SolnT1092

SolnT1092 - 1)You receive an award that pays \$1,000 at the...

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O O O (6) (3) O (1) O (5) (2) O O (4) 1)You receive an award that pays \$1,000 at the beginning of year 0, \$P at the beginning of year 1, and \$3,000 at the beginning of year 2. Find P, given that at the beginning of year 0, the present value of the award at 5% interest per year was \$9300. 9300=1000+(1+i)^(-1)*P+(1+i)^(-2)*3000 i d .05; Ans d solve 9300 = 1000 C 1 C i ^ K 1 * P C 1 C i ^ K 2 * 3000, P i := 0.05 Ans := 5857.857142 2)I invest \$P at the end of the year for 30 years at 4% interest compounded annually. Find P, given that the total the present value of all of the deposits is \$7781.41. i d .04; j d 1 C i ; n d 30 i := 0.04 j := 1.04 n := 30 Ans d solve 7781.41 = j n K 1 i \$ P \$ j K n , P Ans := 449.9997117 3)Huntington Bank offers an account that pays 5%, compounded monthly. They decide to change to daily compounding. What interest rate should they offer to obtain the same annual effective rate as the original account? State your answer as a nominal annual rate--i.e. i% per year, compounded daily. 1 C .05 12 12 = 1 C i 365 365 i d 365 \$ 1 C .05 12 12 365 K 1 ; Ans d 100 \$ i i := 0.049899515 Ans := 4.989951500

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