S07Assg3soln

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

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

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

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