CT- 1 Interest Rate CHAPTER 5

Nominal and Effective rate of interest

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟏: 𝑌𝑜𝑢 𝑚𝑎𝑘𝑒 𝑎𝑛 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑤ℎ𝑒𝑟𝑒 𝑦𝑜𝑢 𝑝𝑎𝑦 1000 𝑛𝑜𝑤 𝑎𝑛𝑑 𝑔𝑒𝑡 1500 𝑏𝑎𝑐𝑘 𝑖𝑛 5 𝑦𝑒𝑎𝑟𝑠. 𝑊ℎ𝑎𝑡 𝑖𝑠
a) 𝐴𝑛𝑛𝑢𝑎𝑙 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑟𝑎𝑡𝑒 𝑑𝑖𝑑 𝑦𝑜𝑢 𝑒𝑎𝑟𝑛?
b) 𝑁𝑜𝑚𝑖𝑛𝑎𝑙 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑞𝑢𝑎𝑟𝑡𝑒𝑟𝑙𝑦 𝑑𝑖𝑑 𝑦𝑜𝑢 𝑒𝑎𝑟𝑛 [(𝒂) 𝟖. 𝟒𝟓% (𝒃) 𝟖. 𝟏𝟗𝟐%]
𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟐: (𝑎) 𝐺𝑖𝑣𝑒𝑛 𝑖 (2) = 5% , 𝑓𝑖𝑛𝑑 𝑡ℎ𝑒 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑟𝑎𝑡𝑒 𝑖.
(𝑏)𝐺𝑖𝑣𝑒𝑛 𝑎𝑛 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡, 𝑖 = 5.26%, 𝑓𝑖𝑛𝑑 𝑖 (6) [(𝒂) 𝟓. 𝟎𝟔𝟐𝟓% (𝒃)𝟓. 𝟏𝟒𝟖𝟑% ]
𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟑: 𝐹𝑖𝑛𝑑 𝑡ℎ𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑐o𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑞𝑢𝑎𝑟𝑡𝑒𝑟𝑙𝑦 𝑡ℎ𝑎𝑡 𝑖𝑠 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑡𝑜 𝑎 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓
𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑜𝑓 6% 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑠𝑒𝑚𝑖𝑎𝑛𝑛𝑢𝑎𝑙𝑙𝑦. [𝟓. 𝟗𝟓𝟓𝟕%]
𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟒: 𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝑡ℎ𝑒 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑞𝑢𝑎𝑟𝑡𝑒𝑟𝑙𝑦 𝑤ℎ𝑖𝑐ℎ 𝑖𝑠 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑡𝑜
(𝑖) 𝐴𝑛 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 0.8% 𝑝𝑒𝑟 𝑚𝑜𝑛𝑡ℎ
(𝑖𝑖)𝐴 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 8% 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑒𝑣𝑒𝑟𝑦 2 𝑦𝑒𝑎𝑟𝑠. [(𝒊)𝟎. 𝟎𝟗𝟔𝟕𝟕(𝒊𝒊)𝟎. 𝟎𝟕𝟒𝟗𝟎𝟐𝟔]
𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟓: 𝐹𝑖𝑛𝑑 𝑡ℎ𝑒 𝑎𝑛𝑛𝑢𝑎𝑙 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑡𝑜 𝑎 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑜𝑓 8% 𝑝𝑎,
𝐶𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑏𝑖𝑎𝑛𝑛𝑢𝑎𝑙𝑙𝑦. [𝟖. 𝟏𝟔%]
𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟔 ∶
a) 𝐺𝑖𝑣𝑒𝑛 𝑖 (2) = 6%, 𝑓𝑖𝑛𝑑 𝑡ℎ𝑒 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑟𝑎𝑡𝑒 𝑖.
b) 𝐺𝑖𝑣𝑒𝑛 𝑎𝑛 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖 = 5%, 𝑓𝑖𝑛𝑑 𝑖 (2) [𝒂) 𝟔. 𝟎𝟗% 𝒃) 𝟒. 𝟗𝟑𝟗%]
Nominal and Effective Discount Rate of interest

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟕: 𝐷𝑒𝑡𝑒𝑟𝑚𝑖𝑛𝑒 𝑡ℎ𝑒 𝑎𝑛𝑛𝑢𝑎𝑙 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑟𝑎𝑡𝑒 𝑡ℎ𝑎𝑡 𝑐𝑜𝑟𝑟𝑒𝑠𝑝𝑜𝑛𝑑𝑠 𝑡𝑜 𝑎 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑑𝑖𝑠𝑐𝑜𝑢𝑛t
𝑜𝑓 6% 𝑎 𝑦𝑒𝑎𝑟 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑞𝑢𝑎𝑟𝑡𝑒𝑟𝑙𝑦. [𝟔. 𝟐𝟑%]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟖: 𝐹𝑖𝑛𝑑 𝑡ℎ𝑒 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑎𝑛𝑛𝑢𝑎𝑙 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑟𝑎𝑡𝑒 𝑓𝑜𝑟 𝑎 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑟𝑎𝑡𝑒 𝑜𝑓 9% 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑚𝑜𝑛𝑡ℎ𝑙𝑦.
[𝟖. 𝟔𝟑𝟕𝟗%]
𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟗: 𝐹𝑖𝑛𝑑 𝑡ℎ𝑒 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑟𝑎𝑡𝑒 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑠𝑒𝑚𝑖𝑎𝑛𝑛𝑢𝑎𝑙𝑙𝑦 𝑐𝑜𝑟𝑟𝑒𝑠𝑝𝑜𝑛𝑑𝑖𝑛𝑔 𝑡𝑜 𝑎𝑛 𝑎𝑛𝑛𝑢𝑎𝑙
𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑟𝑎𝑡𝑒 𝑜𝑓 6%. [𝟔. 𝟎𝟗%]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟏𝟎: 𝐹𝑖𝑛𝑑 𝑡ℎ𝑒 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑟𝑎𝑡𝑒 𝑝𝑎, 𝑓𝑜𝑟 𝑎 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 7.5% 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑒𝑣𝑒𝑟𝑦 𝑓𝑜𝑢𝑟 𝑚𝑜𝑛𝑡ℎ𝑠
a) 𝑇ℎ𝑒 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑟𝑎𝑡𝑒 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑚𝑜𝑛𝑡ℎ𝑙𝑦 𝑐𝑜𝑟𝑟𝑒𝑠𝑝𝑜𝑛𝑑𝑖𝑛𝑔 𝑡𝑜 𝑎𝑛 𝑎𝑛𝑛𝑢𝑎𝑙 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡
𝑟𝑎𝑡𝑒 𝑜𝑓 6% [( 𝒂) 𝟕. 𝟑𝟏% (𝒃) 𝟔. 𝟏𝟕%]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟏𝟏: 𝐺𝑖𝑣𝑒𝑛 𝑑 = 0.056, 𝑓𝑖𝑛𝑑 𝑣 𝑎𝑛𝑑 𝑖. [𝒗 = 𝟎. 𝟗𝟒𝟒 𝒂𝒏𝒅 𝒊 = 𝟎. 𝟎𝟓𝟗𝟑]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟏𝟐: 𝐺𝑖𝑣𝑒𝑛 𝑖 (4) = 0.07 . 𝐹𝑖𝑛𝑑 𝑑 (2) . [𝟎. 𝟎𝟔𝟖𝟐]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟏𝟑: 𝐹𝑜𝑟 𝑎 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑜𝑓 7% 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚, 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑚𝑜𝑛𝑡ℎ𝑙𝑦, 𝑐𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒:
𝑖)𝑡ℎ𝑒 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 ℎ𝑎𝑙𝑓 𝑦𝑒𝑎𝑟𝑙𝑦, 𝑎𝑛𝑑
(ii)𝑡ℎ𝑒 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑚𝑜𝑛𝑡ℎ𝑙𝑦 [(𝒊) 𝟕. 𝟏𝟎𝟑% 𝒑𝒂 (𝒊𝒊) 𝟔. 𝟗𝟓𝟗% 𝒑𝒂]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟏𝟒: 𝑇ℎ𝑒 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑎𝑟𝑛𝑒𝑑 𝑜𝑛 𝐴 𝑓𝑜𝑟 𝑜𝑛𝑒 𝑦𝑒𝑎𝑟 𝑖𝑠 $336, 𝑤ℎ𝑖𝑙𝑒 𝑡ℎ𝑒 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡
𝑖𝑠 $300. 𝐹𝑖𝑛𝑑 𝐴. [$𝟐𝟖𝟎𝟎]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟏𝟓. 𝑇ℎ𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑞𝑢𝑎𝑟𝑡𝑒𝑟𝑙𝑦 𝑖𝑠 8% 𝑐𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝑢𝑝 𝑡𝑜 4 𝑑𝑒𝑐𝑖𝑚𝑎𝑙 𝑝𝑙𝑎𝑐𝑒𝑠 ∶
1. 𝑇ℎ𝑒 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 ℎ𝑎𝑙𝑓 − 𝑦𝑒𝑎𝑟𝑙𝑦. [𝟖. 𝟐𝟒%]
2. 𝑇ℎ𝑒 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑙𝑒 𝑚𝑜𝑛𝑡ℎ𝑙𝑦. [8.05%]
3. 𝑇ℎ𝑒 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑙𝑒 𝑜𝑛𝑐𝑒 𝑖𝑛 𝑡𝑤𝑜 𝑦𝑒𝑎𝑟𝑠. [𝟖. 𝟕𝟕%]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟏𝟔: 𝐹𝑜𝑟 𝑒𝑎𝑐ℎ 𝑜𝑓 𝑡ℎ𝑒 𝑓𝑜𝑙𝑙𝑜𝑤𝑖𝑛𝑔 𝑐𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝑡ℎ𝑒 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡:
1. 𝐴𝑛 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑜𝑓 12% 𝑝𝑎𝑖𝑑 𝑒𝑣𝑒𝑟𝑦 𝑡𝑤𝑜 𝑦𝑒𝑎𝑟𝑠 [5.83%]
2. 𝐴𝑛 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑜𝑓 6% 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚 [6.38%]
3. 𝐴 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 1% 𝑝𝑒𝑟 𝑚𝑜𝑛𝑡ℎ [12.75]
4. 𝐴 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑜𝑓 8% 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑞𝑢𝑎𝑟𝑡𝑒𝑟𝑙𝑦 [8.416]
5. 𝐴 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑠𝑒𝑡 𝑜𝑓12% 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑒𝑣𝑒𝑟𝑦 2 𝑦𝑒𝑎𝑟𝑠 [11.35%]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟏𝟕. 𝑇ℎ𝑒 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑞𝑢𝑎𝑡𝑒𝑟𝑙𝑦 𝑖𝑠 8%
1) 𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝑡ℎ𝑒 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 . [𝟎. 𝟎𝟖𝟎𝟖𝟏𝟏]
2) 𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝑡ℎ𝑒 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚. [𝟎. 𝟎𝟖𝟒𝟏𝟔𝟔]
3) 𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝑡ℎ𝑒 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑚𝑜𝑛𝑡ℎ𝑙𝑦. [𝟎. 𝟎𝟖𝟎𝟓𝟑𝟗]

