜎 = 1 said to have standard normal probability distribution. The random variable in case of standard
normal distribution is represented by Z.
1 −𝑧 2 𝑋−𝜇
𝑓 𝑧 = 𝑒 2 , −∞ < 𝑧 < ∞, z=
2𝜋 𝜎
Area under Standard Normal Curve
Like normal curve, the area under the standard normal curve also represent the probability.
We need to calculate 3 types of probabilities:-
i PZ<z = 𝐹 𝑍

ii Pz1<Z<z2 = F(Z2 )– F(Z1)

iii P(Z>z) = 1 – F(z)

F(∞) = 1 , F(0) = 0.5 , F(-z) = 1- F(z)

Inferential statistics
To draw a conclusion about population on the basis of sample evidence
Population → Sample → Experiment → Testing → Conclusion of population
Population:-
In statistic population means group of objects, events, experiments, observation etc. it doesn’t mean only group of people or animal.

There are two types of population : 1. Finite population 2. Infinite population

Finite population Infinite population

It is countable group of objects , events , experiments It is uncountable group of objects,events ,
etc. experiments etc.
For ex- All citizen of india, Teachers in a school For ex- All star in a milky way , no. of bacteria
present in culture.
Sample:-
It is smaller group of members of a population selected to represent the population. A well-chosen
sample will contain most of the information about the population.

Difference between Population & Sample

Population Sample
1. It focuses on the identification of the characteristic. 1. It makes inference about the population.
2. A survey done of an entire population is accurate and 2. A survey done using a sample of the population has a margin
more precise with no margin of error. of error.
3. It is collection of all elements having same 3. it is a subgroup of members of the population.
characteristic. 4. The measurable characteristic of sample is called statistic.
4. The measurable characteristic of population is called
parameter.
 Types of Sampling :: 1. Probability sampling 2. Non Probability
sampling

•Probability Sampling:- In this type selection of member is random. It has an equal chance of
being selected. It is also known as random sampling.

➢ 1. Simple Random Sampling:- In this every member of the population has an equal chance
of being selected. It is most common method of sampling.
➢ Systematic Sampling:- It is similar to Simple Random Sampling but it is easier to
conduct. In this member are chosen at regular interval instead of randomly selected
numbers.
•Stratified Sampling:- In this the population is divided into subgroups called strata based on the relevant
characteristic e.g. gender, age, income profession etc. The member from each subgroup are selected using simple
random or systematic sampling.

•Cluster Sampling:- It divides the population into subgroups but each subgroup has similar characteristics of the
whole population. This is useful when population is dispersed.
 .

•Non-probability Sampling:- In this type of sampling the selection of members from the population is non-
random and each member has not equal chance of being selected. This is easier and cheaper to access. You cannot
use it to make valid Statistical Inferences about the population.

•Convenience Sampling:- In this the member are selected which are most convenient for researcher.
For ex.:- Suppose you are researching about the hotels. You mayA ask your friends who has visited these hotels
•Voluntary Response Sampling:- It is similar to convenience sampling. In this method people who are
themselves ready to conduct the survey, collect the sample data.
For ex.- Suppose you announced about the survey of hostel facilities. Some student volunteer themselves to
collect the sample data.

•Judgement Sampling:- It is based on the opinion of on expert. It is also called purposive sampling. Here
quality of the sample result depend on the judgement of the person selecting the sample.
For ex.- You can see the selection procedure of all the reality show.
•Snowball Sampling:- In this method, we first select some person, then with the help of
selected person we select some more and this process continues to collect the sample. It is
same as a snowball increase in size as it rolls down.
For ex.- It you are researching about the child labour of your city. You meet one child labour
and he/she puts you in contact of other child labour.
Sampling Error:-
The difference between a population parameter and a sample statistics is known as a sampling
error. It can be either positive or negative and the estimated sampling error decreases as the
sample size grows.
Sampling Error = 𝑥ҧ − 𝜇
𝑥ҧ → 𝑠𝑎𝑚𝑝𝑙𝑒 𝑚𝑒𝑎𝑛 , 𝜇 = 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑚𝑒𝑎𝑛
σ 𝑥𝑖 σ 𝑥𝑖
Population mean (𝜇) = Sample mean (𝑥)ҧ =
𝑁 𝑛

