UNIVERSITY OF THE COMMONWEALTH CARIBBEAN

SCHOOL OF INFORMATION TECHNOLOGY AND MATHEMATICS

DEPARTMENT OF MATHEMATICS

BSc. TOURISM & HOSPITALITY MANAGEMENT

Course Title: APPLIED MATHEMATICS FOR TOURISM & HOSPITALITY

Course Number: MTH105
Credits: 3
Total Hours: 45
Prerequisite: CSEC Mathematics

Unit Content

Unit 1 Solving Algebraic Equations [Weeks 1-3]

Learning Objectives:

At the end of this unit, students will be able to:

1. Translate word problems into mathematical form and solve.

2. Convert decimals to percentages and vice versa.
3. Solve literal equations.
4. Reorganize formulas to solve for any given element.
5. Solve equations in the form of proportions.

Content

 Working with literal symbols

 Word problem
 Literal equations
 Ratios
 Proportions
 Formulas
Algebra is best defined as a generalized and abstracted basic mathematics. In basic math
emphasis is on simple operations applied to numbers or discrete values to provide a result.
This is true for simple algebra.
Elementary algebra steps beyond discrete numbers and constant terms to include variables,
symbols that can represent a numeric value or quantity. Variables are literal numbers (or
literal factors): a, b, c, x, y or z. Symbols specifying a constant value can be represented by
Greek, Latin or other symbol. The Greek letter π (pi) is a mathematical constant for the ratio
of a circle's circumference to its diameter, approximately 3.1416.

Literals, capitalized or lower-case are different symbols. “A” is not “a”, “B” is not “b”.
Lower-case is often used for a literal factor.
Algebra has operations not considered basic math. The Greek letter ∑ (sigma) designates
summation of a set having a range of values.
By combining constant and variable symbols, what is numbers in basic math expands to the
concept of a term. In algebra, all mathematical operations are applied on terms. A number is a
coefficient of a term. A simple term could be a number, a literal number, or a number and a
literal number: 4x3, meaning “x” cubed is multiplied by the coefficient four.

Terms Expressions Equations Form and Function

Terms combined with math operations form expressions. An algebraic expression with two or
more terms is a multinomial. A simple expression is: 4x2 + 2x + 6; an expression with 3
terms.

When a value for “x” is provided the terms can be evaluated for value and written as an
equation 4x2 + 2x + 6 = y. The equation by using an expression provides a solution for y, the
value of y. We could just as easily write 4x2 + 2x + 6 as 2 (2x2+ x + 3), each the mathematical
expression of the other as equivalent different form, identity. Then, 4x2 + 2x + 6 = 2 (2x2 + x
+ 3) = y.

Much of math from algebra onward is working with equations, expressions and forms of
expressions.

Math equations and expressions can define very abstract algebra relationships. Suppose the
mass of matter and energy. If we could prove mathematically that mass is equivalent to
energy then that aspect of mass and energy becomes an expressed relationship, an expression
of the other; the same with different identity. This is what Albert Einstein demonstrated with
E = MC2. It means the energy contained in matter (E) is equal to the mass of the matter (M)
times the speed of light (C) squared. This equation helped prove the mass of matter and
energy are not separate, but different forms of the same thing. I can’t think of a better way to
say it; an expression is a different form of the same!

Algebra is often taught as a math by itself to learn rules, properties and permutations of
operations on terms using symbols. Its legacy is a math of trigonometry and geometry as a
language enabling the description of many physical shapes and forms in their absence, and
therefore provides abstract representation of physical shapes or forms. The algebraic equation
is an expression of identity, an abstract representation by symbols, letters and operations that
do not look anything like the physical shape or form. The specific shape or form can be
created or constructed from the abstract representation.
Advanced algebra curriculum is often referenced as pre-calculus or elementary functions. In
algebra we write equations;  4x2 + 2x + 6 = y. In pre-calculus or elementary functions we
write f(x) = 4x2 + 2x + 6; f(x), is a function of x, then f(x) = y. They are similar with
differences attributed to subject emphasis on particular math topics by author(s) of the text.
f(x) often represents a two dimensional or three dimensional map relationship as Cartesian
coordinates (x, y) or (x, y, z) where the equation defining f(x) specifies a set or range of
values, the domain of the function as line, area or other function type.

Advanced Math Properties that Help Solve Equations

a. Substitution Property – The equation formed by substituting one expression for an
equal expression in an equation is equivalent to the original equation.

