ASSIGNMENT 4: MATHEMATICS OF FINANCE

(Due Date: 10 days after classes resume)

(note that assignment 3 is due 7 days after classes resume)

1. A bank offered 6% p.a. simple interest on an investment and at the end of

three years the interest paid was $900. What was the original investment?
2. Linda invested $2500 for 36 months and earned $375 simple interest. What
was his yearly interest rate?
3. Ramil has been given $1000 as a twenty-first birthday present. How long does
she need to invest in order to earn $150 if the bank is offering 5% p.a. simple
interest?
4. Having received an inheritance from his late father, Isaiah invested the money
for 5 years at 5.25% simple interest per annum and earned $5775 in total
interest. How much was Isaiah’s inheritance?
5. Find the principal needed now to get each amount, that is, find the present
value.
a) To get $100 after 2 years at 6% compounded monthly.
b) To get $75 after 3 years at 8% compounded quarterly.
6. A principal of €25000 is invested at 12% interest compounded annually. After
how many years will it have exceeded €250000?
7. 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 to two decimal places.
8. $1000 accumulated to $1959 in an investment certificate in which interest was
4.25% compounded quarterly. Find the span of time of the investment.
9. Construct an amortization table if you get a $9,000 loan from a furniture
dealer at 18% annual interest with annual payments that you will pay off in
over five years. What will your annual payments be on this loan?

**end**