assignment
MATH 1115 - Assignment 2, Due Wednesday September 25th
A general note on assignment submission: Write your name and B00 number at the top of every page of your assignment.
Working with other students on assignments is allowed and encouraged.
However, copying is not allowed. Each student must write out his or her own assignment. Show all of your work.
If you are having trouble getting started on any of the problems, come see me during my office hours or by appointment.
1. Given the choice between investing money at 3.5% compounded continuously and 3.55% compounded monthly, which should you choose? Give the effective rate for each case.
2. How long does it take a principal P to triple at a nominal rate of 4.5% compounded annually? What if interest is compounded continuously?
3. Suppose that after 4 years, an initial investment of $500 grew to $635.30 at a fixed interest rate.
(a) Find the effective rate of interest earned.
(b) Find the nominal rate if interest is compounded monthly.
4. Find the present value of the given future payment at the specified interest rate. (a) $1117.97 due in 10 years at an effective rate of 7%.
(b) $1114.95 due in 20 years at 5% compounded quarterly.
(c) $1031.96 due in 5 years at 6% compounded continuously.
5. A bank account pays a 2.3% nominal rate, compounded monthly. How much must be deposited in the account now so that the account contains exactly $10, 000 at the end of 2 years?
6. A debt of $6, 800 payable in 10 years is to be repaid by three payments as follows: $2000 after 4 years, $2000 after 6 years, and a final payment x after 8 years. Find x, the value of the final payment to cover the debt.
Assume a nominal rate of 5% compounded annually.
7. A debt of $3, 000 payable in 3 years is to be repaid by three equal payments taking place now, after 1 year, and after 2 years. What should the value of each payment be? Assume a nominal rate of 6% compounded semiannually. 8. Find the present value of an ordinary
A general note on assignment submission: Write your name and B00 number at the top of every page of your assignment.
Working with other students on assignments is allowed and encouraged.
However, copying is not allowed. Each student must write out his or her own assignment. Show all of your work.
If you are having trouble getting started on any of the problems, come see me during my office hours or by appointment.
1. Given the choice between investing money at 3.5% compounded continuously and 3.55% compounded monthly, which should you choose? Give the effective rate for each case.
2. How long does it take a principal P to triple at a nominal rate of 4.5% compounded annually? What if interest is compounded continuously?
3. Suppose that after 4 years, an initial investment of $500 grew to $635.30 at a fixed interest rate.
(a) Find the effective rate of interest earned.
(b) Find the nominal rate if interest is compounded monthly.
4. Find the present value of the given future payment at the specified interest rate. (a) $1117.97 due in 10 years at an effective rate of 7%.
(b) $1114.95 due in 20 years at 5% compounded quarterly.
(c) $1031.96 due in 5 years at 6% compounded continuously.
5. A bank account pays a 2.3% nominal rate, compounded monthly. How much must be deposited in the account now so that the account contains exactly $10, 000 at the end of 2 years?
6. A debt of $6, 800 payable in 10 years is to be repaid by three payments as follows: $2000 after 4 years, $2000 after 6 years, and a final payment x after 8 years. Find x, the value of the final payment to cover the debt.
Assume a nominal rate of 5% compounded annually.
7. A debt of $3, 000 payable in 3 years is to be repaid by three equal payments taking place now, after 1 year, and after 2 years. What should the value of each payment be? Assume a nominal rate of 6% compounded semiannually. 8. Find the present value of an ordinary