Assignment 1

1.An investment of $10,000 is made into a fund at t = 0. The fund develops the
following balances over the next 4 years:

t A(t)
0 10,000.00
1 10,600.00
2 11,130.00
3 11,575.20
4 12,153.96
(i) If $5000 is invested at time t = 2, under the same interest environment, find
the accumulated value of the $5000 at time t = 4.

(ii) For the $10,000 investment, find the effective rate of interest for each of the
four years.
(iii) For the $5000 given in the above question, find the amount of interest earned
during the second year of investment i.e. between times t = 3 and t = 4.

2(a). At what rate of simple interest will $500 accumulate to $615 in 2 ½ years?
2(b). In how many years will $500 accumulate to $630 at 7.8% simple interest?

3. At a rate of simple interest $1000 will accumulate to $1110 after a certain

period of time. Find the accumulated value of $500 at a rate of simple interest
three fourths as great over twice as long a period of time.
4. A deposit of $1000 is invested at simple interest at time t = 0. The rate of
simple interest during t years is equal to .01t for t = 1,2,3,4, and 5.Find the total
accumulated value of this investment at time t = 5.

5. It is known that $600 invested for two years will earn $264 in interest . Find the
accumulated value of $2000 invested at the same rate of compound interest for
three years.