N = population size n = sample size

Parameter and Statistics:-
Parameter:- A measurable characteristic of population is called parameter. e.g. population mean (μ),
population variance (𝜎 2 ), population deviation (σ) etc.
Statistics:- A measurable characteristic of a sample is called statistics e.g. sample mean (x) sample variances
(𝑠 2 ), sample standard deviation (s) etc.

Difference between Parameter and Statistics

Parameter Statistics
1. It is a characteristic of a population. 1. It is a characteristic of a sample.
2. It is a numeric value that is taken from the 2. A statistics is the numerical value taken from a
entire population such as population sample and calculated from the sample
mean. observation alone.
3. Generally denoted by Greek alphabets. 3. Generally denoted by English alphabet.
4. For ex.- The average weight of all males in 4. For ex.- The average weight of 1000 males in
India. The average test score of all student India. The average test of 200 students in a class
in a class. of 500 students.
Statistical Inference:-
It is a process through which inferences about the population are made based on information obtained from the sample.

There are mainly 2 types of statistical inference:-

1. (i) Point Estimation (ii) Interval Estimation

2. Hypothesis Testing

Estimation:- A process in which we obtain the value of unknown population parameters with the help of sample data.

Point Estimation:-

In point estimation involves the use of sample data to calculate a single value of an unknown population parameter. Single value of
sample data is known as point estimate of corresponding population parameter.

For ex : 1. sample mean 𝑥ҧ is a point estimate of population mean 𝜇

2. sample proportion 𝑝ҧ is a point estimate of population mean p

3. sample standard deviation s is a point estimate of population standard deviation 𝜎

2
Σ𝑥𝑖 Σ(𝑥𝑖− 𝑥)ҧ 2 Σ𝑥 2 Σ𝑥𝑖
𝑠𝑎𝑚𝑝𝑙𝑒 𝑚𝑒𝑎𝑛 𝑥ҧ = 𝑠𝑎𝑚𝑝𝑙𝑒 𝑠𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑑𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 𝑠 = 𝑜𝑟 −
𝑛 𝑛−1 𝑛 𝑛
INTERVAL ESTIMATION
In interval estimation, we find two numbers using sample statistic between which a population parameter lie.
For eg. L < μ < U is an interval estimate of the population mean μ . It indicates that population mean is greater
than L but less than U.
Confidence Interval
It is a range of values, drive from sample static which is likely to contain the value of an unknown population
parameter. it is denoted by 1-α
Where α is level of significance
A confidence Internal consists of 3 parts:-
(i) Confidence level (ii) Sample static (iii) Margin of error
Confidence level:-
It describes the uncertainty of a sampling method. Confidence level written in decimal is called confidence
coefficient.
(i) Sample static:-
It is sample statistic for which the estimation of population parameter is done.
(i) Margin of error:-
The range of value above and below the sample statistic is called margin of error.
For example:-
Assume a news channel conducts pre-election survey and predicts that the candidate. A will get 30% of the vote.
According to news channel the survey had margin of error of 5% and a confidence level of 95%. This means that we
are 95% sure that the candidate A will receive 25% and 35% of the vote.
Interval Estimation of population Mean
Calculation of Margin of error (σ known)
𝜎
Margin of error = 𝑍𝛼Τ2 .
𝑛

The interval estimation of population mean is given by

μ=x ± margin of error

x→sample mean μ=population mean

Where (1-α) is called confidence coefficient and 𝑍𝛼Τ2 is the Z value providing an area of 𝛼Τ2in the upper
tail of the standard normal probability distribution.

