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320hm6_F10

# 320hm6_F10 - value equal to s 3 | is 4 | Explain 4 A man...

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MATH 320 HOMEWORK 6 Due Wednesday, October 6 1. An annuity consists of n payments of 1, the first to be made at the end of 7 years and the others to be made at three year intervals thereafter. The rate of interest is i per annum effective. Derive an expression for the present value of this annuity in terms of a 3 | , a 7 | , and a 3 n +7 | . 2. Present value of a series of payments of 2 at the end of every 8 years forever is equal to 5. Calculate the effective rate of interest. 3. A perpetuity pays 1 at the end of every year, except that it pays 0 at the end of every 4th year. The effective interest rate is i . Is the present
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Unformatted text preview: value equal to s 3 | is 4 | ? Explain! 4. A man deposits \$50 at the end of each quarter for 10 years. ±ind the total amount of interest that he has accumulated at the end of 10 years, if i = 0 . 045 for the Frst 5 years, and i (2) = . 05 for the second 5 years. 5. An annuity pays 1 at the end of each 4-year period for 40 years. Given a 8 | i = k, Fnd the present value of the annuity. Show work! (A) 1-(1-ik ) 5 1-(1-ik ) . 5 (B) 1-(1-ik ) 40 1-(1-ik ) . 5 (C) 1-(1-ik ) 5 i (D) 1-(1-ik ) 40 (1-ik )-. 5-1 (E) 1-(1-ik ) 5 (1-ik )-. 5-1 . 1...
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