UNIVERSITY OF ILLINOIS AT URBANACHAMPAIGN
Actuarial Science Program
DEPARTMENT OF MATHEMATICS
Math 210
P
r
o
f
.
R
i
c
k
G
o
r
v
e
t
t
Theory of Interest
Fall, 2010
Homework Assignment # 1 (max. points = 10)
Due at the beginning of class on Thursday, September 2, 2010
You are encouraged to work on these problems in groups of no more than 3 or 4.
However, each
student must hand in her/his own answer sheet. Please show your work – enough to show that
you understand how to do the problem – and circle your final answer.
Full credit can only be
given if the answer and approach are appropriate.
Please give answers to two decimal places –
e.g., xx.xx% and $xx,xxx.xx .
(1)
You invest $10,000 now, at an annual simple interest rate of 10%.
What is the effective
rate of interest during the 6
th
year of your investment?
(2)
Suppose that the accumulation function for an account is
)
4
1
(
)
(
it
t
a
+
=
.
At time 0, you
invest $1,000 in this account.
If the value in the account at time 5 is $1,700, what 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.
 Fall '10
 RickGorvett
 Math, Actuarial Science, #, $1,700, University of Illinois, annual compound, Prof. Rick Gorvett

Click to edit the document details