Confidence Level 𝛼 𝛼ൗ Ζ𝛼ൗ

2 2

90% 0.10 0.05 1.645

95% 0.05 0.025 1.960

99% 0.01 0.005 2.576

Central limit theorem
It states that the sampling distribution of the sample mean approaches a normal
distribution as the sample size gets larger – no matter whatever be the shape of the population
distribution
 A sample size of 30 or more is considered to be sufficient to hold CLT and the sample size becomes
larger the prediction of characteristics of population becomes accurate

As per CLT when sample size increases the mean of sample of data becomes close to mean of
overall population

Expected value = E (x̅ ) = μ(population mean)

Mean of random sample drawn from any distribution with mean μ and variance σ2 will have an approximate
normal distribution with a mean equals to μ and s2 = σ2/n . So s = σ/ √𝒏

ഥ 𝒊s formed from a population with mean

Q1. A sampling distribution of the sample means 𝒙
weight 𝜇 = 60𝑘𝑔 and standard deviation 𝜎 = 9𝑘𝑔. What is the expected value and standard
ഥ , if sample size is 36? (Cbse term-2 2022)
deviation of 𝒙
Hypothesis Testing
In order to make decision it is useful to make some assumption about the population. Such assumption, which
may or may not be true are known as hypothesis. There are two types of statistical hypothesis for each
situation the null hypothesis (Ho) and the alternative Hypothesis (Ha).

Null Hypothesis (Ho) Alternative Hypothesis (Ha)

1. There is no difference between a 1. Existence of a difference between a
parameter and a specific value or parameter and a specific value or states
there is no difference between two that there is a difference between two
parameter parameter
2. Two groups studying are same. 2. Two groups studying are different.

Hypothesis 𝐻𝑂 : 𝜇 ≥ 𝜇0 𝐻𝑂 : 𝜇 ≤ 𝜇0 𝐻𝑂 : 𝜇 = 𝜇0
𝐻𝑎 : 𝜇 < 𝜇0 𝐻𝑎 : 𝜇 > 𝜇0 𝐻𝑎 : 𝜇 ≠ 𝜇0
Degree of freedom:-
The no. of independent pieces of information on which an approximation is based is known as degree of
freedom
For one sample test DF = n-1
For two sample test DF = n1+n2-2

For ex. consider a classroom having seating capacity of 25 students. The first 24 students have a choice to sit
but the 25th student can only sit on the one remaining seat. Therefor degree of freedom is 24.
There are 3 types of test are there:-
(i) One sample t-test (ii) Two sample t-test (iii) Paired t-test

T-Test
It is used to compare the means of two groups, which may be related in same population. It is often used in
hypothesis testing. It is also calles student t test
The inferential statistic calculated in the t-test is called the t-ratio and denoted by ‘t’. The larger the t-ratio, the
more likely we will reject the null hypothesis because the more evidence in data that the two groups different from
each other. It is used for small sample.
One sample t-test

In testing the null hypothesis that the population mean is equal to hypothesized value 𝜇0

ҧ 0
𝑥−𝜇 ҧ 0
𝑥−𝜇
𝑡= 𝑆 if n ≥ 30 , 𝑡 = 𝑠 if n < 30
ൗ 𝑛 ൗ 𝑛−1

𝑥ҧ = 𝑠𝑎𝑚𝑝𝑙𝑒 𝑚𝑒𝑎𝑛, 𝑛 = 𝑠𝑎𝑚𝑝𝑙𝑒 𝑠𝑖𝑧𝑒

𝜇0 = ℎ𝑦𝑝𝑜𝑡ℎ𝑒𝑠𝑖𝑧𝑒𝑑 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑚𝑒𝑎𝑛

S= Population standard deviation

S = sample standard deviation

For One tailed test : rejection rule you can use |t| ≥ 𝑡𝛼

For two tailed test : rejection rule you can use |t| ≥ 𝑡𝛼Τ2

Where 𝛼 𝑖𝑠 𝑙𝑒𝑣𝑒𝑙 𝑜𝑓 𝑠𝑖𝑔𝑛𝑖𝑓𝑖𝑐𝑎𝑛𝑐𝑒

Two Sample t-test

This compares two groups and help us to see whether a statistically significant difference exists between the two means thus the
two sample t-test compare two groups means. For example we can use t-test to testing the following hypothesis “It is expected
that boys will have higher mathematics score than the girls”.