Substitution Property Example:

5x - 4x = 6; x (5 - 4) = 6; x(1) = 6; x = 6

b. Addition Property – The equation formed by adding (or subtracting) the same quantity
to both sides of an equation is equivalent to the original equation.

Addition Property Examples:

x - 4 = 6; x - 4 + 4 = 6 + 4; x = 10
x + 5 = 12; x + 5 - 5 = 12 - 5; x = 7

c. Multiplication Property – The equation formed by multiplying (or dividing) the same
quantity to both sides of an equation is equivalent to the original equation.

Multiplication Property Examples:

1/3 • x = 6;  (1/3) • 3 • x = 6 ∙ 3;  (1) x = 18;  x = 18
5 x = 20;  5 x / 5 = 20 / 5;  x = 4
Typical Algebra Curriculum
1. Real Number Set Theory
2. Operations of Algebraic Expressions
3. Factoring
4. Algebraic Fractions
5. Linear Equations and Inequalities in One Variable
6. Exponents and Radicals
7. Quadratic Equation in one variable
8. Linear Equations Involving Two Variables
9. Relations and Functions
10. Exponential and Logarithmic Functions
11. Polynomial Functions
12. Analytic Geometry of Conic Sections
13. Trigonometric Functions
14. Sequences and Series (of terms, arithmetic or geometric)
Think of algebra as advanced basic math; that the purpose of basic math is the necessary
foundation of algebra. Basic math often incorporates pre-algebra concepts, though that
algebra is restricted to simple formulas relating trigonometric shapes, geometric shapes and
lines. There usually isn’t an absolute delineation that separates one topic from another in
mathematics. It’s fuzzy, it integrates. What is absolute is that algebra establishes the
foundation for all other branches of mathematics beyond basic math.
Word problem:
Applications
To realize the full potential of algebra, we must be able to translate real-world problems into
mathematics. In short, we must be able to do word problems.
Here are some suggestions that will help you get started:

Procedure For Solving Word Problems

1. Read the problem carefully and introduce a variable to represent an unknown
quantity in the problem. Often the question asked in a problem will indicate the
unknown quantity that should be represented by a variable.
2. Identify other quantities in the problem (known or unknown), and whenever possible,
express unknown quantities in terms of the variable you introduced in Step 1.
3. Write a verbal statement using the conditions stated in the problem and then
write an equivalent mathematical statement (equation or inequality).
4. Solve the equation or inequality and answer the questions posed in the problem.
5. Check the solution(s) in the original problem.

Purchase Price: 1.
Alex purchases a plasma TV, pays 7% state sales tax, and is charged $65 for delivery. If
Alex’s total cost is $1,668.93, what was the purchase price of the TV?

Solution:

Step 1 Introduce a variable for the unknown quantity. After reading the problem, we
decide to let x represent the purchase price of the TV.

Step 2 Identify quantities in the problem.

Delivery charge: $65
Sales tax: 0.07x
Total cost: $1,668.93

Step 3 Write a verbal statement and an equation.

Price + Delivery Charge + Sales Tax = Total Cost
x + 65 + 0.07x = 1,668.93

Step 4 Solve the equation and answer the question.

Total = X+65+0.07X=1668.93
X+0.07X+65= 1668.93
1.07X = 1668.93-65
1.07X = 1603.93
1.07 1.07
X= 1499
Step 5 Check the answer in the original problem.
Price = $ 1,499.0 0
Delivery charge = $ 65.00
Tax = 0.07 # 1,499 = $ 104.93
Total = $ 1,668.93

1. Mary paid 8.5% sales tax and a $190 title and license fee when she bought a new car
for a total of $28,400. What is the purchase price of the car?

Let Price for Car = X

Sales Tax= 0.085X

Title = 190

Total = 28400

X+0.085X+190= 28400

1.085X+190 =28400

1.085X= 28400-190

1.085X= 28210

1.085 1.085

X= 26000
 The next example involves the important concept of break-even analysis, which is
encountered in several places in this text. Any manufacturing company has costs, C,
and revenues, R. The company will have a loss if R 6 C, will break even if R = C,
and will have a profit if R 7 C. Costs involve fixed costs, such as plant overhead,
product design, setup, and promotion, and variable costs, which are dependent on the
number of items produced at a certain cost per item.

Break-Even Analysis A multimedia company produces DVDs.

