Exam 6: Mathematics of Finance

Over a period of 3 years,an original principal of $1000 accumulated to $1200 in an account where the interest rate was compounded monthly.Determine the rate of interest to two decimal places.

The Finance Club would like to endow an annual prize of $150 to the student who shows the most promise as a future stockbroker.The club is confident that it can invest indefinitely at an interest rate of at least 5% a year.How much does the club need to endow its prize?

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Suppose you deposit $200 at the end of every month into a bank account that pays 6% compounded monthly.After six years,how much will you have?

Determine the effective rate equivalent to an annual rate of 10% compounded continuously.

Find the future value of an annuity due with semiannual payments of $6,250 for 21 years at 4.25% compounded semiannually.

Find the present value of an ordinary annuity with semiannual payments of $450 for 30 years at 6% compounded semiannually.

A debt of $1000 due 4 years from now and $1500 due 6 years from now,is instead to be paid off by a single payment 5 years from now.How much is the payment if an interest rate of 8.4% compounded monthly is assumed?

Suppose a company establishes a sinking fund to replace equipment that has a salvage value of $50,000.The company deposits $20,000 into the fund at the end of every six months.If interest is earned at the rate of 8% compounded semiannually,the value of the fund at the end of six years is

Find the future value of an ordinary annuity with monthly payments of $250 for 40 years at 6.8% compounded monthly.

Find the present value of a future value of $1,750 due in 9 years at an effective rate of 3.65%.

If an initial investment of $3000 grows to $18,000 in five years,find the nominal rate of interest,compounded quarterly,that was earned by the money.

If an initial investment of $3000 grows to $18,000 in ten years,find the nominal rate of interest,compounded monthly,that was earned by the money.

At what nominal rate of interest,compounded monthly,will an investment triple in 20 years?

Find the present value of an annuity due with monthly payments of $200 for 17 years at 5.25% compounded monthly.

An initial investment of $300 grows at an annual rate of 4.5% compounded bimonthly.Find how long it takes for the investment to amount to $450.

A bank pays 4% annual interest compounded quarterly.How large a deposit must be made now in order that the account contains $1500 at the end of 3 years?

A rubber ball always bounces back of its previous height.If the ball is thrown up to a height of 30 feet,give the first five heights of the ball.

If $1,000 is invested at a nominal rate of 4% compounded quarterly for 5 years,find the compound amount.