𝐻0 : 𝜇1 = 𝜇2 (𝑡𝑤𝑜 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑚𝑒𝑎𝑛𝑠 𝑎𝑟𝑒 𝑒𝑞𝑢𝑎𝑙)

𝐻1 : 𝜇1 ≠ 𝜇2 (𝑡𝑤𝑜 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑚𝑒𝑎𝑛𝑠 𝑎𝑟𝑒 𝑛𝑜𝑡 𝑒𝑞𝑢𝑎𝑙)

Case I :- When variances are assumed to be equal

ഥ
𝒙𝟏 −ഥ
𝒙𝟐 ഥ𝟏 − 𝒙
𝐮𝐬𝐞 𝒙 ഥ𝟏 ഥ𝟏 > 𝒙
𝒊𝒇 𝒙 ഥ𝟐
𝒕= 𝟏
𝒔 𝒏 +𝒏
𝟏 ഥ𝟐 − 𝒙
𝒙 ഥ𝟏 ഥ𝟏 < 𝒙
𝒊𝒇 𝒙 ഥ𝟐
𝟏 𝟐

Case-II:- When variances are assumed to be unequal

ഥ
𝒙𝟏 −ഥ
𝒙𝟐 ഥ𝟏 − 𝒙
𝐮𝐬𝐞 𝒙 ഥ𝟏 ഥ𝟏 > 𝒙
𝒊𝒇 𝒙 ഥ𝟐
𝒕=
𝑺𝟏 𝟐 𝑺𝟐 𝟐
ഥ𝟐 − 𝒙
𝒙 ഥ𝟏 ഥ𝟏 < 𝒙
𝒊𝒇 𝒙 ഥ𝟐
𝒏𝟏
+ 𝒏
𝟐

For One tailed test : rejection rule you can use |t| ≥ 𝑡𝛼

For two tailed test : rejection rule you can use |t| ≥ 𝑡𝛼Τ2
Index Numbers &
time Based data
Index Numbers
Index number is a specialised average designed to measure the change on the level of an
activity or item either with respect to time or geographic location or some other characteristic.
Characteristics of Index Numbers
They are expressed as ratio or percentage
They are specialised averages
They measure the change in the level of a phenomenon.
They measure the effect of change over a period of time.
Classification of Index Numbers
The index numbers are classified as (i) Price Index (ii) Quantity indexes (iii) Value index
(iv)Special purpose index
Methods of Construction of Index
Index Numbers (i)Unweighted (or simple) – (a) Simple Aggregative
(b) Simple average of price relatives
(ii) Weighted (or Arithmetic Mean Method) – (a) Weighted Aggregate
(b) Weighted average of price relatives
 Σ𝑝1
(i) Simple aggregative method : 𝑃01 = 𝑥 100 , where 𝑃01 = Index number of current year .
Σ𝑝0
Σ𝑝1 = Sum of prices of all items in the current year, Σ𝑝0 = Sum of prices of all items in the base year
𝑝1
Σ(𝑝0 𝑥 100)
(ii) Simple average of price relatives method : 𝑃01 = where N number of items
𝑁
(iii) Weighted aggregative method :
(a) If along with base prices and current prices of a number of the weight of each item are given,
Σ𝑝
𝑃01 = 1𝑤 𝑥 100 , where w = weight of items
Σ𝑝0 𝑤
σ𝑝 𝑞
(b) Laspeyre's index number. In this method the quantities of the base year (𝑞0 ) are taken as nights 𝑃01 = σ 𝑝1 𝑞0 x 100
0 0
σ 𝑝1 𝑞1
(c) Paasche's index number. In this method the quantities of the current year (𝑞1 ) are taken as weights 𝑃01 = σ 𝑝0 𝑞1
x 100
(d) Fisher's ideal index number. The grometric mean of Laspeyre's and Pasche's indexnumbers is known as Fisher's
σ 𝑝1 𝑞0 σ 𝑝1 𝑞1
ideal index number. 𝑥
σ 𝑝0 𝑞0 σ 𝑝0 𝑞1
x 100
(e) Marshall-Edgeworth's index number. In this method the average of quantities of the current year and the base
σ 𝑝1 (𝑞0 +𝑞1 )
year is taken as weights. σ x 100
𝑝0 (𝑞0 +𝑞1 )
Σ𝐼𝑤 𝑝1
(iv) Weighted average of price relatives method : : 𝑃01 = , where I = x 100 and w = weight
Σ𝑤 𝑝0
Test of adequacy of Index Numbers :
There are test to check consistency , to verify adequacy of Index Numbers
(i) Unit Test
(ii) Time Reversal Test
(iii) Factor reversal test
(iv) Circular test

