MATH 320 HW 7 - is 1 during the 1st year and increases by...

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MATH 320 HOMEWORK 7 Due Wednesday, October 20 1. A thirty-year annuity-immediate makes annual payments. The first 10 payments are of amount 100. The payments then decrease by 5 each year until the 20th payment, which is of amount 50. The last 10 payments are also of amount 50. The interest rate is 6% per annum. Find the present value of the annuity. 2. A perpetuity-due makes annual payments. The first 5 payments are of amount 5, the next five are of amount 6, the next five are of amount 7, and so on. If the annual effective interest rate is 3.5%, find the present value of the perpetuity. 3. I borrow 100 at the interest rate i = 0 . 4 , which I am to repay in quarterly installments over the next 25 years. The quarterly payment
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Unformatted text preview: is 1 during the 1st year, and increases by amount X at the end oF each year. Determine X. 4. A twenty-year annuity-immediate with annual payments, has a present value oF 100. The frst payment is X , and the payment amount increases by 6.09% each year. IF i = 0 . 03 , fnd X. 5. Jane receives 10-year increasing annuity-immediate paying 100 the frst year and increasing by 100 each year thereaFter. Mary receives a 10-year decreasing annuity-immediate paying X the frst year and decreasing by X/ 10 each year thereaFter. at an effective rate oF 5%, both annuities have the same present value. Calculate X. 1...
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