Question

please answer question #2

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ENGR 3970 Homework Assignment #2, Fall 2019 - Due Mon Sep 23 in Class Note: Show all of your work to arrive at a final result. 1) Using the amounts in the table below and an interest rate of 8% compounded annually, determine (a) the equivalent present amount (b) the equivalent annual amount Use the gradient conversion factor, if and where applicable, for full credit. EOY Deposit 1000 1000 1000 1000 200 250 300 350 400 LOWN 500 400 300 200 2) Using the amounts in the table below and an interest rate of 10% compounded annually, determine: • the equivalent present amount Use the gradient conversion factor, if and where applicable, for full credit. ΕΟΥ Deposit 100 0 0 200 500 500 500 500 650 550 450 350 3) A person deposits $5000 into an account. How much will be in the account after 6 years, assuming: (a) 12% compounded quarterly. Show the units for the interest rate. (b) 10% compounded continuously. Show the units for the interest rate. 4) A $2000 bond that pays 10% compounded quarterly and matures in 5 years is for sale. What is the maximum that should be paid for the bond if 12% compounded quarterly is required on the bond?

Answer 1

I = 10%

P = 100 + 200*(P/F, 10%,3) + 500*(P/A, 10%,4)*(P/F, 10%,3) + 650*(P/A, 10%,4)*(P/F, 10%,7) - 100*(P/G, 10%,4)*(P/F, 10%,7)

= 100 + 200*0.751315 + 500*3.169865*0.751315 + 650*3.169865*0.513158 - 100*4.378116*0.513158

= 2273.70