Time reversal test : 𝑃01 x 𝑃10 = 1

Here 𝑃01 = Index number of current year on the basis of base year
And 𝑃10 = Index number of base year on the basis of current year
Time Series :
There is a special significance of time in economic and commercial world because with time various kinds of
changes can be seen in these fields, like increase in population, rise or fall in production cost etc. To check these
changes, the basis of measure of time is one year, one month, one week, one day, one hour, one minute etc. In
simple words, the organized series of data on the basis of any measure of time is called time series.
Time series is used in statistics, pattern recognition, weather forecasting, earthquake prediction, astronomy etc.
Components of Time Series: . The pattern of data in time series is influenced by a large variety of factors. The
usual assumptions that four components trend, cyclical, seasonal and irregular combine to provide specific
values for In time series,
(i)Trend component:
the measurements may be taken every hour, day, week, month or year or at any other regular interval. Although
time series data generally exhibit random fluctuations, the time series may show gradual shifts to relatively
higher or lower values over a long period of time. The gradual shifting of the time series is called trend in the time
series. The symbol "T is used to denote long term trend.
(ii) Cyclical component:
Although a time series may exhibit a trend over long period of time. All future values of the time series will not
fall exactly on the trend line. In fact, time series show rise and fall of the values in a short period of time. The
variations in a time series which operate themselves over a span of more than one your are called cyclic
variations. For example, rise and fall of share market. Many time series exhibit cyclical behaviour with regular
runs of observations below and above the trend line Cyclical component of the time series is denoted by symbol
C
Seasonal Component:
Whereas the trend and cyclical components of a time series are identified by analyzing multiyear variations, many
time series show a regular pattern over one year period. For example, sale of soft drinks and ice creams is higher in
summer than in winter, crockery sales are higher in festival season (Diwali, Christmas etc.) than other times. The
component of the time series that represents the variability in the data due to seasonal influence is called seasonal
component. It is denoted by symbol "S".
Irregular Component:
The irregular component of the time series is the factor which causes the variations that are not regular I.e random
or irregular. These variations are unforeseen, uncontrollable and unpredictable. Irregular or random fluctuations
occur accidently in the time series. For example, with sudden ban on mustard oil, soya oil shows a marked upward
sales, irregular fall in crop yield due to floods. unusual rise in income of printing press due to announcement of
election, decline in profits due to broke of fire in the factory, decrease in production due to sudden strike etc. It is
denoted by symbol I.
Time Series Analysis :
Time series analysis comprises methods for analyzing time series data in order to extract meaningful Statistics and other
characteristics of the data .In other words, the main aim of the time series analysis is to derive conclusions after arranging the
time series in a systematic manner. The objective of time series analysis is to provide good forecasts or predictions of future
values of the time
Models of time series analysis:
Additive Model : This model is based on the assumption that the sum of four components is equal to original value i.e. O =
T+C+S+L
Multiplicative Model : This model is based on the assumption that the multiplication of four components is equal to original
value i.e. O = T x C x S x L
finanCial MatheMatiCs
 Perpetuity :
• Perpetuity is an annuity in which the periodic payments or receipts begin on a fixed date
and continue indefinitely or perpetually. Fixed coupon payments on permanently
invested (irredeemable) sums of money are prime examples of perpetuities.
• Type of perpetuity::
• Type 1: When periodic payment is made at the end of each payment period.
𝑹
• P= Where: R = the payment or receipt each period
𝒊
• ,i = the interest rate per payment or receipt period
• Type 2: When periodic payment is made in the beginning of each payment period.
𝑹
• P=R+
𝒊
 Sinking Fund :
A sinking fund is a fund created to accumulate money over the years to discharge a future obligation like replacing an old
machine by a new machine, renovation of house, expansion of business etc. The problems of sinking fund can be solved
by using the formulas of regular annuity
(1+𝑖)𝑛 −1
A=R or A = R.𝑆𝑛/𝑖
ത
𝑖