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CT- 1 Interest Rate CHAPTER 5

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟏𝟖. 𝐺𝑖𝑣𝑒𝑛 𝑖 = 0.08, 𝑐𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒

𝑎) 𝑑 (12) [𝟎. 𝟎𝟕𝟔𝟕𝟏𝟒]
𝑏) 𝑖 (365) [𝟎. 𝟎𝟕𝟔𝟗𝟔𝟗]
𝑐) 𝛿 [𝟎. 𝟎𝟕𝟔𝟗𝟔𝟗]
1
( )
𝑑)𝑖 2 [𝟎. 𝟎𝟖𝟑𝟐]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟏𝟗. 𝑇ℎ𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑞𝑢𝑎𝑟𝑡𝑒𝑟𝑙𝑦 𝑖𝑠 6% 𝑐𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 ∶
𝑎) 𝑇ℎ𝑒 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 ℎ𝑎𝑙𝑓 𝑦𝑒𝑎𝑟𝑙𝑦. [𝟔. 𝟏𝟑𝟕𝟕%]
𝑏) 𝑇ℎ𝑒 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑚𝑜𝑛𝑡ℎ𝑙𝑦. [𝟔. 𝟎𝟑𝟎𝟑%]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟐𝟎: 𝑇ℎ𝑒 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑎𝑛𝑛𝑢𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 ℎ𝑎𝑠 𝑏𝑒𝑒𝑛 4% 𝑓𝑜𝑟 𝑡ℎ𝑒 𝑙𝑎𝑠𝑡 5 𝑦𝑒𝑎𝑟𝑠. 𝑃𝑟𝑖𝑜𝑟 𝑡𝑜 𝑡ℎ𝑎𝑡,
𝑖𝑡 𝑤𝑎𝑠 5%. 𝐴 𝑏𝑎𝑛𝑘 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 ℎ𝑎𝑠 𝑏𝑎𝑙𝑎𝑛𝑐𝑒 𝑜𝑓 $457 𝑡𝑜𝑑𝑎𝑦. 𝐴 𝑠𝑖𝑛𝑔𝑙𝑒 𝑑𝑒𝑝𝑜𝑠𝑖𝑡 𝑜𝑓 $ 𝑋 𝑤𝑎𝑠 𝑝𝑙𝑎𝑐𝑒𝑑 𝑖𝑛 𝑡ℎ𝑒 𝑎𝑐𝑐𝑜𝑢𝑛𝑡
8 𝑦𝑒𝑎𝑟𝑠 𝑎𝑔𝑜. 𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝑡ℎ𝑒 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑋. [$𝟑𝟏𝟗. 𝟒𝟖 ]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟐𝟏: 𝑌𝑜𝑢 𝑑𝑒𝑝𝑜𝑠𝑖𝑡 $5000 𝑡𝑜 𝑎𝑛 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑡ℎ𝑎𝑡 𝑒𝑎𝑟𝑛𝑠 5% 𝑐𝑜𝑚𝑝𝑜𝑢𝑛𝑑𝑒𝑑 𝑎𝑛𝑛𝑢𝑎𝑙𝑙𝑦 𝑓𝑜𝑟 2 𝑦𝑒𝑎𝑟𝑠 𝑎𝑛𝑑 7% 𝑖𝑛 𝑎𝑙𝑙
𝑠𝑢𝑏𝑠𝑒𝑞𝑢𝑒𝑛𝑡 𝑦𝑒𝑎𝑟𝑠. 𝑊ℎ𝑎𝑡 ℎ𝑎𝑠 𝑡ℎ𝑒 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑔𝑟𝑜𝑤𝑛 𝑖𝑛 5 𝑦𝑒𝑎𝑟𝑠? [$𝟔𝟕𝟓𝟑. 𝟎𝟓]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟐𝟐: 𝐴 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 𝑜𝑓 $1,000 𝑖𝑠 𝑑𝑢𝑒 𝑎𝑡 𝑡𝑖𝑚𝑒 15 𝑦𝑒𝑎𝑟𝑠. 𝐵𝑒𝑡𝑤𝑒𝑒𝑛 𝑡𝑖𝑚𝑒𝑠 0 𝑡𝑜 5 𝑦𝑒𝑎𝑟𝑠 , 𝑡ℎ𝑒 𝑎𝑛𝑛𝑢𝑎𝑙 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑟𝑎t𝑒
𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑖𝑠 7%. 𝐵𝑒𝑡𝑤𝑒𝑒𝑛 𝑡𝑖𝑚𝑒𝑠 5 𝑎𝑛𝑑 10 𝑦𝑒𝑎𝑟𝑠 𝑖𝑡 𝑖𝑠 9% 𝑎𝑛𝑑 𝑏𝑒𝑡𝑤𝑒𝑒𝑛 𝑡𝑖𝑚𝑒𝑠 10 𝑎𝑛𝑑 15 𝑦𝑒𝑎𝑟𝑠 𝑖𝑡 𝑖𝑠 4%. 𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝑡ℎ𝑒
𝑝𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 𝑎𝑡 𝑡𝑖𝑚𝑒. [$𝟑𝟖𝟎. 𝟖𝟕]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟐𝟑: 𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝑡ℎ𝑒 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑚𝑜𝑛𝑡ℎ𝑙𝑦 𝑡ℎ𝑎𝑡 𝑖𝑠 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑡𝑜 𝑎 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡e
𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑜𝑓 18.9% 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑚𝑜𝑛𝑡ℎ𝑙𝑦. [𝟎. 𝟏𝟖𝟔𝟎𝟔𝟗]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟐𝟒: 𝐴 𝑑𝑒𝑝𝑜𝑠𝑖𝑡 $ 𝑋 𝑖𝑠 𝑖𝑛𝑣𝑒𝑠𝑡𝑒𝑑 𝑎𝑡 𝑡𝑖𝑚𝑒 6 𝑦𝑒𝑎𝑟𝑠 𝑎𝑡 𝑎𝑛 𝑎𝑛𝑛𝑢𝑎𝑙 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑟𝑎𝑡𝑒 𝑜𝑓 8%. A 𝑠𝑒𝑐𝑜𝑛𝑑 𝑑𝑒𝑝𝑜𝑠𝑖𝑡
𝑜𝑓 $𝑋 𝑖𝑠 𝑖𝑛𝑣𝑒𝑠𝑡𝑒𝑑 𝑎𝑡 𝑡𝑖𝑚𝑒 8 𝑦𝑒𝑎𝑟𝑠 𝑎𝑡 𝑡ℎ𝑒 𝑠𝑎𝑚𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡. 𝐴𝑡 𝑡𝑖𝑚𝑒 11 𝑦𝑒𝑎𝑟𝑠 𝑡ℎ𝑒 𝑎𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒𝑑 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓
𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑖𝑠 $976 . 𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒𝑋. [$𝟑𝟓𝟕. 𝟔𝟑]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟐𝟓: 𝐴 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 𝑜𝑓 $100 𝑖𝑠 𝑚𝑎𝑑𝑒 𝑎𝑡 𝑡𝑖𝑚𝑒 1 𝑦𝑒𝑎𝑟, 𝑎 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 𝑜𝑓 $200 𝑖𝑠 𝑚𝑎𝑑𝑒 𝑎𝑡 𝑡𝑖𝑚𝑒 2 𝑦𝑒𝑎𝑟𝑠, 𝑎𝑛d 𝑎 𝑝𝑎𝑦𝑚𝑒𝑛𝑡
𝑜𝑓 $300 𝑖𝑠 𝑚𝑎𝑑𝑒 𝑎𝑡 𝑡𝑖𝑚𝑒 3 𝑦𝑒𝑎𝑟𝑠. 𝑇ℎ𝑒 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑡ℎ𝑒𝑠𝑒 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠 𝑎𝑡 𝑎 𝑠𝑖𝑚𝑝𝑙𝑒 𝑎𝑛𝑛𝑢𝑎𝑙 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑟𝑎𝑡𝑒 𝑜𝑓 5% 𝑖𝑠 𝑋.
𝑇ℎ𝑒 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑡ℎ𝑒s𝑒 𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠 𝑎𝑡 𝑎𝑛𝑛𝑢𝑎𝑙 𝑐𝑜𝑚𝑝𝑜𝑢𝑛𝑑 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑟𝑎𝑡𝑒 𝑜𝑓 5% 𝑖𝑠𝑌. 𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒𝑋 – 𝑌. [−𝟐. 𝟕𝟏𝟐𝟓]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟐𝟔: 𝑌𝑜𝑢 𝑑𝑒𝑝𝑜𝑠𝑖𝑡 1,500 𝑡𝑜 𝑎𝑛 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑡ℎ𝑎𝑡 𝑒𝑎𝑟𝑛𝑠 𝑎𝑛𝑜𝑚𝑖𝑛𝑎𝑙 6% 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑚𝑜𝑛𝑡ℎ𝑙𝑦 𝑓𝑜𝑟 𝑜𝑛𝑒 𝑦𝑒𝑎𝑟 𝑎𝑛𝑑 𝑎
𝑛𝑜𝑚𝑖𝑛𝑎𝑙 8% 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑞𝑢𝑎𝑟𝑡𝑒𝑟𝑙𝑦 𝑓𝑜𝑟 𝑡ℎ𝑒 𝑛𝑒𝑥𝑡 𝑡𝑤𝑜 𝑦𝑒𝑎𝑟𝑠.
𝑎) 𝐻𝑜𝑤 𝑚𝑢𝑐ℎ 𝑖𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑖𝑛 3 𝑦𝑒𝑎𝑟𝑠?
𝑏) 𝐹𝑖𝑛𝑑 𝑎𝑛 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑙𝑒𝑣𝑒𝑙 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 s𝑒𝑚𝑖𝑎𝑛𝑛𝑢𝑎𝑙𝑙𝑦𝑓𝑜𝑟 𝑡ℎ𝑖𝑠 𝑎𝑐𝑐𝑜𝑢𝑛𝑡. [(𝒂) 𝟏, 𝟖𝟔𝟓. 𝟖𝟗 (𝒃) 𝟕. 𝟒%]

