MATH 320 HW 4

# MATH 320 HW 4 - eﬀective interest rate of 3.5 the present...

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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 = 1, 28.10 at t = 3, 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 = 66 . 24. What time should this payment be at, (i) using the equation of value, (ii) using the method of equated time. 2. Suppose a n | = 5 . 5348 and a 2 n | = 8 . 3126. Find i and n . 3. You are given an annuity-immediate with 11 annual payments of 100 and a final balloon payment of X at the end of 12 years. At an annual
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Unformatted text preview: 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 a 2 | = 1 . 7, ±nd i . 1...
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