ma305_may_2004_exam_solutions_slides

# ma305_may_2004_exam_solutions_slides - Question 1(4 a a20 =...

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1 Question 1 (4) (4) 20 20 20 20 12 20 12 8 20 (12) (12) 20 ) 1.011181 14.8775 15.0438 ) 1.014926 14.8775 15.0996 ) 15.0996 1.014926 9.954 4.9970 1.03 1 1.80611 1 ) 27.3054 0.029522 i a a a i i b a a c a a a d s d δ = = × = = = × = = - = - × = - - = = = Question 2 Therefore c ) gives the highest annual effective rate of interest ( ) 0.04 (4) (4) 4 1 4 (4) (4) ) 0.04 1 0.04081 ) 0.04 [1 ] 1 0.04060 4 ) 0.04 1 1 0.04167 ) 0.04 1 1 0.04102 4 a i e i i b i i i c d i d i d d d i i - - = = - = = = + - = = = - - = = = - - =

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2 Question 3 a ) Present value 5 5 0 0 2 10 10 5 5 15 15 10 10 0.035 [0.035 ] 0.175 0.007 [ ] 0.007 0.2625 2 0.075 [0.075 ] 0.375 (0,5) 1.1912462 (5,10) 1.300176 (10,15) 1.45499 dt t t tdt dt t A e e e A e e e A e e e = = = = = = = = = = = = 1 1 1 1 (0,5) (5,10) (10,15) 1.1912462 1.300176 1.45499 0.44375 A A A - - - = × × = × × = Question 3 b ) Therefore, the effective rate of interest is 6.876% 2 10 10 9 9 0.007
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## This note was uploaded on 06/07/2011 for the course MA 305 taught by Professor Loba,millet during the Spring '11 term at Kent Uni..

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ma305_may_2004_exam_solutions_slides - Question 1(4 a a20 =...

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