Onetime fixed costs for a particular DVD are $48,000, which include costs such as
filming, editing, and promotion. Variable costs amount to $12.40 per DVD and
include manufacturing, packaging, and distribution costs for each DVD actually sold
to a retailer. The DVD is sold to retail outlets at $17.40 each. How many DVDs must
be manufactured and sold in order for the company to break even?

Solution
Step 1 Let x = number of DVDs manufactured and sold.

Step 2 C = cost of producing x DVDs

R = revenue 1return2 on sales of x DVDs
Fixed costs = $48,000
Variable costs = $12.40x
C = Fixed costs + variable costs
= $48,000 + $12.40x
R = $17.40x

Step 3 The company breaks even if R = C; that is, if

$17.40x = $48,000 + $12.40x
17.40X- 12.40X =48000
5X = 48000 = 9600
5 5
Step 5 Check:

Step 4 17.4x = 48,000 + 12.4x Subtract 12.4x from both sides.

5x = 48,000 Divide both sides by 5.
x = 9,600
The company must make and sell 9,600 DVDs to break even.
Step 5 Check:
Costs Revenue
48,000 + 12.419,6002 17.419,6002
= $167,040 = $167,040
 2. How many DVDs would a multimedia company have to make and sell to break even
if the fixed costs are $36,000, variable costs are $10.40 per DVD, and the DVDs are
sold to retailers for $15.20 each?

Total DVD = X
Variable Cost= 10.40
Fix Cost = 36000
Price = 15.20
15.20X = 36000+ 10.40 X
15.20X - 10.40X= 36000
4.8X= 36000
4.8 4.8
X = 7500

Example 10 Consumer Price Index:

The Consumer Price Index (CPI) is a measure of the average change in prices over time from
a designated reference period, which equals 100. The index is based on prices of basic
consumer goods and services. Table 2 lists the CPI for several years from 1960 to 2012. What
net annual salary in 2012 would have the same purchasing power as a net annual salary of
$13,000 in 1960? Compute the answer to the nearest dollar. (Source: U.S. Bureau of Labor
Statistics)

Table 2 CPI (1982–1984 _ 100)

Year Index
1960 29.6
1973 44.4
1986 109.6
1999 156.9
2012 229.6

Solution
Step 1 Let x = the purchasing power of an annual salary in 2012.

Step 2 Annual salary in 1960 = $13,000

CPI in 1960 = 29.6
CPI in 2012 = 229.6

Step 3 The ratio of a salary in 2012 to a salary in 1960 is the same as the ratio of
the CPI in 2012 to the CPI in 1960.
X = 229.6
13,000 29.6

29.6X=229.6(13000) = 2,984, 800

29.6 29.6

X = 100,838
Multiply both sides by 13,000
X = (13,000)(229.6) = = $100,838 per year
29.6
Step 5 To check the answer, we confirm that the salary ratio agrees with the CPI ratio

Salary Ratio = 100,838 =7.757

13,000

CPI Ratio = 229.6 = 7.757

29.6

3. What net annual salary in 1973 would have had the same purchasing power as a net
annual salary of $100,000 in 2012? Compute the answer to the nearest dollar.

X 44.4
100,000 229.6

229.6X =44.4(100000) = 4,440,000 = 19,338

229.6 229.6

Solving Literal Equations:

1. Solve A = bh  for b
A= BH
H H

A =B
H
2. Solve d = rt for r
T T

D =R

T
3. Solve P = 2L + 2w for w
P- 2L = 2W
2 2
P-2L= W
2

4. Solving 2Q = 2( C+D) = for D

2
2Q = C+D
2Q-C =D
Q= C+D
2
2Q = C+D
2Q –C = D

5. Solve V = 3K for T
T
TV = 3K
V V
T = 3K
V
6. Solve Q = 3a + 5ac  for a
Q = a(3+5c) = a
(3+5c) (3+5c)
 Introduction to Ratios
Ratio is the quantitative relation between two amounts showing the
number of times one value contains or is contained within the other.

1. Two numbers are in the ratio 3 : 4. If the sum of numbers is 63, find the
numbers.

Solution:

Let the unknown =X

3X+4X= 63
7X = 63
7 7
X =9
Numbers = 3(9) =27
4(9)= 36

2. In a certain room, there are 28 women and 21 men. What is the ratio of
men to women? What is the ratio of women to the total number of
people?

