Extra Problems 1

Extra Problems 1 - b simple interest of 5 p.a 4 Find the...

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ACTSC 231 Extra Problem Set 1 1. BIG Bank offers its customers checking accounts with overdraft protection. The bank pays simple intest on positive balances at a rate of 6% and charges simple interest on negetive balances at a rate of 18%. The interest is calculated using exact simple interest and is deposited (withdrawn) on the last day of each month. Mary’s checking account balance at the end of March is $400. Calculate her balance at the end of May if the following transactions occur: withdraw $350 on April 8th, withdraw $600 on April 15th, deposit $2000 on April 25th, withdraw $900 on April 29th, withdraw $1000 on May 5th and deposit $2000 on May 20th. 2. Given 6% nominal rate of interest compounded semi-annually, what is the equivalent a. nominal rate of interest compounded daily ? b. nominal rate of discount compounded quarterly ? 3. How much interest is earned during the 5th year by $100 invested today under a. compound interest with annual effective rate 5%?
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Unformatted text preview: b. simple interest of 5% p.a. ? 4. Find the accumulated value of $300 at the end of two years: a. If the nominal annual rate of interest is 9% convertible semi-annually b. If the nominal annual rate of interest is 9% convertible once every four years. c. If the nominal annual rate of discount is 9% compounded weekly. 5. Fund A accumulates at a simple interest rate of 10%. Fund B accumulates at a simple discount rate of 5%. Find the point in time at which the forces of interest on the two funds are equal 6. On July 1, 1999 a person invested 1000 in a fund for which the force of interest at time t is given by u t u 3 U 2 t 50 , where t is the number of years since January 1, 1999. Determine the accumulated value of the investment on January 1, 2000. 7. Find the following derivatives: a. d di d b. d di u c. d dd d u m U d. d dv u e. d d u d...
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