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Unformatted text preview: ) N = $ 3 ) 1 ( 3000 i + = $ ) 3 3 1 ( 3000 3 2 i i i + + + If earning simple interest, amount at the end of 3 years would be P + iPN = $ ) 3 1 ( 3000 i + . Difference = $ ) 3 1 ( 3000 ) 3 3 1 ( 3000 3 2 i i i i ++ + + = $ ) 3 ( 3000 3 2 i i + = $ ) 3 ( 3000 2 + i i . 2 6. F = P (1 + i ) N . N P F ) 07 . 1 ( 3 + = = . ) 07 . 1 ln( 3 ln N = . 24 . 16 0677 . 0986 . 1 ) 07 . 1 ln( 3 ln = = = N years. Since interest is compounded only once a year, takes 17 years . 7. P = $200. Interest rate is r per year. Period for compounding interest is ½ year. So interest rate i per period is i = r /2, and number of periods N in 1 year is N = 2. Future worth F after 1 year is $ N i ) 1 ( 200 + = $ 2 2 ) 1 ( 200 r + = $ ) 1 ( 200 4 2 r r + + Interest earned F – P = ${ ) 1 ( 200 4 2 r r + + – 200 } = $ ) ( 200 4 2 r r + = $ ) 4 ( 50 + r r ....
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 Fall '09
 DennisBlumenfield
 decision making homework

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