What are 2 examples of simultaneous equations are used in business and what are some other ways you can satisfied these equations?

Answer 1

Example:

When deciding about the purchase of a new warehouse for the storage of merchandise and tools, a company faces the option to incur in payment of two types of mortgages, one with fixed-rate and other with variable-rate. The decision will depend on the study of the equations (graphs) that represent each of them and the time they plan to hold the investment.

Variable mortgage:

Y=50/3 X + 600

Fixed mortgage:

Y=700

Y=50/3 X + 600

Y=700

SOLUTION:

700= 50/3 X + 600 (substitution)

50/3 X = 100

X= 100 x 3 / 50

X=6

SOLUTION: (6,700)

When graphing both equations we find out that the intersection (solution of the system) occurs at (6,700), what represents that?

1) the variable graph is under the fixed one from the year 0 to year 6.

2) the fixed graph is under the variable one after the year 6.

3) both graphs intersect each other at the solution of the system, the pair (6,700).

For the business analysis, it is recommendable to take a variable mortgage if the investment is to be hold for less than 6 years, because it will represent less expenses for the mortgage.

On the other side, if the investment is to be hold for more than 6 years, for example 20 years or more, the fixed mortgage is more suitable for the organization since it will expend less money than taking the variable one.

If it is between 6 years and other specific time, the amount finally paid with the variable mortgage and the fixed one can be compared studying the areas involved between the graphs with the specific time selected.