FORCE OF INTEREST
𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟐𝟖: 𝐴 𝑑𝑒𝑝o𝑠𝑖𝑡 𝑜𝑓 $10 𝑖𝑠 𝑖𝑛𝑣𝑒𝑠𝑡𝑒𝑑 𝑎𝑡 𝑡𝑖𝑚𝑒 2 𝑦𝑒𝑎𝑟𝑠. 𝑈𝑠𝑖𝑛𝑔 𝑡ℎ𝑒 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝛿𝑡 = 0.2 − 0.02𝑡. 𝐹𝑖𝑛𝑑
𝑡ℎ𝑒 𝑎𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒d 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑡ℎ𝑖𝑠 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 𝑎𝑡 𝑡ℎ𝑒 𝑒𝑛𝑑 𝑜𝑓 5 𝑦𝑒𝑎𝑟𝑠. [$𝟏𝟒. 𝟕𝟕]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟐𝟗: 𝐴 𝑑𝑒𝑝𝑜𝑠𝑖𝑡 𝑜𝑓 $200 𝑖𝑠 𝑑𝑢𝑒 𝑎𝑡 𝑡𝑖𝑚𝑒 8 𝑦e𝑎𝑟𝑠. 𝑈𝑠𝑖𝑛𝑔 𝑡ℎ𝑒 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝛿𝑡 = 0.1 − 0.002𝑡.
𝐹𝑖𝑛𝑑 𝑡ℎ𝑒 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑡ℎ𝑖𝑠 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 𝑎𝑡 𝑡ℎ𝑒 𝑒𝑛𝑑 𝑜𝑓 3 𝑦𝑒𝑎𝑟𝑠. [$𝟏𝟐𝟖. 𝟏𝟕]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟑𝟎: 𝐴 𝑏𝑎𝑛𝑘 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑎𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒𝑠 𝑎𝑡 𝑎 𝐹𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑜𝑓:

0.025𝑡 𝑓𝑜𝑟 0 ≤ 𝑡 ≤ 4
𝛿𝑡 = {
0.10 𝑓𝑜𝑟 𝑡 > 4
𝐷𝑒𝑡𝑒𝑟𝑚𝑖𝑛𝑒 𝑡ℎ𝑒 𝑎𝑛𝑛𝑢𝑎𝑙 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑟𝑎𝑡𝑒 𝑒𝑎𝑟𝑛𝑒𝑑 𝑜𝑣𝑒𝑟 𝑡ℎ𝑒 𝑓𝑖𝑟𝑠𝑡 𝑓𝑖𝑣𝑒 − 𝑦𝑒𝑎𝑟 𝑝𝑒𝑟𝑖𝑜𝑑. [𝟔. 𝟏𝟖𝟒%]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟑𝟏: $500 𝑖𝑠 𝑝𝑎𝑖𝑑 𝑎𝑡 𝑡𝑖𝑚𝑒 8 𝑦𝑒𝑎𝑟𝑠 𝑎𝑡 𝑎 𝑐𝑜𝑛𝑠𝑡𝑎𝑛𝑡 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑜𝑓 10%. 𝐷𝑒𝑡𝑒𝑟𝑚𝑖𝑛𝑒 𝑡ℎ𝑒 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓
𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑎𝑡 𝑡𝑖𝑚𝑒 0. [$𝟐𝟐𝟒. 𝟔𝟔]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟑𝟐: $1,000 𝑖𝑠 𝑝𝑎𝑖𝑑 𝑎𝑡 𝑡𝑖𝑚𝑒 6 𝑦𝑒𝑎𝑟𝑠. 𝐹𝑖𝑛𝑑 𝑡ℎ𝑒 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 𝑎𝑡 𝑡𝑖𝑚𝑒 4 𝑦𝑒𝑎𝑟𝑠 𝑢𝑠𝑖𝑛𝑔 𝑎 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑜𝑓
𝛿(𝑡) = 0.05 + 0.002𝑡 . [$𝟖𝟖𝟔. 𝟗𝟐]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟑𝟑: 𝐹𝑖𝑛𝑑 𝑡ℎ𝑒 𝑎𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒𝑑 𝑣𝑎𝑙𝑢𝑒 𝑎𝑡 𝑡𝑖𝑚𝑒 5 𝑦𝑒𝑎𝑟𝑠 𝑜𝑓 $30 𝑡ℎ𝑎𝑡 𝑖𝑠 𝑖𝑛𝑣𝑒𝑠𝑡𝑒𝑑 𝑎𝑡 𝑡𝑖𝑚𝑒 0. 𝑈𝑠𝑒 𝑎 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡
𝑜𝑓 𝛿(𝑡) = 0.02𝑡 + 0.01. [$𝟒𝟎. 𝟓𝟎]

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CT- 1 Interest Rate CHAPTER 5

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟑𝟒: $100 𝑖𝑠 𝑖𝑛𝑣𝑒s𝑡𝑒𝑑 𝑎𝑡 𝑡𝑖𝑚𝑒 0. 𝑇ℎ𝑒 𝑐𝑜𝑛𝑠𝑡𝑎𝑛𝑡 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑖𝑠 7% 𝑓𝑟𝑜𝑚 𝑡𝑖𝑚𝑒 0 𝑡𝑜 𝑡𝑖𝑚𝑒 5 𝑦𝑒𝑎𝑟𝑠
𝑎𝑛𝑑 5% 𝑓𝑟𝑜𝑚 𝑡𝑖𝑚𝑒 5 𝑡𝑜 𝑡𝑖𝑚𝑒 8 𝑦𝑒𝑎𝑟𝑠. 𝐷𝑒𝑡𝑒𝑟𝑚𝑖𝑛𝑒 𝑡ℎ𝑒 𝑎𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒𝑑 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑎𝑡 𝑡𝑖𝑚𝑒 8 𝑦𝑒𝑎𝑟𝑠. [$𝟏𝟔𝟒. 𝟖𝟕]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟑𝟓: 𝑇ℎ𝑒 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡, 𝛿𝑡 𝑖𝑠:

