Exam 6: Mathematics of Finance

An initial investment of $240 grows at an annual rate of 5% compounded quarterly.Find how long it takes for the investment to amount to $300.

Find the effective rate that corresponds to an interest rate of 5% compounded daily.

Given an interest rate of 4.6% compounded semiannually,find the present value of the following annuity: $2100 at the end of every six months for six years and $3000 at the end of every six months for four more years.

Suppose a truck costing $36,000 is to be replaced at the end of 10 years,at which time it will have a resale value of $12,000.In order to provide money at the time for a new truck costing $40,000,a sinking fund is set up into which equal payments are placed at the end of every six months.If the fund earns 6% compounded semiannually,what should each payment be?

In five years a company will purchase equipment costing $100,000.The company decides to place a single deposit into a savings account now so that its future value will equal the cost of the equipment.If the account earns interest at an annual rate of 10% compounded continuously,determine the deposit to the nearest dollar.

Suppose an initial investment grows from $330 to $600 over five years.First find the nominal rate compounded monthly and then find the equivalent effective rate.

A $10,000 loan is amortized by equal semiannual payments over 5 years.If the interest rate is 8% compounded semiannually,then the principal repaid in the first payment is

If money earns interest at an annual rate of 8% compounded continuously,then the value (in dollars)of $10,000 due at the end of five years is

At what nominal rate of interest,compounded semiannually,will an investment double in 20 years?

A 20-year loan for $100,000 is to be amortized by equal semiannual payments.If interest is at the nominal rate of 10% compounded semiannually,find (a)the semiannual payment; (b)the interest in the first payment; (c)the principal repaid in the first payment.

To purchase land for an industrial site,a company agrees to pay $20,000 down and $10,000 at the end of every six-month period for 10 years.If the interest rate is 10% compounded semiannually,what is the corresponding cash value of the land?

A person purchased a television set for $850 and agreed to pay it off by monthly payments of $50.If the store charges an interest rate of 9% compounded monthly,how many months will it take to pay off the debt?

Miguel has the opportunity to invest $3000 in a friend's business such that he will be repaid $4500 in six years.On the other hand,he can put the $3000 in a savings account that pays 5.5% compounded quarterly.Which investment is better?

You have a choice of two banks.One bank pays interest at 4.66% compounded 360 times a year and the other bank pays interest at 4.65% compounded 365 times a year.Which is the better choice?

Suppose Mr.Takegawa owes Ms.Perez three sums of money: $1000 due in 2 years,$1500 due in 5 years,and $2000 due in 8 years.Suppose he would rather pay her $2000 now and the rest in 3 years.If the interest rate is 6% compounded annually,how much will he owe in 3 years?

Find the present value of an annuity of $200 per month for years at an interest rate of 7% compounded monthly.

A trust fund for a newborn is being set up by a single payment so that at the end of 18 years there will be $34,000.If the fund earns interest at the rate of 6.25% compounded monthly,how much money should be paid into the fund initially?