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Unformatted text preview: MMHESEOV ‘ ‘ ” ” H’O'MEWWC‘PCK 3 '7 " mljiiéWWédﬁééd‘ay; ”Séﬁteiiih’éﬁr’" i 5 1. t0 Annual compound interest rates are 13% in 1984, 11% in 1985, and
15% in 1986. Find the effective/rate of compound interest per year
which yields an equivalent return over the three—year period, . suppose that 6,; x 04(1 + 0‘1. (a) Find a(t)
(b) I invest 10 at t z 2. What is the value of my investment at t = 5? . Two funds, X and Y, start with the same amount. Fund X accumulates at force of interest of 10%. Fund Y accumulates at a rate of interest 2',
compounded semiannually. At the end of 10 years, fund X is 1.1 times
as big as fund Y. Calculate t. .' Steve puts 100 into a fund that pays an effective annual rate of discount of 20% for the first two years, and a force of interest of rate 6, =
215/ (t2 + 8), 2 S t S 4, for the next '2 years. At the end of four years,
the amount in Steve’s account is the same as it would have been had
he put 100 into an account paying interest at a nominal rate of j per
annum compounded quarterly for four years. Calculate j. . I borrow 100 at an annual interest rate of j compounded semiannually. Six months later, the annual interest rate (compounded semiannually)
suddenly goes up by 4%. One year after the loan, I owe 110.24. Find j. W 5 540,45“ M 0+.l3)(/+.//)(/7L,/5—)= 071193 3 _ . jp 850/5 ; . 02/ Lag/(HQ/p
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 Spring '10
 Dr.K

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