0.04 0<𝑡≤5
𝛿𝑡 = {
0.01(𝑡 2 − 𝑡) 𝑡>5

𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝑡ℎ𝑒 𝑝𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 𝑎𝑡 𝑡 = 0, 𝑜𝑓 $100 𝑝𝑎𝑦𝑎𝑏𝑙𝑒 𝑎𝑡 𝑡𝑖𝑚𝑒 10. [𝟔. 𝟒𝟓]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟑𝟔: 𝑌𝑜𝑢 𝑑𝑒𝑝𝑜𝑠𝑖𝑡 1800 𝑖𝑛 𝑎𝑛 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑒𝑎𝑟𝑛𝑖𝑛𝑔 𝑎 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑜𝑓 5%. 𝐻𝑜𝑤 𝑙𝑜𝑛𝑔 𝑤𝑖𝑙𝑙 𝑖𝑡 𝑡𝑎𝑘𝑒 𝑡𝑜
𝑎𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒 2,700? [𝟖. 𝟏𝟎𝟗𝟑]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟑𝟕: 𝐵𝑟𝑢𝑐𝑒 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑠 100 𝑖𝑛 𝑡𝑜 𝑎 𝑏𝑎𝑛𝑘 𝑎𝑐𝑐𝑜𝑢𝑛𝑡. 𝐻 𝑖𝑠 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑖𝑠 𝑐𝑟𝑒𝑑𝑖𝑡𝑒𝑑 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑡 𝑎𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡
𝑜𝑓 4% 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑠𝑒𝑚𝑖𝑎𝑛𝑛𝑢𝑎𝑙𝑙𝑦. 𝐴𝑡 𝑡ℎ𝑒 𝑠𝑎𝑚𝑒 𝑡𝑖𝑚𝑒, 𝑃𝑒𝑡𝑒𝑟 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑠 100 𝑖𝑛 𝑡𝑜 𝑎 𝑠𝑒𝑝𝑎𝑟𝑎𝑡𝑒 𝑎𝑐𝑐𝑜𝑢𝑛𝑡. 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑖𝑠 𝑐𝑟𝑒𝑑𝑖𝑡𝑒𝑑
𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑡 𝑎 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑜𝑓 𝛿. 𝐴𝑓𝑡e𝑟 7.25 𝑦𝑒𝑎𝑟𝑠, 𝑡ℎ𝑒 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑒𝑎𝑐ℎ 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑖𝑠 𝑡ℎ𝑒 𝑠𝑎𝑚𝑒. 𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝛿. [𝟎. 𝟎𝟑𝟗𝟔]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟑𝟖: 𝑌𝑜𝑢 𝑑𝑒𝑝𝑜𝑠𝑖𝑡 1000 𝑖𝑛 𝑎𝑛 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑒𝑎𝑟𝑛𝑖𝑛𝑔 𝑎 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑜𝑓 6%. 𝐻𝑜𝑤 𝑙𝑜𝑛𝑔 𝑤𝑖𝑙𝑙 𝑖𝑡 𝑡𝑎𝑘𝑒 𝑡𝑜 𝑑𝑜𝑢𝑏𝑙𝑒
𝑦𝑜𝑢𝑟 𝑚𝑜𝑛𝑒𝑦? [𝟏𝟏. 𝟓𝟓𝟐𝟓]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟑𝟗: 𝑌𝑜𝑢 𝑑𝑒𝑝𝑜𝑠𝑖𝑡 5000 𝑡𝑜 𝑎𝑛 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑡ℎ𝑎𝑡 𝑒𝑎𝑟𝑛𝑠 5% 𝑐𝑜𝑚𝑝𝑜𝑢𝑛𝑑𝑒𝑑 𝑎𝑛𝑛𝑢𝑎𝑙𝑙𝑦𝑓𝑜𝑟 2 𝑦𝑒𝑎𝑟𝑠 𝑎𝑛𝑑 𝑐𝑜𝑛𝑡𝑖𝑛𝑢𝑜𝑢𝑠 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡
2
𝑤𝑖𝑡ℎ 𝛿 (𝑡) = i𝑛 𝑠𝑢𝑏𝑠𝑒𝑞𝑢𝑒𝑛𝑡 𝑦𝑒𝑎𝑟𝑠. 𝑊ℎ𝑎𝑡 ℎ𝑎𝑠 𝑡ℎ𝑒 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑔𝑟𝑜𝑤𝑛 𝑡𝑜 𝑖𝑛 5 𝑦𝑒𝑎𝑟𝑠? [$𝟐𝟐, 𝟎𝟓𝟎]
𝑡+1

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟒𝟎: 𝐴 𝑑𝑒𝑝𝑜𝑠𝑖𝑡 𝑜𝑓 $2500 𝑖𝑠𝑖𝑛𝑣𝑒𝑠𝑡𝑒𝑑 𝑎𝑡 𝑡𝑖𝑚𝑒 0. 𝑇ℎ𝑒 𝑎𝑛𝑛𝑢𝑎𝑙 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑖𝑠 2.5% 𝑓𝑟𝑜𝑚 𝑡𝑖𝑚𝑒 0 𝑡𝑜
𝑡𝑖𝑚𝑒 6 𝑦𝑒𝑎𝑟𝑠. 𝑇ℎ𝑒 𝑎𝑛𝑛𝑢𝑎𝑙 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑖𝑠 2.5% 𝑓𝑟𝑜𝑚 𝑡𝑖𝑚𝑒 6 𝑡𝑜 𝑡𝑖𝑚𝑒 10 𝑦𝑒𝑎𝑟𝑠 𝑎𝑛𝑑 𝑡ℎ𝑒 𝑎𝑛𝑛𝑢𝑎𝑙
𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑖𝑠 2.5% 𝑡ℎ𝑒𝑟𝑒𝑎𝑓𝑡𝑒𝑟. 𝐹𝑖𝑛𝑑 𝑡ℎ𝑒 𝑎𝑐𝑐u𝑚𝑢𝑙𝑎𝑡𝑒𝑑 𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑡ℎ𝑒 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑎𝑡 𝑡𝑖𝑚𝑒 13 𝑦𝑒𝑎𝑟𝑠. [$𝟑𝟒𝟓𝟖. 𝟎𝟗]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟒𝟏: (𝒕𝒓𝒊𝒄𝒌𝒚)𝑇𝑜𝑑𝑎𝑦, 𝑅𝑎𝑚 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑠 $𝑋 𝑖𝑛 𝑡𝑜 𝑎 𝑛𝑒𝑤 𝑎𝑐𝑐𝑜𝑢𝑛𝑡. 𝐹𝑖𝑣𝑒 𝑦𝑒𝑎𝑟𝑠 𝑓𝑟𝑜𝑚 𝑛𝑜𝑤, ℎ𝑒 𝑚𝑎𝑘𝑒𝑠 𝑎𝑛𝑜𝑡ℎ𝑒𝑟 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑠
𝑡3
𝑜𝑓 $𝑋 𝑖𝑛 𝑡𝑜 𝑡ℎ𝑒 𝑎𝑐𝑐𝑜𝑢𝑛𝑡. 𝑇ℎ𝑒 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑔𝑟𝑜𝑤𝑠 𝑎𝑡 𝑎 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑜𝑓𝛿𝑡 = , 𝑡 > 0. 𝐸𝑖𝑔ℎ𝑡 𝑦𝑒𝑎𝑟𝑠 𝑎𝑓𝑡𝑒𝑟
1000
𝑡ℎ𝑒 𝑖𝑛𝑖𝑡𝑖𝑎𝑙 𝑑𝑒𝑝𝑜𝑠𝑖𝑡, 𝑡ℎ𝑒 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑏𝑎𝑙𝑎𝑛𝑐𝑒 𝑖𝑠 $5000. 𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒𝑋 . [$𝟗𝟔𝟕. 𝟖𝟗]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟒𝟐: 𝑇ℎ𝑒 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑖𝑠 𝑔𝑖𝑣𝑒𝑛 𝑏𝑦 𝑡ℎ𝑒 𝑓𝑜𝑟𝑚𝑢𝑙𝑎 [0.0375]

0.01𝑡 0<𝑡≤5
𝛿𝑡 = {
0.05 5<𝑡
$100 𝑖𝑠 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑒𝑑 𝑎𝑡 𝑡𝑖𝑚𝑒 0. 𝑊ℎ𝑎𝑡 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡, 𝑐𝑜𝑚𝑝𝑜𝑢𝑛𝑑𝑒𝑑 𝑚𝑜𝑛𝑡ℎ𝑙𝑦, 𝑖𝑠 𝑒𝑎𝑟𝑛𝑒𝑑 𝑜𝑣𝑒𝑟 𝑡ℎ𝑒 𝑓𝑖𝑟𝑠𝑡 10 𝑦𝑒𝑎𝑟𝑠.

