MA373 S12 Homework Chapter 2

# MA373 S12 Homework Chapter 2 - Math 373 Spring 2012...

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January 23, 2012 Math 373 Spring 2012 Homework Chapter 2 Chapter 2, Section 2 1. Yu invests 1000 at a nominal interest rate of 6% compounded monthly. At time T , Yu has 2000. Calculate T in years. 2. Nic invests 700 in an account earning an annual effective interest rate of i . After 8 years, Nic s account has a value of 1,234. Calculate i . 3. 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? 4. 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 5. Kunqi takes a loan 4000 with an annual effective interest rate of 4%. The loan is repaid with a payment of P at the end of one year and 2000 at the end of two years. Calculate P . 6. Zach repays a loan of 100,000 with a payment of 60,000 at the end of two years and another payment of 60,000 at the end of 4 years. Determine the effective annual interest rate that Zach pays on his loan. 7. Kim loans Jacqui 5000 so that she can buy a car. The annual effective interest rate on the loan is 8.5%.

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