Unformatted text preview: can buy a $3600 stereo by making 12 monthly payments of $300 (i.e. 3600 12 u 300) with the first payment starts in exactly one month from the time of the purchase. However, if you decide to pay in full at the time of the purchase, you get a 20% cash discount. What rate of interest i u 12 U is the “Good Deal” Co. actually charging ? 5. $ X is deposited at the end of each quarter for 4 years to fund a perpetuity paying $2000 per quarter. The first perpetuity payment is made 1 year after the last deposit. Find $ X if i u 4 U u 10% in the first 4 years and i u 4 U u 8% thereafter. 6. Calculate, assuming an annual effective rate of 5.5%: a. The present value of an annuity of 100 p.a. payable at the beginning of each quarter for 25 years. b. The accumulated value of an annuity of 1000 per year, payable at the beginning of each month for 10 years. c. The present value of an annuity of 200 per year payable continuously for 3 years....
View Full Document
This note was uploaded on 02/07/2010 for the course ACTSC 231 taught by Professor Chisholm during the Spring '09 term at Waterloo.
- Spring '09