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟒𝟑: 𝑋 𝑖𝑠 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑒𝑑 𝑖𝑛𝑡𝑜 𝑎𝑛 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑡ℎ𝑎𝑡 𝑝𝑎𝑦𝑠 6% 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑐𝑜𝑚𝑝𝑜𝑢𝑛𝑑𝑒𝑑 𝑐𝑜𝑛𝑡𝑖𝑛𝑢𝑜𝑢𝑠𝑙𝑦, 𝑎𝑛𝑑 𝑖𝑡 𝑡𝑎𝑘𝑒𝑠 𝑛 𝑦𝑒𝑎𝑟𝑠 𝑡𝑜
𝑑𝑜𝑢𝑏𝑙𝑒 𝑡ℎ𝑒 𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑑𝑒𝑝𝑜𝑠𝑖𝑡. 𝑌 𝑖𝑠 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑒𝑑 𝑖𝑛𝑡𝑜 𝑎𝑛 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑡ℎ𝑎𝑡 𝑝𝑎𝑦𝑠 𝑎 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 6% 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑐𝑜𝑚𝑝𝑜𝑢𝑛𝑑𝑒𝑑 𝑡𝑤𝑖𝑐𝑒
𝑝𝑒𝑟 𝑦𝑒𝑎𝑟, 𝑎𝑛𝑑 𝑖𝑡 𝑡𝑎𝑘𝑒 𝑚 𝑦𝑒𝑎𝑟𝑠 𝑡𝑜 𝑑𝑜𝑢𝑏𝑙𝑒 𝑡ℎ𝑒 𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑑𝑒𝑝𝑜𝑠𝑖𝑡. 𝐹𝑖𝑛𝑑 𝑚 – 𝑛 [𝟎. 𝟏𝟕]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟒𝟒: 𝐴 𝑐𝑢𝑠𝑡𝑜𝑚𝑒𝑟 𝑖𝑠 𝑜𝑓𝑓𝑒𝑟𝑒𝑑 𝑎𝑛 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑤ℎ𝑒𝑟𝑒 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑖𝑠 𝑐𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒𝑑 𝑎𝑐𝑐𝑜𝑟𝑑𝑖𝑛𝑔 𝑡𝑜 𝑡ℎ𝑒 𝑓𝑜𝑙𝑙𝑜𝑤𝑖𝑛𝑔
𝑓𝑜𝑟𝑐𝑒 𝑜𝑓𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡
0.02𝑡 𝑓𝑜𝑟 0 < 𝑡 ≤ 3
𝛿(𝑡) = {
0.045 𝑓𝑜𝑟 𝑡 ≥ 3

𝑇ℎ𝑒 𝑐𝑢𝑠𝑡𝑜𝑚𝑒𝑟 𝑖𝑛𝑣𝑒𝑠𝑡𝑠 1000 𝑎𝑡𝑡𝑖𝑚𝑒𝑡 = 0. 𝑊ℎ𝑎𝑡 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡, 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑞𝑢𝑎𝑟𝑡𝑒𝑟𝑙𝑦, 𝑖𝑠 𝑒𝑎𝑟𝑛𝑒𝑑 𝑜𝑣𝑒𝑟 𝑡ℎ𝑒
𝑓𝑖𝑟𝑠𝑡 𝑓𝑜𝑢𝑟 𝑦𝑒𝑎𝑟 𝑝𝑒𝑟𝑖𝑜𝑑 ? [𝟑. 𝟑𝟖𝟗𝟑%]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟒𝟓: 𝑇ℎ𝑒 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚, 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑚𝑜𝑛𝑡ℎ𝑙𝑦, 𝑖𝑠 6%. 𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝑒𝑎𝑐ℎ 𝑜𝑓 𝑡ℎ𝑒 𝑓𝑜𝑙𝑙𝑜𝑤𝑖𝑛𝑔:
(i) 𝑇ℎ𝑒 𝑐𝑜𝑟𝑟𝑒𝑠𝑝𝑜𝑛𝑑𝑖𝑛𝑔 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚. [𝟓. 𝟗𝟖𝟓𝟎%]
(ii) 𝑇ℎ𝑒 𝑐𝑜𝑟𝑟𝑒𝑠𝑝𝑜𝑛𝑑𝑖𝑛𝑔 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑝𝑒𝑟 ℎ𝑎𝑙𝑓 𝑦𝑒𝑎𝑟. [𝟑. 𝟎𝟑𝟕𝟕%]
(iii) 𝑇ℎ𝑒 𝑐𝑜𝑟𝑟𝑒𝑠𝑝𝑜𝑛𝑑𝑖𝑛𝑔 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚, 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑞𝑢𝑎𝑟𝑡𝑒𝑟𝑙𝑦. [𝟓. 𝟗𝟒𝟎𝟒%]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟒𝟔: 𝐼𝑛 𝐹𝑢𝑛𝑑 𝑋 𝑚𝑜𝑛𝑒𝑦 𝑎𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒𝑠 𝑎𝑡 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝛿 = 0.01𝑡 + 0.10, 𝑓𝑜𝑟 0 < 𝑡 < 20. 𝐼𝑛 𝑓𝑢𝑛𝑑 𝑌 𝑚𝑜𝑛𝑒𝑦
𝑎𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒𝑠 𝑎𝑡 𝑎𝑛𝑛𝑢𝑎𝑙 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖. 𝐴𝑛 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 $1 𝑖𝑠 𝑖𝑛𝑣𝑒𝑠𝑡𝑒𝑑 𝑖𝑛 𝑒𝑎𝑐ℎ 𝑓𝑢𝑛𝑑, 𝑎𝑛𝑑 𝑡ℎ𝑒 𝑎𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒𝑑
𝑣𝑎𝑙𝑢𝑒𝑠 𝑎𝑟𝑒 𝑡ℎ𝑒 𝑠𝑎𝑚𝑒 𝑎𝑡 𝑡ℎ𝑒 𝑒𝑛𝑑 𝑜𝑓 20 𝑦𝑒𝑎𝑟𝑠. 𝐹𝑖𝑛𝑑 𝑡ℎ𝑒 𝑣𝑎𝑙𝑢𝑒 𝑖𝑛 𝐹𝑢𝑛𝑑 𝑌 𝑎𝑡 𝑡ℎ𝑒 𝑒𝑛𝑑 𝑜𝑓 1.5 𝑦𝑒𝑎𝑟𝑠. [𝟏. 𝟑𝟓]

FUTURE TRACK EDUTECH LLP | North Campus52, First Floor, Mall Road, GTB Nagar Delhi-09 , 9910024949,9891428150, 3
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CT- 1 Interest Rate CHAPTER 5

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟒𝟕: 𝑇ℎ𝑒 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑖𝑠 𝑔𝑖𝑣𝑒𝑛 𝑏𝑦:

0.08 − 0.001𝑡 𝑓𝑜𝑟 0 < 𝑡 ≤ 3
𝛿(𝑡) = {
0.025𝑡 − 0.04 𝑓𝑜𝑟 3 ≤ 𝑡 < 5
0.03 𝑡≥5
(𝑖) 𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝑡ℎ𝑒 𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑉𝑎𝑙𝑢𝑒 𝑎𝑡 𝑡𝑖𝑚𝑒 4 𝑜𝑓 𝑎 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 𝑜𝑓 𝑅𝑠 36000 𝑎𝑡 𝑡𝑖𝑚𝑒 12.
(𝑖𝑖)𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝑡ℎ𝑒 𝑎𝑛𝑛𝑢𝑎𝑙 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑓𝑟𝑜𝑚 𝑡𝑖𝑚𝑒 𝑡 = 4 𝑡𝑜 12 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑡𝑜 𝑡ℎ𝑒 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑠
𝑖𝑛 𝑝𝑎𝑟𝑡(1). [(𝒊) 𝟐𝟕𝟏𝟒𝟎 (𝒊𝒊) 𝟑. 𝟓𝟗% ]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟒𝟖: 𝑇ℎ𝑒 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝛿(𝑡)𝑎𝑡 𝑡𝑖𝑚𝑒 𝑡 𝑖𝑠 𝑔𝑖𝑣𝑒𝑛 𝑏𝑦 𝑎𝑡 + 𝑏𝑡 2 − 1 𝑤ℎ𝑒𝑟𝑒 𝑎 𝑎𝑛𝑑 𝑏 𝑎𝑟𝑒 𝑐𝑜𝑛𝑠𝑡𝑎𝑛𝑡𝑠.
𝐴𝑛 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑅𝑠. 5,000 𝑖𝑛𝑣𝑒𝑠𝑡𝑒𝑑 𝑎𝑡 𝑡𝑖𝑚𝑒 𝑡 = 0 𝑎𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒𝑠 𝑡𝑜 𝑅𝑠. 6,000 𝑎𝑡 𝑡𝑖𝑚𝑒 𝑡 = 3 𝑎𝑛𝑑 𝑅𝑠. 10,000 𝑎𝑡 𝑡𝑖𝑚𝑒
𝑡 = 6. 𝐷𝑒𝑡𝑒𝑟𝑚𝑖𝑛𝑒 𝑎 𝑎𝑛𝑑 𝑏. [ 𝒂 = 𝟏. 𝟎𝟒𝟐𝟓𝟐𝟒 𝒂𝒏𝒅𝒃 = −𝟎. 𝟏𝟔𝟕𝟔𝟕]

