Exam 6: Mathematics of Finance

Suppose you can invest $10,000 at 4.5% compounded quarterly or at 4.7% compounded annually.Which is the better choice and how much more per year would you earn?

The premiums on an insurance policy are $20 a month,payable at the beginning of each month.If the policy holder wishes to pay 1 year's premiums in advance,how much should be paid provided that the interest rate is 5.1% compounded monthly?

If $14,300 is invested at an A.P.R.of 8.25% compounded semiannually for 3 years,find a)the compound amount,and b)the compound interest.

Find the present value of a future value of $325 due in 10 years at an A.P.R.of 5.3% compounded semiannually.

If an investment of $12,000 earns interest at an annual rate of 7% compounded continuously,then the value (in dollars)of the investment ten years from now is

What is the present value of an annuity of $1000 per month for ten years at an interest rate of 6.3% compounded monthly?

A $6000 investment in a stock five years ago grew at an effective rate of 19.6%.Find the current value of the investment.

For an initial investment of $10,000,suppose a company guarantees the following cash flows at the end of the indicated years: Year Cash Flow 1 $4000 3 $8000 Assume an interest rate of 5% compounded annually.(a)Determine the net present value of the cash flows.(b)Is the investment profitable?

If $100 is invested at a rate of 5% compounded continuously,the amount in the account is given by: If the same principal is invested at an account earning 5% compounded semiannually,the amount is given by: Consider the difference in these two investments by graphing both functions on your graphing calculator and looking at the years 5 through 7.(Use the window × .)What do you notice about the two graphs?

Determine the effective rate equivalent to an annual rate of % compounded continuously.

After putting $20,000 down on a piece of property,a man began paying $500 a month for ten years.Given an interest rate of 8% compounded monthly,how much would the property cost if the man had paid for it in cash?

Suppose a corporation pays $50,000 for a machine that has a useful life of eight years and a salvage value of $5000.A sinking fund is established to replace the machine at the end of 8 years.The replacement machine will cost $70,000.If equal payments are made into the fund at the end of every 6 months and the fund earns interest at the rate of 10% compounded semiannually,what should each payment be?

Determine the present value of $4000 due in 5 years if the interest rate is 10% compounded semiannually.

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Suppose you can invest $6000 at 6.2% compounded monthly or at 6.5% compounded semiannually.Which is the better choice and how much more per year would you earn?

An initial investment of $10,000 grows at an annual rate of 3.5% compounded monthly.Find how long it takes for the investment to amount to $14,400.

A debt of $600 is to be repaid by two equal yearly payments with interest at the rate of 5% compounded annually.Complete the following amortization schedule for this debt. Totals ________ ________ ________ ________

A company earns a profit of $2000 in its first month.Suppose its profit increases by 10% each month for two years.Find the amount of profit the company earns in its sixth and sixteenth months.

An $800 loan is amortized by equal quarterly payments over two years.If interest is at the rate of 16% compounded quarterly,then the quarterly payment is