Unformatted text preview: KEY University of Illinois at UrbanaChampaign —___
Department of Mathematics—Actuarial Science Program Math 210 _ Instructor Jared Thompson
Theory of Interest Spring 2006 IllClass Assignment #6 (2 points) 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 workeenough 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) 2) You make a single deposit of $100 today into your investment account. Your investment
earns a 5% annual effective interest rate (with interest paid at the end of each year). The
interest is immediately reinvested at an annual effective rate of 6%. Find the
accumulated value ﬁve years from today. h: 5 ; @573; J a: 4,7, ’96 p553“: 15100 f Ace, Value: 1,,
———l———l———i—l——l
Time: ([3 1L 2 3 5+ 5
mm " £5 5 5 $5 1‘ 5 $5 AccUaluw: SIDE) + $5'Sgléaﬁ : $[oo s5(<1395_:): “use
+ .OQ (Exam FM/2, May 2005, #20) An investor wishes to accumulate 10,000 at the end of 10
years by making level deposits at the beginning of each year. The deposits earn a 12%
annual effective rate of interest paid at the end of each year. The interest is immediately
reinvested at an annual effective interest rate of 8%. Calculate the level deposit. VePos'at‘i'. X X X """"" X X pkgﬂaluet [0,000
’ng‘v O 1. 2— . . . . c . o n 3‘ a lo
W+: Ki at 826 0m oni
la: to; L: [1% i J:?% Nate' (ISL‘1]: (galh)
J __=, “3,000 : X'IA + XL'(IS)MJ
10,000: IOX +o.lZX(Ci(°Vfo;ljr l0 : ‘0.)(4— metaX: £0,000 .08 __.., [EAGKZE'X = [0,000 ...
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 Spring '08
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