MA373 F15 Homework Chapter 3

# MA373 F15 Homework Chapter 3 - Math 373 Fall 2015 Homework...

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September 24, 2015 Copyright Jeffrey Beckley 213, 2014, 2015 Math 373 Fall 2015 Homework Chapter 3 Chapter 3, Section 2 1. Calculate the present value for an annuity that pays 500 at the end of each year for 20 years. You are given that the annual interest rate is 7%. 2. Calculate the present value of an annuity immediate with monthly payments of 200 for 10 years using an interest rate of 9% compounded monthly. 3. Calculate the present value of an annuity immediate with monthly payments of 200 for 10 years using an annual effective interest rate of 9%. 4. Calculate the accumulated value of an annuity immediate with annual payments of 600 for the next 25 years using an annual effective interest rate of 4%. 5. Calculate the accumulated value of an annuity that pays 5000 at the end of each year for the next 8 years using an interest rate of 10% compounded semi-annually. 6. Zijing is buying a new car for 23,000 and financing the entire amount with a loan with monthly payments over the next 4 years. The interest rate on Zijing’s loan is 8.4% compounded quarterly. Calculate Zijing’ s monthly payment. 7. Edward deposits 150 into a bank account at the end of each quarter for 10 years. During this time period, he earns an annual effective interest rate of 6.8%. Calculate the amount that Edward has at the end of 10 years. 8. Nik wants to have 1000 in one year to buy a new HDTV for the Super Bowl. He decides that he will invest P at the end of each month in an account earning 8% compounded quarterly in order to accumulate the 1000. Calculate P . 9. Mitchell won the lottery! He has the following payout options: a. One million at the end of each year for the next 20 years; or b. A lump sum of 7,469,443.62 paid now. Calculate the annual effective interest rate at which both options have the same present value. 10. Yi is paying a car loan with payments of 500 at the end of each month. The loan has a monthly effective interest rate of 1%. If the car loan is for 18,986.98, calculate the number of payments that Yi will need to make.

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September 24, 2015 Copyright Jeffrey Beckley 213, 2014, 2015 11. For a given interest rate, n s = 21.4953 and n a = 7.90378. Calculate n. 12. If 0.1 d , calculate 14 a . 13. The accumulated value of an n year annuity is four times the present value of the same annuity. Calculate the accumulated value of 100 in 2n years. (Note: This is NOT asking for the accumulated value of an annuity just the accumulated value of a single payment of 100.) Chapter 3, Section 3 14. Ran is receiving monthly payments of 1000 at the start of each month for 10 years. Calculate the present value of these payments using an annual effective rate of 12%. 15. Allie is the beneficiary of a trust fund which will pay her 1000 at the beginning of each month for the next 5 years. She invests each payment into an account earning an interest rate of 7.2% compounded monthly.
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