Unformatted text preview: i , what would the accumulated value of these deposits have been at the end of 20 years? 4. I borrow 500 from the bank at time 0, at an interest rate of 0.10 per annum eﬀective. I am to repay the loan by n1 annual installments of X , followed by a drop payment at time n of less then X. (a) If X = 80 , ±nd n and the value of the drop payment. (b) What happens if X = 30? What is the smallest possible value of X ? 5. A sum, P, is used to buy a deferred perpetuitydue of 1 payable annually. The eﬀective annual rate of interest is i, i > . Calculate the deferred period. Show work! (A) ln( P d ) (B) 1ln( iP ) δ (C)ln( iP ) δ (D) 1 + ln( dP ) δ (E) ln( dP ) δ . 1...
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 Spring '10
 Dr.K
 Math, Addition, Time Value Of Money, effective annual rate

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