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Unformatted text preview: Interest Problems Math 618 1. Eric deposits $100 into a savings account at time 0, which pays interest at a nominal rate of i , compounded semiannually. Mike deposits $200 into a different savings account at time 0, which pays simple interest at an annual rate of i . Eric and Mike earn the same amount of interest during the last 6 months of the 8th year. Calculate i . A. 9.06% B. 9.26% C. 9.46% D. 9.66% E. 9.86% 2. Jeff deposits $10 into a fund today and $20 fifteen years later. Interest is credited at a nominal discount rate of d compounded quarterly for the first 10 years, and at a nominal interest rate of 6% compounded semiannually thereafter. The accumulated balance in the fund at the end of 30 years is $100. Calculate d A. 4.33% B. 4.43% C. 4.53% D. 4.63% E. 4.73% 3. David can receive one of the following two payment streams: 100 at time 0, 200 at time n , and 300 at time 2 n 600 at time 10 At an annual effective interest rate of i , the present values of the two streams are equal. Given v n = 0 . 76, determine i .....
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