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟒𝟗: 𝐷𝑢𝑟𝑖𝑛𝑔 𝑎 𝑝𝑎𝑟𝑡𝑖𝑐𝑢𝑙𝑎𝑟 𝑦𝑒𝑎𝑟, 𝑡ℎ𝑒 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝛿(𝑡) 𝑤𝑎𝑠 10% 𝑝𝑎 𝑎𝑡 𝑡ℎ𝑒 𝑠𝑡𝑎𝑟𝑡 𝑜𝑓 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟, 7%𝑝𝑎 𝑎𝑡
𝑡ℎ𝑒 𝑒𝑛𝑑 𝑜𝑓 𝑡ℎ𝑒 9 𝑚𝑜𝑛𝑡ℎ 𝑎𝑛𝑑 5% 𝑝𝑎 𝑎𝑡 𝑡ℎ𝑒 𝑒𝑛𝑑 𝑜𝑓 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟. 𝑇ℎ𝑒 𝑓𝑢𝑛𝑐𝑡𝑖𝑜𝑛 𝛿(𝑡)𝑤𝑎𝑠 𝑙𝑖𝑛𝑒𝑎𝑟 𝑑𝑢𝑟𝑖𝑛𝑔 𝑡ℎ𝑒 𝑡𝑤𝑜 𝑝𝑒𝑟𝑖𝑜𝑑
𝑏𝑒𝑓𝑜𝑟𝑒 𝑎𝑛𝑑 𝑎𝑓𝑡𝑒𝑟 𝑡ℎ𝑒 𝑒𝑛𝑑 𝑜𝑓 𝑡ℎ𝑒 9𝑡ℎ 𝑚𝑜𝑛𝑡ℎ. 𝐴 𝑠𝑢𝑚 𝑜𝑓 𝑅𝑠 10,000 𝑤𝑎𝑠 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑒𝑑 𝑎𝑡 𝑡ℎ𝑒 𝑠𝑡𝑎𝑟𝑡 𝑜𝑓 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟.
𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝑡ℎ𝑒 𝑎𝑐𝑐𝑢𝑚𝑙𝑎𝑡𝑒𝑑 𝑣𝑎𝑙𝑢𝑒 𝑎𝑡 𝑡ℎ𝑒 𝑒𝑛𝑑 𝑜𝑓 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟. [𝟏𝟎𝟖𝟏𝟗]

0.04 𝑓𝑜𝑟 0 <≤ 8

𝑸𝒖𝒆𝒔𝒕𝒊𝒐𝒏 𝟓𝟎: 𝑇ℎ𝑒 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝛿(𝑡) = {0.005𝑡 𝑓𝑜𝑟 8 < 𝑡 ≤ 20
0.003𝑡 + 0.0002𝑡 2 𝑓𝑜𝑟 20 < 𝑡
1) 𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝑡ℎ𝑒 𝑎𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑒𝑑 𝑣𝑎𝑙𝑢𝑒 𝑜𝑑 𝑅𝑠 1000 𝑎𝑡 𝑡 = 22, 𝑖𝑛𝑣𝑒𝑠𝑡𝑒𝑑 𝑎𝑡 𝑡 = 2 [𝟑𝟗𝟖𝟒. 𝟏𝟏𝟏]
2) 𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝑡ℎ𝑒 𝑐𝑜𝑛𝑠𝑡𝑎𝑛𝑡 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚, 𝐶𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑚𝑜𝑛𝑡ℎ𝑙𝑦, 𝑤ℎ𝑖𝑐ℎ 𝑤𝑜𝑢𝑙𝑑 𝑙𝑒𝑎𝑑 𝑡𝑜 𝑡ℎ𝑒 𝑠𝑎𝑚𝑒
𝑎𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑖𝑛 (1)𝑎𝑏𝑜𝑣𝑒. [𝟎. 𝟎𝟔𝟖𝟗]
3) 𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝑡ℎ𝑒 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡 𝑡𝑖𝑚𝑒 𝑓𝑟𝑜𝑚 𝑡𝑖𝑚𝑒 𝑡 = 19 𝑡𝑜 𝑡 = 20 [𝟏𝟎. 𝟐𝟒𝟏]

FUTURE TRACK EDUTECH LLP | North Campus52, First Floor, Mall Road, GTB Nagar Delhi-09 , 9910024949,9891428150, 4
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Ans1.
(𝑎)𝑈𝑠𝑖𝑛𝑔 𝑎𝑛𝑛𝑢𝑎𝑙 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑟𝑎𝑡𝑒
1500 = 1000(1 + 𝑖)

𝑖 = 1.5 − 1
𝑖 = 0.08447
(𝑏)𝑈𝑠𝑖𝑛𝑔 𝑁𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑐𝑜𝑛𝑣𝑒𝑟𝑡𝑖𝑏𝑙𝑒 𝑞𝑢𝑎𝑟𝑡𝑒𝑟𝑙𝑦 𝑖 ( )

×
𝑖( )
1500 = 1000 1 +
4

𝑖( )
= 4 1.5 −1

𝑖( )
= 0.08192
Ans2.
(𝑎) 𝑖 ( )
= 0.05
𝑢𝑠𝑖𝑛𝑔 𝑓𝑜𝑟𝑚𝑢𝑙𝑎,

𝑖( )
(1 + 𝑖) = 1 +
2
0.05
𝑖 = 1+ −1
2
𝑖 = 0.05062
(𝑏) 𝑖 = 0.0526
𝑈𝑠𝑖𝑛𝑔 𝑓𝑜𝑟𝑚𝑢𝑙𝑎,

𝑖( )
(1 + 𝑖) = 1 +
6

𝑖( )
= 6 (1.0526) − 1
𝑖( )
= 0.051483
Ans3.
𝑖( )
= 6%

𝑖( ) 𝑖( )
1+ = 1+
2 4

0.06 𝑖( )
1+ = 1+
2 4
𝑖( )
= 4((1.03) .
− 1)
𝑖( )
= 5.95566%
Ans4.
𝑖( )
(𝑎) = 0.008
12
𝑖( ) 𝑖( )
1+ = 1+
12 4
𝑖( )
= 4((1 + 0.008) − 1)
𝑖( )
= 0.09677

(𝑏) 𝑖 = 8%

𝑖 𝑖( )
1+ = 1+
1 4
2
.
0.08 𝑖( )
1+ = 1+
0.5 4
 0.08
𝑖( )
=4 1+ −1
0.5

𝑖( )
= 0.074902
Ans5.
𝑖( )
= 0.08

𝑖( )
(1 + 𝑖) = 1 +
2
0.08
𝑖 = 1+ −1
2
𝑖 = 0.0816
Ans6.
(𝑎)𝑖 ( )
= 6%

𝑖( )
(1 + 𝑖) = 1 +
2
0.06
𝑖 = 1+ −1
2
𝑖 = 0.0609
(𝑏) 𝑖 = 5%

𝑖( )
(1 + 𝑖) = 1 +
2

𝑖( )
(1 + 0.05) = 1 +
2
𝑖( )
= 2(1.05 .
− 1)
𝑖( )
= 0.0494
Ans7.
𝑑( )
= 0.06

𝑑( )
(1 + 𝑖) = 1 −
4
0.06
𝑖 = 1− −1
4
𝑖 = 0.06232
Ans8.
𝑑( )
= 0.09

𝑑( )
(1 − 𝑑) = 1 −
12
0.09
𝑑 = 1− 1−
12
𝑑 = 0.086378
Ans9.
𝑑 = 0.06

𝑑( )
(1 − 𝑑) = 1 −
2
𝑑( )
= 2(1 − (0.94) . )
𝑑( )
= 0.060928
Ans10.
(𝑎)𝑑 ( )
= 0.075

𝑑( )
(1 − 𝑑) = 1 −
3
 0.075
𝑑 = 1− 1−
3
𝑑 = 0.07314
(𝑏) 𝑑 = 0.06

𝑑( )
(1 − 𝑑) = 1 −
12

𝑑( )
= 12 1 − (1 − 0.06)