Solution:
Men : women = 21 : 28 = 3:4
Women : total number of people = 28 : 49 = 4 : 7

3. In a group, the ratio of doctors to lawyers is 5:4. If the total number of

people in the group is 72, what is the number of lawyers in the group?
The Unknown = X
5X +4X = 72
9X =72
9 9
X= 8
Lawyers = 8(4)= 32
4.  In a bag, there are a certain number of toy-blocks with alphabets A, B,
C and D written on them. The ratio of blocks A:B:C:D is in the ratio
4:7:3:1. If the number of ‘A’ blocks is 50 more than the number of ‘C’
blocks, what is the number of ‘B’ blocks?

Solution:
Let the unknown =X
4X = 50+3X
4X- 3X = 50
X=50
B BLOCK= 7(50) = 350

5. If the ratio of chocolates to ice-cream cones in a box is 5:8 and the

number of chocolates is 30, find the number of ice-cream cones.

Solution:
Let the unknown =x
Let the number of chocolates be 5x and the number of ice-cream cones
be 8x.
5x = 30 → x = 6.
Therefore, number of ice-cream cones in the box = 8*6 = 48.
 Introduction to Proportion
Definition & Notation
A proportion is a comparison of two ratios. If a : b = c : d, then a, b, c, d are
said to be in proportion and written as a:b :: c:d or a/b = c/d.
a, d are called the extremes and b, c are called the means.
For a proportion a:b = c:d, product of means = product of extremes → b*c
= a*d.
Question 1
In a mixture of 45 litres, the ratio of sugar solution to salt solution is 1:2.
What is the amount of sugar solution to be added if the ratio has to be 2:1?
Sugar: 1(45) = 15
3
Salt = 45-15=30
X= Addition

Sugar = 15+x = 2
30 1
1(15+x)= 60

15 +x = 60
X = 60-15 =45
Sugar = 15+45= 60
Question 2

A certain recipe calls for 3kgs of sugar for every 6 kgs of flour. If 60kgs of
this sweet has to be prepared, how much sugar is required?
Solution:
3 =X

9 60

3(60)= 9(X)

180 =9X

9 9

20 =X

Problem 3

If a 60 ml of water contains 12% of chlorine, how much water must be

added in order to create a 8% chlorine solution?

Solution:
12 = X
100 60
12(60)= 100(X)
720= 100X
100 100

7.2= X

8 = 7.2

100 Y

8Y = 7.2(100)

8Y = 720

8 8

Y= 90 -60 = 30
Problem 4

There is a 20 litres of a solution which has 20% of bleach. Extra bleach is

added to it to make it to 50% bleach solution. How much water has to be
added further to bring it back to 20% bleach solution?

Solution

A part

Quantity = 20 Litres

Water = 80

Bleach= 20

Quantity of bleach in Solution= 0.20(20)= 4 Litres

Quantity of water= 100-20=0.80(20)= 16

B Part

Amount of bleach added to make it 50% Beach

Quantity of bleach = 4+x

Quantity of water = 16

Total Quantity= 20+x

Then, (4+x) = 50

20+X 100

100(4+X)= 50(20+X)

400+100X = 1000+50X

100X-50X = 1000-400

50X = 600

50 50

X =12
= 50/100 → x = 12 L of bleach is added.

4+x = 50
20+x 100
= 100(4+x)= (20+x)50

= 400+100x = 1000+50x

400- 1000= 50x-100x

-600= -50x
-50 -50
X= 12

Now, there is 4+12 = 16 L of bleach in 16 L of water in a total of 32 L of

solution.

Now, to bring the bleach percentage back to 20%, extra water is added and
the amount of bleach remains the same. Let this extra amount of water be y
litres.
16 L of bleach constitutes 20% of the solution →

16/(32+y) = 20/100 → y = 48.

Therefore, 48 litres of water has to be added to the solution if bleach has to

be 20% of the whole solution.

16 =20

32+Y 100

100(16) = 20(32+Y)

1600 = 640+20Y

1600-640= 20Y

960 =20Y

20 20

48 =Y
Question

1 kg of cashews costs $ 100 and 1 kg of walnuts costs $120. If a mixture of

cashews and walnuts is sold at $105 per kg,then what fraction of the total
mixture are walnuts?
Solution:
For this type of problems, first step is to determine how much each of the
items is above or below the target.
Our target price is 105. Cashews price is $5 below the target price and
walnuts price is $15 above the target price.
So, for each kg of cashews added, let’s consider it as ‘-5’ and for each kg of
walnuts added, let’s consider it as ‘+15’. These two have to be added in such
a way that they cancel out each other. Adding ‘-5’ thrice gives a -15 and
adding ‘+15’ once results in cancellation of the terms.
This means that adding 3 kgs of cashews and 1 kg of walnuts gives a
mixture that can be sold at 105 per kg.
So, 3 kgs of cashews present for every 1 kg of walnuts. The ratio of cashews
to walnuts is 3:1. Fraction of walnuts in the mixture = 1/(3+1) = 1/4 of the
total mixture
The Time Value of Money

