TUGAS GSLC 2: Mathematics Finance

1. Over a five-year period, an original principal of $2000 accumulated to $2950 in an account in which
interest was compounded quarterly. Determine the effective rate of interest, rounded to two
decimal places.
2. Decision Making Suppose that a person has the following choices of investing $10,000: (a) placing
the money in a savings account paying 6% compounded semiannually; (b) investing in a business
such that the value of the investment after 8 years is $16,000. Which is the better choice?
3. Presently, the Smiths have $50,000 to invest for 18 months. They have two options open to them:
(a) Invest the money in a certificate paying interest at the nominal rate of 5% compounded
quarterly; (b) Invest the money in a savings account earning interest at the annual rate of 4.5%
compounded continuously. How much money will they have in 18 months with each option
4. Suppose that insurance proceeds of $25,000 are used to purchase an annuity of equal payments at
the end of each month for five years. If interest is at the rate of 10% compounded monthly, find the
amount of each payment.
5. A loan of $1300 is being paid off by quarterly payments of $110. If interest is at the rate of 6%
compounded quarterly, how many fill payments will be made?