S07Assg3soln

# S07Assg3soln - Formula Solutions to Assignment #3 1). a)...

This preview shows pages 1–2. Sign up to view the full content.

Formula Solutions to Assignment #3 1). a) [1+(20+(1/10) times the first two digits of your ID) %] 1/12 -1 b) 12*{[1+(20+(1/10) times the first two digits of your ID) %] 1/12 -1} c) [1+(20+(1/10) times the first two digits of your ID) %] 10 -1 d) (1/10)*{[1+(20+(1/10) times the first two digits of your ID) %] 10 -1} e) [1+(20+(1/10) times the first two digits of your ID) %] 350/365 -1 2). First, find the implied effective rate, which is Rq=(1/4)*(24+(1/10) times the last two digits of your ID)% per quarter a) (1+Rq) 1/3 -1 b) ((1+Rq) 2 -1)*20 c) (1+Rq) 40 -1 3). First, find the implied effective rate, which is Rm= (1/12)*(12+(1/10) times the first two digits of your ID)% per month. Find R5m, the effective rate per 5 months, which is R5m=(1+Rm) 5 -1. There are 6 annuity payments and the first payment comes after 2 months. So the present value today is 10000/R5m*(1-1/(1+R5m) 6 )*(1+Rm) 3 . Or, use a financial calculator with N=6, r=Rm, PMT=10000, FV=0, calculate PV and multiply PV by (1+Rm) 3 4). Find the implied effective rate, which is

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 04/06/2010 for the course ECON 2342 taught by Professor James during the Three '09 term at ADFA.

### Page1 / 2

S07Assg3soln - Formula Solutions to Assignment #3 1). a)...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online