𝑑( )
= 0.061716
Ans11.
𝑑 = 0.056
𝑡ℎ𝑒𝑛, 𝑣 = 1 − 𝑑 = 1 − 0.056 = 0.944

And, 𝑣 =

𝑠𝑜,
1 1
𝑖= −1= − 1 = 0.059322
𝑣 0.944
Ans12.
𝐼𝑓 𝑖 ( )
= 0.07
𝑈𝑠𝑖𝑛𝑔 𝑓𝑜𝑟𝑚𝑢𝑙𝑎,

𝑖( ) 𝑑( )
1+ = 1−
4 2

0.07 𝑑( )
1+ = 1−
4 2
0.07
𝑑( )
=2 1− 1+
4
𝑑( )
= 0.068204
Ans13.
𝑖( )
= 7%𝑝. 𝑎

𝑖( ) 𝑖( )
(𝑖) 1 + = 1+
2 12
0.07
𝑖( )
=2 1+ −1
12
𝑖( )
= 0.0710288

𝑖( ) 𝑑( )
(𝑖𝑖) 1 + = 1−
12 12
0.07
𝑑( )
= 12 1 − 1 +
12
𝑑( )
= 0.069594
𝐴𝑛𝑠14.
𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑎𝑟𝑛𝑒𝑑 𝑜𝑛 𝐴 𝑓𝑜𝑟 𝑜𝑛𝑒 𝑦𝑒𝑎𝑟
𝐴(1 + 𝑖) − 𝐴 = 336
𝐴𝑖 = 336
𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑑𝑖𝑠𝑐𝑜𝑢𝑛𝑡 𝑓𝑜𝑟 𝑜𝑛𝑒 𝑦𝑒𝑎𝑟
𝐴 − 𝐴(1 − 𝑑) = 300
𝐴𝑑 = 300
𝑠𝑜, 𝑤𝑒 𝑐𝑎𝑛 𝑠𝑎𝑦
336 300 𝑖
= 𝑎𝑛𝑑, 𝑑 =
𝑖 𝑑 1+𝑖
𝑠𝑜,
 𝑖
336 = 300𝑖
1+𝑖
336 = 300(1 + 𝑖)
336 = 300 + 300𝑖
36
=𝑖
300
𝑖 = 0.12
𝑠𝑜, 𝐴(0.12) = 336
𝑎𝑛𝑑,
336
𝐴= = 2800
0.12
Ans15.
𝑑( )
= 0.08

𝑖( ) 𝑑( )
(𝑖) 1 + = 1−
2 4
0.08
𝑖( )
=2 1− −1
4
𝑖( )
= 0.082465

𝑑( ) 𝑑( )
(𝑖𝑖) 1 − = 1−
12 4

0.08
𝑑( )
= 12 1 − 1 −
4

𝑑( )
= 0.08054
 𝑖 𝑑( )
(𝑖𝑖𝑖) 1 + = 1−
1 4
2

1 0.08 .
𝑖 = 1− −1
2 4

𝑖 = 0.087707
Ans16.

𝑖
(𝑖) = 0.12
1
2

𝑖
(1 + 𝑖) = 1 +
1
2
.
𝑖 = (1 + 0.12) − 1 = 0.0583
(𝑖𝑖) (1 + 𝑖) = (1 − 𝑑)
𝑖 = (1 − 0.06) − 1 = 0.06383
(𝑖𝑖𝑖) 𝑒 = (1 + 𝑖)
.
𝑖 =𝑒 −1=𝑒 − 1 = 0.1275

𝑑( )
(𝑖𝑣) 1 − = (1 + 𝑖)
4
0.08
𝑖 = 1− − 1 = 0.08416
4
 𝑖
(𝑣) 1+ = (1 + 𝑖)
1
2
.
0.12
𝑖 = 1+ − 1 = 0.11355
0.5
𝐴𝑛𝑠17.
𝑑( )
= 0.08

𝑑( )
(𝑖) 𝑒 = 1 −
4
0.08
𝛿 = (−4) ln 1 − = 0.08081
4
𝑑( )
(𝑖𝑖) (1 + 𝑖) = 1 −
4
0.08
𝑖 = 1− − 1 = 0.0841657
4
𝑑( ) 𝑑( )
(𝑖𝑖𝑖) 1 − = 1−
12 4

0.08
𝑑( )
= 12 1 − 1 − = 0.08054
4

Ans18.

𝑑( )
(𝑖) (1 + 𝑖) = 1 −
12

𝑑( )
= 12 1 − (1 + 0.08) = 0.076714
 𝑖( )
(𝑖𝑖) (1 + 𝑖) = 1 +
365

𝑖( )
= 365 (1.08) − 1 = 0.076969

(𝑖𝑖𝑖) 𝛿 = ln(1 + 𝑖) = ln(1.08) = 0.076961

𝑖
(𝑖𝑣) 1+ = (1 + 𝑖)
1
2
1
𝑖 = ((1.08) − 1) = 0.0832
2
Ans19.
𝑑( )
= 6%

𝑖( ) 𝑑( )
(𝑎) 1 + = 1−
2 4
0.06
𝑖( )
=2 1− − 1 = 0.061377
4

𝑑( ) 𝑑( )
(𝑏) 1− = 1−
12 4

0.06
𝑑( )
= 12 1 − 1 − = 0.060302
4

𝐴𝑛𝑠20.
457(1 − 0.04) (1 − 0.05) = 𝑋
𝑋 = 319.48
Ans21.
5000(1 + 0.05) (1 + 0.07) = 6753.05
Ans22.
1000
𝑃𝑉 = = 380.87
(1.07) (1.09) (1.04)
𝐴𝑛𝑠23.

𝑖( ) 𝑑( )
1+ = 1−
12 12
0.189
𝑑( )
= 12 1 − 1 + = 0.18607
12
𝐴𝑛𝑠24.
𝑋(1 + 0.08) + 𝑋(1 + 0.08) = 976
976
𝑋= = 357.63
(1.08) + (1.08)
𝐴𝑛𝑠25.
𝑋 = 100 1 − 0.05(1) + 200 1 − 0.05(2) + 300 1 − 0.05(3)
𝑋 = 530
𝑌 = 100(1 − 0.05) + 200(1 − 0.05) + 300(1 − 0.05)
𝑌 = 532.7125
𝑠𝑜, 𝑋 − 𝑌 = 530 − 532.7125 = −2.7125
𝐴𝑛𝑠26.
×
𝑖( ) 𝑖( )
(𝑖) 1500 1 + 1+
12 4
0.06 0.08
1500 1 + 1+ = 1865.88
12 4
 ×
𝑖( )
(𝑖𝑖) 1865.88 = 1500 1 +
2

1865.88
𝑖( )
=2 − 1 = 0.0741
1500

𝐴𝑛𝑠28.
. .
𝐴𝑉 = 10𝑒 ∫
. .
𝐴𝑉 = 10𝑒
. ( ) . . ( ) .
𝐴𝑉 = 10𝑒
𝐴𝑉 = 14.77
𝐴𝑛𝑠29.
∫ ( . . )
𝑃𝑉 = 200𝑒
. .
𝑃𝑉 = 200𝑒
. ( ) . . ( ) .
𝑃𝑉 = 200𝑒
𝑃𝑉 = 128.16
𝐴𝑛𝑠30.
𝐴𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 1 𝑎𝑡 𝑒𝑛𝑑 𝑜𝑓 5 𝑦𝑒𝑎𝑟𝑠
( . )
𝑒∫ 𝑒 . (𝑢𝑠𝑖𝑛𝑔 𝛿)
(1 + 𝑖) (𝑢𝑠𝑖𝑛𝑔 𝑖)
𝑠𝑜,
.
.
(1 + 𝑖) = 𝑒
.
. .
𝑖=𝑒 − 1 = 0.061836
𝐴𝑛𝑠31.
. ( )
𝑃𝑉 = 500 𝑒 = 224.66
𝐴𝑛𝑠32.
∫ . .
𝑃𝑉 = 1000𝑒
. ( ) .
𝑃𝑉 = 1000𝑒
𝑃𝑉 = 886.92
𝐴𝑛𝑠33.
∫ ( . .
𝐴𝑉 = 30𝑒
. . ( )
𝐴𝑉 = 30𝑒 = 40.5
𝐴𝑛𝑠34.
. ( ) . ( )
𝐴𝑉 = 100𝑒 𝑒 = 164.87
𝐴𝑛𝑠35.
∫ ( . . ( )
𝑃𝑉 = 100𝑒 𝑒

. .
𝑃𝑉 = 100𝑒

. .
𝑃𝑉 = 100𝑒
𝑃𝑉 = 6.45
𝐴𝑛𝑠36.
. ( )
2700 = 1800 𝑒
1 3
𝑛= ln = 8.1093
0.05 2
𝐴𝑛𝑠37.
𝐴𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑏𝑟𝑢𝑐𝑒 𝑎𝑐 𝑎𝑓𝑡𝑒𝑟 7.25 𝑦𝑒𝑎𝑟𝑠
× .
𝑖( )
100 1 +
2
× .
0.04
100 1 + = 133.26
2
𝐴𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑝𝑒𝑡𝑒𝑟 𝑎𝑐 𝑎𝑓𝑡𝑒𝑟 7.25 𝑦𝑒𝑎𝑟𝑠
.
100𝑒
𝐴. 𝑇. 𝑄
.
133.26 = 100𝑒
1
ln(1.3326) = 𝛿
7.25
𝛿 = 0.039604
𝐴𝑛𝑠38.
.
1000𝑒 = 2000
1
𝑛= ln(2) = 11.55 𝑦𝑒𝑎𝑟𝑠
0.06
𝐴𝑛𝑠39.
/( )
𝐴𝑉 = 5000(1 + 0.05) 𝑒 ∫
( ( ))
𝐴𝑉 = 5000(1.05) 𝑒
( ( ) ( ))
𝐴𝑉 = 5000(1.05) 𝑒
𝐴𝑉 = 22050
𝐴𝑛𝑠40.
. ( )
𝐴𝑉 = 2500(1 + 0.025) (1 − 0.025) 𝑒
𝐴𝑉 = 3458.09
𝐴𝑛𝑠41.
𝑋𝑒 ∫ + 𝑋𝑒 ∫ = 5000

𝑋 𝑒 +𝑒 = 5000

5000
𝑋=
( ) ( )
𝑒 +𝑒
𝑋 = 967.89
𝐴𝑛𝑠42.
𝐴𝑉 𝑢𝑠𝑖𝑛𝑔 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡
. ( )
𝐴𝑉 = 100𝑒 ∫ 𝑒 .