If payment made in the beginning of each year then

(1+𝑖)𝑛 −1
A=R (1+i) or A = R(𝑆𝑛+1/𝑖 -1)
𝑖

DIFFERENCE BETWEEN SINKING FUND AND SAVINGS ACCOUNT :

Sinking fund and savings account are both financial tools. They both involve setting aside an amount of money for the
future. The differences between sinking fund and saving account are given below:
Sinking Fund Savings Account

1. It is a fixed term account. 1. It is a long term account which can be closed any time
2. It is set-up for a particular upcoming expense. 2. It does not have any specific purpose.

3. In sinking fund a fixed amount at regular intervals is deposited. 3. In savings account any amount, any time can be deposited.

4. It can be used only for the purpose it was created. 4. It can be used in any emergency.
 Bond :
• Bonds are long term debt securities issued by companies or government entities. Bonds are key source of
funds in the financial market.
• A bond is simply a loan taken by a company or government bodies from investors who buy its bonds. In return
of which company pays an interest at fixed intervals (annually semi-annually. quarterly or monthly) on the face
value (price at which the bond is sold to the investors when first issued) at fixed rate called coupon rate and
repay the principal i.e. face value at a later date termed as maturity date. Each amount received from the
issuer of the bond ie interest (coupon payment) or maturity amount is termed as cash flow.
• Bond Valuation
• Bond valuation is a method to determine the fair value of a bond. The fair value of the bond is the present
value of stream of cash flows it is expected to generate.
• The rate of interest used to discount the bond's cash flows is known as discount rate or yield to maturity (YTM).
Present Value Approach
Step 1. Estimate all the cash flows i.e. coupon payments and principal payment at maturity (i.e. face value).
Step 2. Obtain the discount rate or yield to maturity.
Step 3. Calculate the present values of all the cash flows at discount rate and add all the present values to obtain the value
of the bond.
𝑟
Let a bond of face value F matures in N years has a coupon rate of % per annum, then each coupon payment C = F x
100
𝑑
If the discount rate is d% per annum, then i = 100
𝟏−(𝟏+𝒊)−𝒏
– PV (Fair value) = 𝐶[ ] + F (𝟏 + 𝒊)−𝒏 Where is F is maturity amount
𝒊
(i) If discount rate<coupon rate, then face value < P.V..
(ii) If discount rate = coupon rate, then face value = P.V..
(iii) If discount rate > coupon rate, then face value > P.V.
CALCULATION OF YIELD TO MATURITY
It is nearly impossible to calculate the yield to maturity using the formula of present value of a bond. However,
approximate value of yield to maturity can be computed using the following formula:
𝑭−𝑷𝑽
𝑪+ 𝑵
Approx YTM = 𝑭+𝑷𝑽
𝟐
 EQUATED MONTHLY INSTALLMENT (EMI)
Nowadays loans have become an integral part of our life. Most of us take loans such as car loan, home loan,
education loan, personal loan etc. from different financial institutions. However, when we talk about loans, we
come across a term EMI which means Equated Monthly Installment. EMI is the monthly amount which we pay
towards the repayment of the loan. EMI are used to pay off both interest on the loan and principal amount.
Initially interest on the loan is the major part of EMI
An equated monthly installment (EMI) is a fixed payment made by a borrower to a lender at a specified date
every month to clear of the loan
flat rate method
In flat rate method, the EMI is calculated by adding the principal loan amount borrowed and me interest on
the principal loan amount for loan tenure at a constant rate and the result is divided by the number of
payments.
𝑃𝑟𝑖𝑛𝑐𝑖𝑝𝑎𝑙 + 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑃+𝐼 𝑃𝑟𝑡
EMI = EMI = ,I=
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠 𝑛 100

