February 8, 2012
Math 373
Spring 2012
Homework
–
Chapter 3
Chapter 3 Section 2
1.
(S12HW) Calculate the present value of an annuity that pays 1000 at the end of each year for
10 years using an annual effective interest rate of 8%.
2.
(S12HW) Calculate the present value of an annuity that pays 100 at the end of each month for
10 years using a nominal interest rate of 6% compounded monthly.
3.
(S12HW) Calculate the present value of an annuity that pays 100 at the end of each month for
10 years using an annual effective interest rate of 6%.
4.
(S12HW) Calculate the accumulated value of an annuity that 50 at the end of each month for
10 years using an annual effective interest rate of 8%.
5.
(S08Q2) James is buying a house.
To help pay for the house, James takes out a mortgage
loan of 60,000.
The mortgage is to be repaid with monthly payments for 30 years.
The
interest rate on mortgage is 7% compounded monthly.
Calculate James’s monthly mortgage payment.
6.
(S12HW) Omar invests 2500 at the end of each year in an account which earns a nominal
interest rate of 5% compounded quarterly.
Calculate the amount that Omar will have at the end of 8 years.
7.
(S12HW) Brooke is planning on buying a house in 4 years.
She wants to accumulate 10,000
to use as a down payment on the house.
Brooke is going to make monthly payments into an
account which earns 9% compounded monthly.
Calculate the amount that Brooke must deposit at the end of each month in order to achieve
her goal of having 10,000 at the end of 4 years.
8.
(S11HW) Michael won the lottery!
He has the following payout options:
a.
One million at the end of each year for the next 20 years; or
b.
A lump sum of 7,469,443.62 paid now.
Calculate the annual effective interest rate at which both options have the same present value.
9.
(S12HW) Yi is paying a car loan with payments of 500 at the end of each month.
The loan
has a monthly effective interest rate of 1%.
If the car loan is for 18,986.98, calculate the
number of payments that Yi will need to make.
10.
(S12HW) For a given interest rate,
n
s
= 21.4953 and
n
a
= 7.90378.
Calculate n.
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February 8, 2012
11.
(S12HW) If
0.1
d
, calculate
14
a
.
12.
(S11HW) The accumulated value of an n year annuity is four times the present value of the
same annuity.
Calculate the accumulated value of 100 in 2n years.
(Note:
This is NOT
asking for the accumulated value of an annuity
–
just the accumulated value of a single
payment of 100.)
13.
Book Problem 3.2, Number 2
Chapter 3 Section 3
14.
(S12HW) Shuda is the beneficiary of a trust fund which will pay her 1000 at the beginning of
each month for the next 5 years.
Calculate the present value of these payments assuming an
annual effective interest rate of 7.2%.
15.
(S09Q2) Sara wants to have $10,000 when she graduates from college in four years so that
she can take trips to Europe and Asia.
She intends to accumulate the $10,000 by making 48
monthly payments at the beginning of each month into a fund earning 9% compounded
monthly.
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 Fall '08
 Staff
 Math, Time Value Of Money, Interest, Nominal Interest Rate, Mortgage loan, Year Three

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