Tes1Soln08 - (10) (10) O O O O (6) (6) (8) (8) O O O O O O...

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Unformatted text preview: (10) (10) O O O O (6) (6) (8) (8) O O O O O O (5) (5) (4) (4) O O O O (7) (7) O O (3) (3) O O (9) (9) (2) (2) (1) (1) 1. Huntington Bank offers an account that pays 3%, compounded daily. Lafayette Bank offers an account with the same annual effective rate, but compounded twice a year. Lafayette Banks nominal interest rate is i% per year, compounded twice a year. Find i. AEF d 1 C .03 365 365 ; AEF := 1.030453346 2 $ AEF 1 2 K 1 ; 0.030224958 2) You receive an award that pays $1,000 at the beginning of year 0, $2,000 at the beginning of year 1, and $3,000 at the beginning of year 2. What is the present value of this award at 5% interest per year? i d .05; i := 0.05 1000 C 1 C i K 1 $ 2000 C 1 C i K 2 $ 3000 5625.850341 3) You borrow $250,000 to buy a house. Compute the monthly payments on a 25 year loan at 5% interest, compounded monthly? i d .05 12 ; i := 0.004166666667 solve 1 C i 25 $ 12 $ 250000 K P $ 1 C i 25 $ 12 K 1 i = 0, P ; 1461.475045 4) On Jan. 1, 2007, you won a contest that pays $400 dollars at the end of each month for On Jan....
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This note was uploaded on 10/28/2010 for the course MA 170 taught by Professor Staff during the Fall '08 term at Purdue University-West Lafayette.

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Tes1Soln08 - (10) (10) O O O O (6) (6) (8) (8) O O O O O O...

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