Where P= Principal borrowed i= interest rate per rupee per month

n = number of payments.
REDUCING BALANCE METHOD
Unlike flat rate method, interest does not remain constant for every EMI. As we pay off our loan, the outstanding principal amount
decreases with every EMI and the interest for every subsequent EMI is calculated on the outstanding principal amount.
The EMI is calculated by reducing balance method using the following formula

𝑃 𝑥 𝑖 𝑥(1+𝑖)𝑛 𝑃𝑥𝑖 𝑃
EMI = or EMI = or EMI =
(1+𝑖)𝑛 −1 1−(1+𝑖)−𝑛 𝑎ത 𝑛
ഥ /𝑖
Amortization of Loans :
Amortization refers to the process of paying off a loan through a scheduled, pre-determined sequence of equal payments that includes
(i) interest on the outstanding loan and (ii) repayment of part of the loan ic. principal.
A loan is said to be amortized if each installment is used to pay interest and the part of the principal.
Amortization Formulas
While amortizing a loan, one should know the principal outstanding at the beginning of any period, interest and principal amounts in
any EMI, total interest paid etc. The formulas for the same are given below:
𝐸𝑀𝐼 1+𝑖 𝑛−𝑘+1 −1
Principal outstanding at beginning of kth period = or EMI. 𝑎𝑛−𝑘+1/𝑖
𝑖(1+𝑖)𝑛−𝑘+1

𝐸𝑀𝐼 1+𝑖 𝑛−𝑘+1 −1

Interest paid in kth payment = or EMI. i. 𝑎𝑛−𝑘+1/𝑖
(1+𝑖)𝑛−𝑘+1

Principal paid in kth payment - EMI - Interest paid in kth period

Total interest paid = n x EMI-P
 return on investMent

𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡/𝑙𝑜𝑠𝑠
Rate of Return = 𝑥 100
𝑡𝑜𝑡𝑎𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡−𝑡𝑜𝑡𝑎𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡
Rate of Return = 𝑥 100
𝑡𝑜𝑡𝑎𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡
Investment in share market involves the receipt of dividend and a capital gain or loss . suppose a stock is hold
for one year then the rate of return can be calculated as
𝐷+ 𝑃1 −𝑃0
Rate of Return = 𝑥 100
𝑃0

P0 = Price of share/stock at the time of investment

P1 = Price of share/stock at the end of the year
D = Dividend earned during the year
 EFFECTIVE RATE OF INTEREST
If interest is compounded more than once a year the effective interest rate for a year exceeds the per annum
interest rate. Suppose you invest Rs 10,000 for a year at the rate of 6% per annum compounded semi annually.
Effective interest rate for a year will be more than 6% per annum since interest is being compounded more than
once in a year. For computing effective rate of interest first we have to compute the interest.
The effective interest rate can be computed directly by following formula:
𝑟 p
E = ((1 + ) – 1)
100𝑝

