MA373 S12 Homework Chapter 4 Solutions

# MA373 S12 Homework Chapter 4 Solutions - Chapter 4 1. Use...

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Chapter 4 1. Use “the formula that doesn’t follow the rules”.

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2. 3. Separate this into two annuities; an annuity that pays 800 every month for 300 months, and an annuity that pays 200 every month for the first year, then 400 every month for the second year, then 600 every month for the third year, all the way up to 5000 in the 25 th year. This second annuity uses the formula “that doesn’t follow the rules”.
4. This is the perpetuity of “the formula that doesn’t follow the rules”. 5. We want to find the present value of a continuous annuity using 1 n n e a Use 1 ie  to find ln(1.06) 20 ln(1.06) 20 1 1000 1000 11810.68 ln(1.06) e a     6. We want to find the accumulated value of a continuous annuity using 1 n n e s .04 20(.04) 20 1 1000 1000 30638.52 .04 e s 7. We want to find the present value of an increasing continuous annuity using   n n n a nv Ia .05 .05 1     10(.05) 10 .05 10 10 10 1 10 10 .05 100 100 100 3608.16 .05 .05 e e av Ia

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8.
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## This note was uploaded on 03/13/2012 for the course MA 373 taught by Professor Staff during the Fall '08 term at Purdue.

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MA373 S12 Homework Chapter 4 Solutions - Chapter 4 1. Use...

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