 Compare simple interest and compound Interest investments

 Solve hire-purchase and profit/loss problems
 Apply currency conversion techniques

 Compare simple interest and compound Interest investments

Defining Simple Interest:

Simple interest represents a fee that you pay on a loan or income that you
earn on deposits.

When you borrow money, you have to repay the amount you borrowed and
make extra payments for interest, which represents the cost of borrowing.

When you lend money or deposit funds in  interest- bearing account like
saving account, you typically earn interest income for making your money
available to other people.

Interest is that additional money—the extra amount you pay or earn—and it’s

calculated based on the original sum of money, known as the principal.

How to Calculate: An Example

To calculate simple interest, use this formula:

Simple interest = (principal) * (rate) * (# of periods)

For example, you invest $100 (the principal) at a 5-percent annual rate for 1
year. The simple interest calculation is:

Simple interest: ($100) * (.05) * (1) = $5 simple interest for one year

Note that the interest rate (5 percent) is written as a decimal (.05). To do your
own calculations, you'll need to convert percentages to decimals Remember this
easily by thinking of the word percent as "per 100." You can convert a
percentage into its decimal form by dividing by 100. For example:

Convert 5 percent into decimal= 5 percent / 100 = .05

The Formula for Simple Interest: A = P(1 + RT)

A = amount, or future value

P = principal, or present value

r = annual simple interest rate(written as a decimal)

T = Time in Years

Limitations of Simple Interest

Simple interest provides a basic way of looking at interest. In the real world,
your interest, whether you’re paying it or earning it, is usually calculated using
slightly more complex methods. However, understanding simple interest gives
you a good start, and it can give you a general idea of what a loan will cost or
what an investment will return.

As the time period involved grows longer, if you're dealing with a 30-year
mortgage instead of a 1-year bank deposit, for example, simple interest
calculations become less accurate than using the actual method that involves
compounding, for example.

More complex interest calculations involve something called compounding

frequency. For example, when you borrow with a credit card, you might
estimate how much interest you pay using simple interest.

However, most credit cards quote an annual percentage rate (APR) but they
actually charge interest daily. As a result, you'll owe a lot more than you would
think if you relied only on a simple interest calculation.

What Is Compound Interest?

Compound interest is one of the most powerful forces of investing. Here's how
to calculate it.

When it comes to calculating interest, there are two basic choices: simple and
compound. Simple interest simply means a set percentage of the principal every
year, and is rarely used in practice.
On the other hand, compound interest is applied to both loans and deposit
accounts. Compound interest essentially means "interest on the interest" and is
the reason many investors are so successful.
Comparing simple and compound interest
Let's say you invest $10,000 at 8% simple interest. This means that after the
first year, $800 is added to your account. In the second year, another $800 in
interest is paid, and the same with the third year, fourth year, and so on.
If your investment paid 8% compound interest on an annual basis, it wouldn't
make a difference at first. After the first year, you'd receive the same $800
interest payment as you would with a simple interest calculation. However, this
is where it starts to get very different.
In the second year, your 8% interest is calculated on your entire new balance of
$10,800, not just your original $10,000. This produces an interest payment of
$864 for the second year, which is then tacked on to the principal when
calculating your interest for the third year.
You may be surprised at how quickly this can add up. At 8% simple interest,
your $10,000 investment would be worth $34,000 after 30 years. However,
using compound interest, the value would balloon to more than $100,000. Just
take a look at how simple and compound interest compare over a 50-year period

The compound interest formula

To calculate compound interest over time, there is a mathematical formula that you can use:
Simple Interest Problems:

1. Find the total amount due on a loan of $800 at 9% simple interest at the
end of 4 months.
A=P(1+RT)
A=800(1+(0.09)(0.33))
A=800(1+0.0297)
A=800(1.0297)= 823.76
2. Find the total amount due on a loan of $500 at 12% simple interest at the
end of 30 months.
A= P(1+RT)
A= 500(1+0.12[2.5])
A= 500(1+0.3)
A= 500(1.3)= 650

