Question

7. A ten-year fund earning compound interest at a constant rate is withdrawn continuously, where ...

7. A ten-year fund earning compound interest at a constant rate is withdrawn continuously, where the annual interest rate, i, and the rate for annual payments, $X/year, are not revealed. You are told that the present value of the fund is $10,000 and the accumulated value of the fund at the end of ten years is $25,000. Find i and X. (Answer: i=9.596%, X=1,527.15)

Math Interest Theory/Financial Math
0 0
Add a comment Improve this question Transcribed image text
Answer #1

v en that ,卉:25,000 P-lo,6m,. .cat es nam ber st compovnding peniod per yea nhere A - amount pcipl od m- number of conopoundilf you have any query then comment on it.

Add a comment
Know the answer?
Add Answer to:
7. A ten-year fund earning compound interest at a constant rate is withdrawn continuously, where ...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • If the interest rate is 5%, the net present value of a ten-year 20% coupon bond...

    If the interest rate is 5%, the net present value of a ten-year 20% coupon bond with a face value of $10,000 is: $30,000 $21,583 $16,145 $12,583 If the interest rate is 10%, the net present value of a ten-year 20% coupon bond with a face value of $10,000 is: $30,000 $21,583 $16,145 $12,583

  • JOHN BORROWS $14000 FROM THE SAVINGS AND LOAN AT A COMPOUND INTEREST RATE OF 5%/YR. HE...

    JOHN BORROWS $14000 FROM THE SAVINGS AND LOAN AT A COMPOUND INTEREST RATE OF 5%/YR. HE WILL PAY BACK THE LOAN IN EQUAL ANNUAL PAYMENTS OVER A 4- YEAR PERIOD. BERTHA BORROWS $10,000 FROM SETH, WHO IS JOHN'S BROTHER DETERMINE THE EQUAL ANNUAL PAYMENTS - SUMMARIZE JOHN'S FINANCIAL POSITION IN BULLET OUTLINE FORMAT BORROWS: $14000 BY SIGNING, I HAVE NOT GIVEN NOR RECEIVED HELP: JOHN BORROWS $14000 FROM THE SAVINGS AND LOAN AT A COMPOUND INTEREST RATE OF 5%/YR. HE...

  • Math Interest Theory/ Financial Math Please Use Formulas 5. (3pts) Given the following three annuities: i....

    Math Interest Theory/ Financial Math Please Use Formulas 5. (3pts) Given the following three annuities: i. the present value of a 4n-year annuity-immediate of 1 at the end of every year is X; ii. the present value of a 4n-year annuity-immediate of 1 at the end of every second year is 10.2; iii. the present value of a 4n-year annuity-immediate of 1 at the end of every fourth year is 5. Find X, assuming a positive annual interest rate. (Hint:...

  • Suppose you invest $1,000 in a financial asset earning an annual interest rate of 6%. How...

    Suppose you invest $1,000 in a financial asset earning an annual interest rate of 6%. How much interest will you earn after one year? How much money will be available to you (principal and interest) at the end of one year? If the money is allowed to compound annually at 6%, how much money will be available at the end of 2 years? 5 years? Suppose you have the opportunity to purchase a risk-free asset that will return $1,000 one...

  • It is given that Fund A earns simple interest at the rate of 5% per year...

    It is given that Fund A earns simple interest at the rate of 5% per year whereas Fund B earns an annual effective rate of interest of 4%. At what time (measured from the date of deposit) do the two funds have the same accumulated value? Use the Newton Raphson iteration method with an initial guess t = 20.

  • Consider introducing compound interest to the pricing formulas for perpetuities and annuities. Suppose each annual payment...

    Consider introducing compound interest to the pricing formulas for perpetuities and annuities. Suppose each annual payment C is paid in n installments, spread equally over each year, and let r denote the nominal annual interest rate. (a) (10) Show that the present value of a perpetuity does not depend on the number of compounding periods. (b) (10) Show that the present value of an annuity is increasing in the number of compounding periods. What if the payments are made continuously...

  • 72. Compound interest: future value. Belinda invests $25,000 in a retirement fund that earns 4.03% annual...

    72. Compound interest: future value. Belinda invests $25,000 in a retirement fund that earns 4.03% annual interest, compounded continuously. a) Write a function of the form A(t) = Pe" that gives the value of Belinda's account after t years, b) How much will be in Belinda's account after 10 yr? c) When will Belinda's account be worth $40,000? d) When will the value of Belinda's account be double the original value? 75. Demand. The price, in dollars per unit, that...

  • 1, Compute the effective rate of interest (APY) if the stated rate is 5% per year,...

    1, Compute the effective rate of interest (APY) if the stated rate is 5% per year, o ompounded aemi- m 2 ( 1.015) 1-1 .0500625- 0 0 500 615 IreRE 5.00625% (b) compounded quarterly (c) compounded monthly (d) compounded daily 2. Find the present value of an investment worth $10000 in eight years, with interest rate 6% compounded monthly. 3, You have an opportunity to invest some money in an account earning 3% interest, compounded continuously. How much should you...

  • 9) Brian buys a 10-year decreasing annuity-immediate with annual payments of 10,9,8,...,1. On the same date,...

    9) Brian buys a 10-year decreasing annuity-immediate with annual payments of 10,9,8,...,1. On the same date, Jenny buys a perpetuity-immediate with annual payments. For the first 11 years, payments are 1,2,3,..., 11. After year 11, payments remain constant at 11. At an annual effective interest rate of i, both annuities have a present value of X. Calculate X. 9) Brian buys a 10-year decreasing annuity-immediate with annual payments of 10,9,8,...,1. On the same date, Jenny buys a perpetuity-immediate with annual...

  • 3) (15 points) A local credit union pays a market interest rate of 5% per year...

    3) (15 points) A local credit union pays a market interest rate of 5% per year for long-term deposits. The current inflation rate is 2% per year. a) (5 points) If I invest some money in a long-term fund at the credit union, what is the real (inflation- free) interest rate I will be earning? b) (10 points) I open a new account today, deposit $10,000, and do not expect to make any deposits or withdrawals for the next 5...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT