ass1 theory of interest

Ass.1 Math 329 Winter2013Due 25 Jan. in class

1.The total amount of a loan to which interest has been added is 5,000. The term of the

loan was 4 years. If the nominal annual rate of interest was 6% and interest was compounded semi-annually, determine the original amount of the loan.

2. Determine the simple interest rate under which a sum of money will double in 5 years.3. Determine the effective annual compound discount rate under which a sum of money

will double in 8 years.4. Determine the rate of interest, convertible continuously, that is equivalent to an

effective interest rate of 1% per month.5.The amount of interest earned on A for one year is 336, while the equivalent amount of

discount (on A) is 300. Find A.6. Find the nominal rate of interest convertible monthly, which is equivalent to a nominal

rate of discount of 6% converted quarterly.7. An amount of 1000 is to be accumulated at a compound rate of discount of 9% per

year. (a) Find the present value 3 years before (b) Find the value of i corresponding to d.

8.(a) Show that (b) Use verbal arguments to obtain result in (a).

9. Given that = .1844144 and = .1802608, find m.10. The sum of the present value of 1 paid at the end of n periods and 1 paid at the end of

2n periods is 1. Find (1 + i)2n.