. .
𝐴𝑉 = 100𝑒 𝑒
.
𝑠𝑜, 𝐼𝑛 𝑡ℎ𝑖𝑠 𝑐𝑎𝑠𝑒 𝑎𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑓𝑎𝑐𝑡𝑜𝑟 𝑓𝑜𝑟 10𝑦𝑒𝑎𝑟𝑠 𝑖𝑠 𝑒
𝑎𝑛𝑑, 𝑡𝑜 𝑓𝑖𝑛𝑑 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑖 ( )
𝑤𝑒 𝑐𝑎𝑛 𝑒𝑞𝑢𝑎𝑡𝑒
×
𝑖( ) .
1+ =𝑒
12
.
𝑠𝑜, 𝑖 ( )
= 12 𝑒 − 1 = 0.0375586

𝐴𝑛𝑠43.
𝐼𝑛 𝑐𝑎𝑠𝑒 𝑜𝑓 𝑋
.
𝑋𝑒 = 2𝑋
0.06𝑛 = ln(2)
1
𝑛= ln(2) = 11.55
0.06
𝐼𝑛 𝑐𝑎𝑠𝑒 𝑜𝑓 𝑌
𝑖( )
= 0.06
 𝑖( )
𝑌 1+ = 2𝑌
2
0.06
1+ =2
2
2𝑚𝑙𝑛(1.03) = ln(2)
ln(2)
𝑚= = 11.72
2 ln(1.03)
𝑠𝑜, 𝑚 − 𝑛 = 11.72 − 11.55 = 0.17
𝐴𝑛𝑠44.
𝐴𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑓𝑎𝑐𝑡𝑜𝑟 𝑢𝑠𝑖𝑛𝑔 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑓𝑜𝑟 𝑓𝑖𝑟𝑠𝑡 𝑓𝑜𝑢𝑟 𝑦𝑒𝑎𝑟𝑠
. ( )
𝑒∫ 𝑒 .

. .
𝑒 = 1.14453
𝑁𝑜𝑤, 𝐴𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑓𝑎𝑐𝑡𝑜𝑟 𝑢𝑠𝑖𝑛𝑔 𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑟𝑎𝑡𝑒 𝑖𝑠
×
𝑖( )
1+
4
𝑠𝑜, 𝑤𝑒 𝑐𝑎𝑛 𝑒𝑞𝑢𝑎𝑡𝑒 𝑎𝑛𝑑 𝑔𝑒𝑡

𝑖( )
1+ = 1.14453
4

𝑖( )
= 4 1.14453 − 1 = 0.033891

𝐴𝑛𝑠45.
𝑖( )
= 0.06

𝑖( )
(𝑖) 𝑒 = 1 +
12
 0.06
𝛿 = 12 ln 1 + = 0.0598505
12
𝑖( ) 𝑖( )
(𝑖𝑖) 1 + = 1+
2 12
𝑖( ) 0.06
= 1+ − 1 = 0.0303775
2 12
𝑑( ) 𝑖( )
(𝑖𝑖𝑖) 1 − = 1+
4 12
0.06
𝑑( )
=4 1− 1+ = 0.059404
12
𝐴𝑛𝑠46.
𝐴𝑠, 𝑎𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑓𝑎𝑐𝑡𝑜𝑟 𝑓𝑜𝑟 𝑏𝑜𝑡ℎ 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒
𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑓𝑜𝑟 20 𝑦𝑒𝑎𝑟𝑠 𝑖𝑠 𝑠𝑎𝑚𝑒.
𝑠𝑜,
( . . )
𝑒∫ = (1 + 𝑖)
. . ( )
𝑒 = (1 + 𝑖)

𝑒 = (1 + 𝑖)
.
𝑖=𝑒 − 1 = 0.221402
𝑣𝑎𝑙𝑢𝑒 𝑜𝑓 𝑓𝑢𝑛𝑑 𝑌 𝑎𝑓𝑡𝑒𝑟 1.5 𝑦𝑒𝑎𝑟𝑠
(1 + 0.221402) .
= 1.35
𝐴𝑛𝑠47.
(𝑖) 𝑃𝑉 =
. ( ) ∫ . .

36000
𝑃𝑉 =
. .
𝑒 . 𝑒
 36000
𝑃𝑉 =
. . ( ) . . ( )
𝑒 . 𝑒
𝑃𝑉 = 27140.27
(𝑖𝑖) 27140.27(1 + 𝑖) = 36000
36000
(1 + 𝑖) =
27140.27

36000
𝑖= − 1 = 0.035943
27140.27
𝐴𝑛𝑠48.
𝐴. 𝑇. 𝑄

5000𝑒 ∫ = 6000

𝑎𝑡 𝑏𝑡
+ −𝑡 = ln(1.2)
2 3

(4.5𝑎 + 9𝑏) = ln(1.2) + 3 − − − − − 𝑒𝑞1

5000𝑒 ∫ = 10000

𝑎𝑡 𝑏𝑡
+ −𝑡 = ln(2)
2 3

18𝑎 + 72𝑏 = ln(2) + 6 − − − − − −𝑒𝑞2

𝑈𝑠𝑖𝑛𝑔 𝑒𝑞1 𝑎𝑛𝑑 𝑒𝑞2
1 1
(ln(1.2) + 3) − 2𝑏 = (ln(2) + 6) − 4𝑏
4.5 18
1 1 1
𝑏= (ln(2) + 6) − (ln(1.2) + 3) = −0.1676
2 18 4.5

𝑠𝑜,
 1 1
𝑎= (ln(1.2) + 3) − 2𝑏 = (ln(1.2) + 3) − 2(−0.1676)
4.5 4.5
𝑎 = 1.04238
𝐴𝑛𝑠49.
𝑙𝑒𝑡 𝑙𝑖𝑛𝑒𝑎𝑟 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑜𝑓 𝑡𝑖𝑚𝑒 𝑝𝑒𝑟𝑖𝑜𝑑 𝑏𝑒𝑓𝑜𝑟𝑒 9 𝑚𝑜𝑛𝑡ℎ𝑠
𝑏𝑒 𝑎 + 𝑏𝑡
𝑎𝑛𝑑, 𝑎𝑓𝑡𝑒𝑟 9 𝑚𝑜𝑛𝑡ℎ𝑠 𝑝𝑒𝑟𝑖𝑜𝑑 𝑏𝑒 𝑐 + 𝑑𝑡
𝑛𝑜𝑤,
9
𝑎 + 𝑏(0) = 0.1, 𝑎𝑛𝑑 𝑎 + 𝑏 = 0.07
12
𝑠𝑜,
12
𝑎 = 0.1 𝑎𝑛𝑑 𝑏 = (0.07 − 0.1) = −0.04
9
9
𝑠𝑜, 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 = 0.1 − 0.04𝑡 𝑖𝑓 0 ≤ 𝑡 ≤
12
𝑎𝑛𝑑,
9
𝑐+𝑑 = 0.07 𝑎𝑛𝑑, 𝑐 + 𝑑(1) = 0.05
12
𝑑 = 0.05 − 𝑐
9
𝑐 + (0.05 − 𝑐) = 0.07
12
9 9
𝑐 + 0.05 −𝑐 = 0.07
12 12
9 9
𝑐 1− + 0.05 = 0.07
12 12
9
0.07 − 0.05
𝑐= 12 = 0.13
9
1−
12
𝑑 = 0.05 − 0.13 = −0.08
9
𝑠𝑜, 𝑓𝑜𝑟𝑐𝑒 𝑜𝑓 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 = 0.13 − 0.08𝑡 𝑖𝑓 ≤𝑡≤1
12
𝑡ℎ𝑒𝑟𝑒𝑓𝑜𝑟𝑒, 𝐴𝑐𝑐𝑢𝑚𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 10000 𝑖𝑠
∫ . .
∫ . .
10000 𝑒 𝑒

. . . .
10000 𝑒 𝑒

10819.33
𝐴𝑛𝑠50.
. ( ) ∫ . . .
(𝑖) 𝐴𝑉 = 1000𝑒 𝑒 𝑒∫
𝐴𝑉 = 3984.983
×
𝑑( )
(𝑖𝑖) 3984.983 1 − = 1000
12

1000 ×
𝑑( )
= 12 1 − = 0.06892
3984.983

.
(𝑖𝑖𝑖) 𝑒 = (1 + 𝑖)
𝑖 = 0.102411