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You are given: 1) Fund X pays interest at the rate of 6% convertible monthly 11) Fund Y pays interest at a force of interest
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Answer #1

Calculations for Fund X

FV=PV(1+r/m)nXm

PV= FV / (1+r/m)nXm = 2000 / (1+ 0.06/12)12x12 = 975.23

Hence, P= 975.23

Calculations for Fund Y

Effective interest rate = 1/(t+12) = 1/(12+12) = 1/24 = 0.0417

FV=PV(1+r/m)nXm = 975.23(1+0.0417)12 = 1592.28

Hence, Z = 1592.28

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