MATHEMATICS

Assignment – 02
Exercise 5.2
Submitted to:
Prof. Muhammad Tahir
Submitted by: Group - 09
Hina Parvaiz (s2020321003)
Alizba Arshad (s2020321009)
Faiza Emaan (s2020321012)
Zuha Sadiq (s2020321028)
Zoiba Aqeel (s2020321010)
Find the sum of the first four terms for each geometric sequence
Question no. 9
a = 1; r = 2 (15)
Solution:
.a=1 r=2
. a1 = 1 a(n) = a1r ^ n-1
. a2 = 2 a2 = (1)2 ^ 2-1 = 2
. a3 = 4 a3 = (1)2 ^ 3-1 = 4
. a4 = 8 a4 = (1)2 ^ 4-1 = 8

Sum:
A1(1) +A2(2) +A3(4) +A4(8) = 15

Find the future value of each ordinary annuity. Interest is compounded

annually.
Question no. 19
R = 25,000; i = 0.045; n = 36 ($2,154,099.15)
Solution:
S = Future value
R = Periodic payment
. i = Interest rate period
. n = number of periods
Formula:
S = R [(1+ .i)^n –1/i]
By putting values:
S = 25000[(1+0.045) ^36-1/0.045]
S = 25000 [ 4.877-1/0.045]
S = 25000 [ 3.877/0.045]
S = 25000 [86.155]
S ≈ $21538
Determine the interest rate needed to accumulate the following amounts in a
sinking fund, with monthly payments as given.
Question no. 29
Accumulate $56,000, monthly payments of $300 over 12 years (4.19%)
Solution:
Formula:
From the formula for sinking fund payment:
R= Si/(1+.i) ^n _1
Define x= 12i and express S as a function of x
Graph the two functions:
S = 300[(1+ x/12) ^144 _1]
S = 56000

They intersect at x = 0.04187

We interpret this as the annual rate needed 4.19%

Question no. 39
Find the future value of each annuity due. Assume that interest is
compounded annually.
39. R = 600; i = 0.06; n = 8 $6294.79
Solution
To find the value of an annuity due use formula for the future of an ordinary annuity nut include
on additional time period and subtract the amount of one period
Formula
S = R [(1+. i )^n+1 – 1/ .i ] - R
By putting values

S= 600[(1+0.06) ^9 _1/0.06] - 600

S ≈ $6294.79

Question no. 49
A typical pack-a-day smoker spends about $179.40 per month on cigarettes.
Suppose the smoker invests that amount each month in a savings account at
4.8% interest compounded monthly. What would the account be worth after
40 years? Source: Tobacco Free Kids. ($259,900.62)
R= 179.40
.i = 0.048/12 = 0.004
. n = 40(12) = 480 (monthly)
Formula:
S = R [(1+. i )^n – 1/ .i ]
Solution:
S = 179.40[(1+0.004) ^480 _1/0.004]
S = 179.40[5.794/0.004]
S= 179.40[1448.5]
S ≈ $259,900.62

Individual Retirement Accounts Suppose a 40-year-old person deposits $4000

per year in an Individual Retirement Account until age 65. Find the total in
the account with the following assumptions of interest rates. (Assume
quarterly compounding, with payments of $1000 made at the end of each
quarter period.) Find the total amount of interest earned. $170,481.38
Question no. 54
4%
Solution:
R = 1000
.i = 0.04/4 = 0.01
. n = 100
Formula:
S = R [(1+. i )^n _ 1/ .i ]
S = 1000[ (1+ 0.01) ^100 _ 1/0.01]
S= 1000[1.7048/0.01]
S = 1000[170.48]
S ≈ $170481
There will be approximately $170481. Total amount deposited was $100000, thus the amount of
interest earned was
$170,481 – 1000,00 = $70481

Question no. 59
Taylor Larson is paid on the first day of the month and $80 is automatically
deducted from her pay and deposited in a savings account. If the account pays
2.5% interest compounded monthly, how much will be in the account after 3
years and 9 months? $3777.89
R = 80
.i = 0.025/12
. n = 3(12) +9=45
Because the deposits are made at the beginning of each month, this is an annuity due.
Formula:
S = R [(1+. i )^n+1 – 1/ .i ] - R
S = 80 [ 1+0.0020 ^ 46 -1/0.0020] - 80
S = 80 [0.0962/0.0020] - 80
S = 80 [ 48.1] - 80
S = 3848 – 80
S ≈ $3768