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MA373 S12 Homework Chapter 3

# MA373 S12 Homework Chapter 3 - Math 373 Spring 2012...

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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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