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Unformatted text preview: Problem Set 6: ACTSC 231 Mathematics of Finance, Fall 2010 Q1. (a) 200 a (4) 10 e 6% = 752 . 31, represents the present value, evaluated at an interest rate of 6% per period effective, of an 10-period annuity-immediate with total payment of 200 in each period payable in 4 equal installments, i.e., an annuity with quarterly payments of 50 in arrear for 10 periods. (a) 1200 s (12) 20 e 4% = 31 , 837 , 526 . 15, represents the accumulated value (i.e., time 20 value), evaluated at an interest rate of 4% per period effective, of an 20-period annuity- due with total payment of 1200 in each period payable in 12 equal installments, i.e., an annuity with payments of 100 every 1 12 period in advance for 20 periods. If each period corresponds to one year, 1200 s (12) 20 e 4% is the accumulated value (the value at the end of 20 years) of an annuity with monthly payments of 100 in advance for 20 years. Q2. For a ( m ) n e i and a ( m ) n e i , we introduced three ways to find their values. You may want to try all of them and then find a most convenient way for yourself.all of them and then find a most convenient way for yourself....
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This note was uploaded on 01/21/2011 for the course ACTSC 231 taught by Professor Chisholm during the Fall '09 term at Waterloo.
- Fall '09