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Unformatted text preview: MATH 320 HOMEWORK 4  Due Wednesday, September 22 1. Chris lends Dennis X at a rate of 12% per annum effective> at time
t = 0. Dennis is to repay in three installments: 22.40 at t r: 1,
28.10 at t = 37 and
15.74 at t = 4. (a) What is X? (b) The repayments are to be replaced by a single payment of 22.40 +
28.10 + 15.74 2 66.24. What time should this payment be at, (i) using the equation of value, (ii) using the method of equated time.
2. Suppose am 2 5.5348 and @551 = 8.3126. Find 7L and n. 3. You are given an annuityimmediate with 11 annual payments of 100
and a final balloon payment of X at the end of 12 years. At an annual
effective interest rate of 3.5% the present value at time 0 of all the
payments is 1000. (a) Find X. (b) Using an annual effective rate of 1%, calculate the present value at
the beginning of the ninth year of all the remaining payments. 4. A large state borrows $300 million in a bond issue to pay for redwood
forests. It will pay the money back in 20 equal installments at an
annual interest rate of 7.5%. Find the total interest the state will pay. 5. If am 2 1.7, find i. 22. ‘{
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 Spring '10
 Dr.K

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