3. Your sister has loaned you $1,000 with the understanding that you will
repay the principal plus 4% simple interest when you can. How much
would you owe her if you repaid the loan after 1 year? After 2 years?
After 5 years? After 10 years?
A = P(1+RT)
A= 1000(1+0.04[1])
A= 1000(1.04)= 1040
A= 1000(1+0.04(2))
1000(1+0.08)
1000(1.08)= 1080
A= 1000(1+0.04[5])
1000(1+0.20)
1000(1.20)= 1200
A= 1000(1+ 0.04(10))
=1000(1+0.4)
1000(1.4) = 1400

4. How is the interest after 10 years related to the interest after 1 year? After
2 years? After 5 years?
5. Explain why your answers are consistent with the fact that for simple
interest, the graph of future value as a function of time is a straight line
(Fig. 1).
6. If you want to earn an annual rate of 10% on your investments, how
much (to the nearest cent) should you pay for a note that will be worth
$5,000 in 9 months?
A= P(1+RT)
(1+RT) (1+RT)

A =P
(1+RT)

5000
(1+(0.10)0.75)
5000
(1+0.075)

5000 = 4651.16
( 1.075)
7. If you want to earn an annual rate of 10% on your investments, how
much (to the nearest cent) should you pay for a note that will be worth
$5,000 in 6 months?

A= P(1+RT)
(1+RT) (1+RT)
A =P
(1+RT)

5000
(1+0.1(0,5)
5000
(1+0.05)

5000
(1+0.05)

5000 = 4761.9
1.05)

8. T-bills (Treasury bills) are one of the instruments that the U.S. Treasury
Department uses to finance the public debt. If you buy a 180-day T-bill
with a maturity value of $10,000 for $9,893.78, what annual simple
interest rate will you earn? (Express answer as a percentage, correct to
three decimal places.)

A= P(1+RT)
A= P+PRT
A-P= PRT
PT PT
A-P = R
PT
10000-9893.78
(9893.78)0.493

106.22 = 0.02= 2%
4877.63
 9. T-bills (Treasury bills) are one of the instruments that the U.S. Treasury
Department uses to finance the public debt. If you buy a 180-day T-bill
with a maturity value of $10,000 for $9,828.74, what annual simple
interest rate will you earn? (Express answer as a percentage, correct to
three decimal places.)
A-P =R
PT
10000-9828.74 = 171.26 = 0.035= 3.5%
9828.74(0.493) 4845.56

10.Suppose that after buying a new car you decide to sell your old car to a
friend. You accept a 270-day note for $3,500 at 10% simple interest as
payment. (Both principal and interest are paid at the end of 270 days.)
Sixty days later you find that you need the money and sell the note to a
third party for $3,550. What annual interest rate will the third party
receive for the investment? Express the answer as a percentage, correct to
three decimal places.

Step 1
A= 3500(1+0.10(0.739)=
3500(1+0.0739)
3500(1.0739) = 3758.65
A-P = R
PT
3758.65-3550 = 208.65 =0.102= 10.2%
3550(0.575) 2041.25
 11.Suppose that after buying a new car you decide to sell your old car to a
friend. You accept a 270-day note for $3,500 at 10% simple interest as
payment. (Both principal and interest are paid at the end of 270 days.).
90 days later you find that you need the money and sell the note to a third
party for $3,500. What annual interest rate will the third party receive for
the investment? Express the answer as a percentage, correct to three
decimal places.

A= 3500(1+0.10(0.739)
= 3500(1+0.0739)
= 3500(1.0739) = 3758.65

A-P = R
PT

3758.65-3500 = 258.65 = 0.149= 14.9%

3500(0.493) 1725.5
Compound Interest:
A = P(1+ R)N

1. If $1,000 is invested at 8% compounded

Annually
A= P(1+R)nt
A= 1000(1+0.08)1
= 1000(1.08)1
1000(1.08)= 1080

B. Semi-annually
A= 1000(1+0.04)2x1
= 1000(1.04)2
1000(1.08)= 1080

A. Quarterly
=1000(1+0.02)4
= 1000(1.02)4
= 1000(1.08)= 1080
B. Monthly

A = 1000(1+0.006) 12(1)
A= 1000(1+0.006)12
A= 1000(1.006)12
= 1000(1.074)=1074

2. If $1,000 is invested in an account that earns 9.75% compounded

annually for 6 years, find the amount after six years.
A= 1000(1+0.0975)6
A- 1000(1.0975)6
A= 1000(1.75)= 1750
3. If $2,000 is invested in an account that earns 8.25% compounded
annually for 5 years, find the amount in the after 5 years.