Where E is the effective interest rate

i = actual interest rate in decimal , p = number of conversion period
if interest is compounded continuously , then
Effective rate of return = (er – 1)
 Compounded Annual Growth Rate (CAGR):
Compounded Annual Growth Rate (CAGR) is a business and investing specific term for the smoothed annualized
gain of an investment over a given time periodic is not an accounting term, but remains widely used, particularly in
growth industries or to compare the growth rates of two investments because CAGR dampens the effect of
volatility of periodic returns that can render arithmetic means irrelevant. CAGR is often used to describe the
growth over a period of time of some element of the business, for example revenue, units delivered, registered
users, etc.
1Τ
𝐹𝑉 𝑛
CAGR = −1
𝑃𝑉
Applications: These are some of the common CAGR applications:
1. Calculating average returns of investment funds.
2. Demonstrating and comparing the performance of investment advisors.
3. Comparing the historical returns of stocks with bonds or with a savings account.
4. Forecasting future values based on the CAGR of a data series.
5. Analyzing and communicating the behavior, over a series of years, of different business measures such as sales,
market share, costs, customer satisfaction, and performance.
 Depreciation
Depreciation is defined as the reduction of original cost of a fixed asset such as buildings, furniture, machinery, vehicles etc
over a period of time due to wear and tear. Original cost is the total price at which the asset was purchased.
The time period in which an asset is expected to be functional and fit for purpose is called useful life. It is generally
measured in years.
The value of a depreciable asset at the end of its useful life is called scrap value or salvage value or depreciated value.
Book value. Book value of an asset at a given date is the original value of the asset minus the accumulated depreciation at
that date
Methods of Computing Depreciation
(i) Linear method or straight line method (ii) Declining balance method or written down value method
(iii) Sum of years digits method (iv) Units of production method
(i) Linear or Straight Line Method
The linear or straight line depreciation method is the simplest and most widely used method. In this method, the value of an
asset is reduced uniformly over each period until it reaches to its scrap or salvage value. The formula of calculating annual
depreciation by linear method is given below
𝑂𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑐𝑜𝑠𝑡 𝑜𝑓 𝑎𝑛 𝑎𝑠𝑠𝑒𝑡−𝑆𝑐𝑟𝑎𝑝 𝑣𝑎𝑙𝑢𝑒 𝐶−𝑆 𝐷
Annual depreciation = = , Depriciation % = x 100
Useful life of asset in years 𝐷 𝐶−𝑆
 Declining balance method/written down value method
Declining balance method is one of the most common method used by companies. This method also known as reducing
balance method. A fixed percentage of depreciation is calculated each year to the depreciated value of an asset at the end
of the previous year, which does not remain constant but keeps on reducing every year.
The formula of calculating the depreciated value or scrap value of an asset is given below S= P(1-i)n
Where , S = Depreciated or scrap value of an asset
P = Present value of an asset
𝑟
i= , r = constant rate of depreciation
100
n = number of years.

Sum of the Years Digit Method

In this method, the fraction of the asset to be depreciated each year is obtained by putting the digits of the years in
reverse order over the sum of the years digits. A greater fraction of the cost of the asset is depreciated in the earlier years
of the life of the asset
Linear Programming
Problems
Linear Programming : Linear programming is a method for determining optimum value of a linear function subject to
constraints expressed as linear equation or inequalities

Objective Functions :

Constraints :

Feasible region and feasible solution:

Optimal solution :

Formulation of an LPP:

Graphical method of solving an LPP:

1. Corner point method

2. Iso profit/ iso cost method
The application of LPP can be found in various daily life situations.
Some of the important LP problems we shall study are:
1. Manufacturing Problem
2. Diet problem
3. Transportation Problem
4. Assignment Problem