University of Illinois at Urbana-Champaign Department of Mathematics—Actuarial Science Program Math 210 Instructor Jared Thompson Theory of Interest Spring 2006 Homework Assignment #6 (10 points) Due at the beginning of class on Friday, March 31, 2006 Please use rounding as little as possible, especially when using interest rates. You may find your calculator’s memory button(s) to be helpful. You are encouraged to work in small groups on these problems, but each student must turn in his or her own answer sheet. Show all work—enough to show that you understand how to do the problem—and circle your final answer. Full credit can only be given where answers and approach are appropriate. Please give answers to two decimal places, e.g. xx.xx% and $xx,xxx.xx . 1) Geneva takes out a 10-year loan that involves level $500 payments at the end of each month. Find the initial amount of the loan (that is, the balance at time 0) if the nominal rate of interest, convertible semiannually, is 8%. 2)
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