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MA 373 S11 Chapter 2 Homework

# MA 373 S11 Chapter 2 Homework - Chapter 2 Section 2 1...

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Chapter 2, Section 2 1. Question 1 in the Book 2. Question 2 in the Book 3. Question 3 in the Book 4. Question 4 in the Book 5. Melvin invests 1000 in a bank account earning a constant annual effective interest rate. Using the Rule of 72, Melvin estimates that he will have 2000 in 10 years. How much will Melvin actually have in 10 years? 6. Jennifer invests 1000 in a fund earning an annual effective interest rate of 10%. She wants to know when she will have 4000. Her banker estimates the time using the Rule of 72 as X years. Jennifer calculates it exactly as Y years. X and Y are not necessarily integers. Calculate Y - X. Chapter 2, Section 3 7. Question 1 in the Book 8. Question 2 in the Book 9. Question 3 in the Book Hint: Find Estaban s effective interest rate for T years using the cash flow and IRR functionality of your calculator. Then T can be found by (1 + IRR) = (1.06) T . Make sure you understand why this is true. 10. Question 4 in the Book. Hint: Find the quarterly effective interest rate and then use our relationship formula to find the annual effective rate of interest.

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