A= 2000(1+0.0825)5
= 2000(1.0825)5
= 2000(1.49) = 2980

4. If you deposit $4000 into an account paying 6% annual interest

compounded quarterly, how much money will be in the account
after 5 years?
A= 4000(1+0.015)20
= 4000(1.015)20
= 4000(1.35)= 5400

5. If you deposit $6500 into an account paying 8% annual interest

compounded monthly, how much money will be in the account after 7
years?

A= 6500(1+0.0067)84

= 6500(1.0067)84

6500(1,75) = 11375
 6. How much money would you need to deposit today at 9%
annual interest compounded monthly to have $12000 in the
account after 6 years?

A= P(1+R)NT
(1+R)NT (1+R)NT
A
(1+R)NT
12000 =
(1.0075)72
12000 =7017.54
1.71)
(1+0.0075)72
12000
(1+ (0.0075)72
12000
(1.0075)72
12000

1.713

7005.25
Occupancy rate is a Key Performance Indicator (KPI ) used by those
within the hotel industry to assess the performance of a hotel. As a
metric, it is concerned with the percentage of a hotel that is occupied
and can be used alongside other KPI’s, such as ADR (average daily
rate) and Rev PAR (revenue per available room) as part of a revenue
management strategy.

What does occupancy rate stand for?

In simple terms, occupancy rate refers to the number of occupied

rental units at a given time, compared to the total number of available
rental units at that time. It is one of the most popular KPI’s in the
hotel industry for revenue management. Highlighting how much of
the available space in a hotel is actually being utilized.
The occupancy rate of a hotel is expressed as a percentage. So, for
example, if a hotel has 100 rooms available to be sold and 100 of
those rooms are occupied, the occupancy rate would be 100 percent.
If the same hotel had 60 rooms occupied, the occupancy rate would be
60 percent.

How to Calculate Occupancy Rate

The occupancy rate KPI can be calculated with the following formula:

Occupancy Rate = Number of Occupied Rooms / Total Number of

Available Rooms

Example: If your hotel has 220 rooms and 210 of the rooms are
occupied:

210 / 220 = 0.95 = 95 percent occupancy rate

How to Use Occupancy Rate
Occupancy rate is often considered to be one of the top three most
useful metrics for hotel owners carrying out a revenue management
strategy, alongside average daily rate and revenue per available room.
With that being said, there are some limitations to it as a KPI, so it is
important to understand how to read it effectively.

Generally speaking, those working in the Hotel Industry  should be

aiming for a high occupancy rate, because this indicates that space is
being used efficiently. However, it should be used on conjunction
with other metrics, because the goal is to maximize revenue, not
occupancy rate.

While a 100 percent occupancy rate is desirable, hotel owners may

have to lower rates in order to achieve it. Therefore, there could be
instances where hotels can actually make more money from an 80
percent occupancy rate than from a 100 percent occupancy rate, if the
80 percent are paying higher prices. For this reason, occupancy rate
should always be viewed in context, alongside average daily rate and
revenue per available room.
 1. ROOM OCCUPANCY RATE (ROR) 
The room occupancy rate is the simplest rate to calculate: ROR = TL/TR *
100 Where: ROR = room occupancy rate as a % TL = the total number of rooms
let over a year TR = the total number of rooms available for letting over the
year.

a. A small Hotel in Negril, Jamaica has 300 rooms and after analyzing its
records it is found that 64 000 rooms were let out during 2019. Calculate
the Room Occupancy Rate.

Solution:

The small Hotel in Negril, Jamaica has 300 rooms and after analyzing its
records it is found that 64 000 rooms were let out during the year.
Therefore, room occupancy rate is: ROR = 64000/(300*365) * 100/1 =
58.4474885845 % 

64000 = 64000= 0.58 (100)= 58%

300(365) 109500

b. The Royal Hotel has 600 rooms, and after careful analyzing of the data ,
it was discovered that 56000 was let during year. Calculate the Room
Occupancy Rate.

Solution: 56000 = 56000 =( 0.25)100= 25%

(600)(365) 219000

ROR = The Majestic Grand Hotel in France has 80,000 rooms, and after
careful analyzing of the data , it was discovered that 160,000 was let
during year. Calculate the Room Occupancy Rate.

