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373chapter1section3

# 373chapter1section3 - a(t = 1 0.001t3 Investment 2 has an...

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MA373 homework Non-Interest Theory 1. 1000 + 1002 + . . . + 2000 = 2. 6 + 18 + 54 + 162 + . . . + 4374 = 3. 1 + 0.9 + 0.92 + . . . 0.910 = 4. If (1i) = 1.1,χαλχυλατε 1(1i) +(1 +ι29 +...+(1 +ι29 . Chapter 1, Section 3 5. Tori borrows 1000 from Grace. Two years later, Tori repays the loan with a payment of 1200. Calculate each of the following: 1 a. The principal on the loan. 2 b. The amount of interest that Tori pays. 2.1 c. a(2) d. i [0,2] 6. You are given a(t) = 1 + 0.04t + 0.02(t2 -129 . Calculate: a. If 100 is invested at time 0, how much will be in the account at time 5. b. i [4.5,5] c. i5 7. Alex invests 10,000 in and account that has an accumulation function of α + β t + δ t^2 . At the end of one year Alex has 11,500 in his account. At the end of 2 years, Alex has 14,000. Determine α, β, and δ . 8. Poppy has a choice of two investments. Investment 1 has an

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Unformatted text preview: a(t) = 1 + 0.001t3 . Investment 2 has an accumulation function of a(t) = 1 + 0.01t2 . a. Which investment should Poppy use if Poppy will be investing for 5 years. Explain why. b. Which investment should Poppy use if Poppy will be investing for 15 years. Explain why. c. If Poppy invests 100 into both investments, at what time will the accumulated value of both investments be equal. 9. Book Problem 1.3, Number 5 10. Book Problem 1.3, Number 6 Answers 1. 751,500 2. 6558 3. 6.8619 4. 64.0025 5. a. 1000 b. 200 c. 1.2 d. 0.20 6.a. 168 b. 0.07348 c. 0.15068 7. α=1;β=0.10;δ=0.05 8. a. Investment 2 is better for 5 years as a(5) for Investment 2 is 1.25 while it is only 1.125 for Investment 1 b. Investment 1 is better for 15 years as a(15) for Investment 1 is 4.375 while it is only 3.25 for Investment 2 c. 10 years 9. n(n 1)/2 10. 2^(n+1) -2...
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373chapter1section3 - a(t = 1 0.001t3 Investment 2 has an...

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