Assignment 3
ACTSC231 (Mathematics of Finance), FALL 2010
This assignment consists of two parts. In the first part, you need to work out eleven questions
that are in the same style as in the previous two assignments. In the second part, you need
to use Excel spreadsheet to answer the given questions. Detail instructions are given at the
beginning of both parts.
Deadline
:
•
Part I:
November 19 (Friday); submit your solutions to the instructor in class; assign
ments submitted after the November 19 class are unacceptable.
•
Part II:
by 5:00pm, November 26; submit one Excel file that contains all your answers
in the Drop Box on the UWACE web site.
You must place the present page on the top of your solutions to Part I as the
cover and combine them together, and put your name, UW ID number and
section number very clearly in the corresponding blanks below. If you fail to do
so, 5% of your grade will be taken off for Part I of this assignment.
Name:
UW ID #:
Section:
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Part I [30 points]
Instruction:
To earn the credit of this part, you need to justify your answer clearly. Simply
listing the final answer is unacceptable. I might only select a part of the assigned questions
to be marked, and your credit will be based on your performance on those selected questions.
However, in order to obtain the full credit for this assignment, you have to work out all the
assigned questions. The problems are not in the order of difficulties.
1.
A thirtyyear annuity has annual payments of $1,000 at the beginning of each year for
ten years, then annual payments of $2,000 at the beginning of each year for twenty
years.
A perpetuity has payments of $
Q
at the end of each year for twenty years,
then payments of $3
Q
at the end of each year thereafter.
The present value of the
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 Spring '10
 WILKIE
 Math, Mortgage loan, Mathematical finance

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