160000 =160000 = 0.0054(100)= 0.54%

80000(365) 29,200,000
 BED OCCUPANCY RATE (BOR) 

A problem with the room occupancy rate is that it does not take into
account the number of guests per room. This can be important for the
assessment of gross income as double and family tariffs provide a higher
income than single tariffs. Knowing the number of beds per room and the
number of guests who have stayed at the motel or hotel it is possible to
calculate an average bed occupancy rate as follows: BOR = AG/TB *
100/1 Where: BOR = bed occupancy rate as a % AG = actual number of
guests per annum TB = total available beds per annum.

a. If the total number of guests at the Small Hotel in Negril is 90000 per
annum and each room has 4 beds, Calculate the Bed Occupancy Rate.

Solutions:

If the total number of guests for the small Hotel in Negril is 90

000 per annum and each room has 4 beds the BOR is:BOR =
90000/(300*4*365) * 100/1 = 20.547945% 

90000
(300)(4)(365)

= 90000 = 0.205(100)= 20.5%

438000
a. If the total number of guests at Royal Hotel is 600,000 per annum, and
each room has 6 beds, calculate the Bed Occupancy Rate. [600 Rooms]
600000= 600000= (0.45)= 45%
(600)(6)(365) 1314000
b. If the total of Guests at the Majestic Grand Hotel in France is 160,000,
and each room has 10 beds, calculate the Bed Occupancy rate.[80000
Rooms]
160000
80000(10)(365)

160000/292,000000= 0.0005(100)=0.05%
PILLOW OCCUPANCY RATE (POR)

The pillow occupancy rate is a further refinement on the BOR and takes into
account that a bed may be either a double or single. The POR is found as
follows: POR = AG/TP * 100/1 Where: POR = pillow occupancy rate as a
% AG = actual number of guests per annum TP = total available pillows per
annum.

a. If each room has two double and two single bed calculate the pillow
occupancy rate for the small Hotel in Negril

Solution:
 POR = 90000/ (300*6*365) * 100/1 = 13.6986% The POR shows a much lower
occupancy rate than the BOR reflecting the fact that a large number of the
guests were either singles or couples. The ratio is a measure against all the
possible guests for one year. 

90000 = 90000 = 0.13(100)= 13%

(300)(6)(365) 657000

b. If each room has four double and four single beds calculate the pillow
occupancy rate for the Royal Hotel. [600,000 Guest,600 Rooms]]
600000
(600)(12)(365)
600000= 0.22(100)= 22%
2628000

c. If each room has four double and four single bed calculate the pillow
occupancy rate for the Majestic Grand Hotel in France . [16,000 Guest,
80000 Rooms]
16000
(80000)(12)(365)
16000 = 0,000045= 0.0045%
350 400000
 ROOM DENSITY RATE (RDR) 

The room density rate is the most useful of the measures as it allows the ready
calculation of the gross income derived from the motel or hotel. It is calculated
as follows: RDR = AG/AR Where: RDR = room density rate AG = actual
guests over the year AR = actual rooms let over the year .

For the Small Hotel in Negril above calculate the Room Density Rate.

Solutions:
For the motel above: RDR = 90000/64000 = 1.41 This shows that on average, 1.41
persons occupied each room over the year. The useful feature of this rate is that once
the tariffs are known the gross annual income can be estimated. 

2. Seat turnover might be used to determine staffing. If the Small Hotel’s

Restaurant has 2000 seats, and 12000 meals are served during the lunch
hour, what is the seat turnover?

Solutions:

Seat Turnover: 12000/2000 = 6

Which means that the average seat was used six times during that period?
This can be valuable information for staffing arrangements.[6 Marks]

For the Royal Hotel above calculate the Room Density Rate.

600000 = 10.7142
56000
Seat turnover might be used to determine staffing. If the Royal Hotel’s
Restaurant has 4000 seats, and 24000 meals are served during the lunch
hour, what is the seat turnover?

24000 =6
4000
For the Majestic Grand Hotel in France calculate the Room Density Rate.

Seat turnover might be used to determine staffing. If the Majestic Grand

Hotel in France ’s Restaurant has 12000 seats, and 72000 meals are served
during the lunch hour, what is the seat turnover?
72000= 6
12000

Reference

1. Algebra : https://www.digitmath.com/algebra.html
2. https://www.mbacrystalball.com/blog/2015/08/28/ratio-proportion-problems/