This preview shows page 1. Sign up to view the full content.
Unformatted text preview: while Grandparents B will fund the third and fourth payment. What is the dierence between the investment required (at time 0) by grandparents A and B, if they both invest at an annual eective rate of 4%? Q7. A bank pays an annual eective rate i on investments. You are told that $500 invested today will accumulate to $566 after ve years. Find the (combined) present value of three payments of $5,000 at time 10, 15 and 20. Q8. Robin deposits $4,300 into an account on March 1, 1998. The bank guarantees that the annual eective rate for the balance under $5,000 is 3.5% and for the balance over $5,000 is 5%. Suppose that there is no other deposits or withdrawals except for one withdrawal of $ 1,000 on March 1, 2003 and a deposit of $500 on March 1, 2004. Find his account balance on March 1, 2006. 1...
View Full Document
- Fall '09