MATH/STAT 170
Test 1 October 22, 2009
.
I grade the work—not the answer.
A correct answer with no supporting work is worth nothing.
It
is O.K. to use a financial calculator to check your answer.
However, your work should be such
that it is clear to me that you actually know how to find the answer “by hand.”
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.
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
.
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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.
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 Fall '08
 Staff
 Math, Time Value Of Money, Interest, 1979

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