Business Mathematics I
Homework 7
Prepared for
Math 115a, Section:
Instructor:
Date:
By
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We, the undersigned, maintain that each of us participated fully and equally in the
completion of this assignment and that the work contained herein is original.
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work is found to violate the Student Code of Conduct, the Code of Academic Integrity, or
the policies and procedures established for this course.
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1. (Exercise 3 in Compound Interest) (i) What is the value of $45,000 after 12 years at
5.65%, compounded daily? (ii) What is the effective annual yield?
Solution.
2. (i) What is the value of $20,000 after 15 years at 4.15%, compounded quarterly? (ii)
What is the effective annual yield?
Solution.
3. (i) What is the value of $150,000 after 6 years at 4.85%, compounded quarterly? (ii)
What is the effective annual yield?
Solution.
4. (i) What is the value of $200,000 after 4 years at 5.45%, compounded quarterly? (ii)
What is the effective annual yield?
Solution.
5. (Exercise 5 in Compound Interest) What rate, r, compounded quarterly, will yield
4.5%?
Solution.
6. What rate, r, compounded monthly, will yield 6.5%?
Solution.
7. What rate, r, compounded daily, will yield 4.25%?
Solution.
8. What rate, r, compounded semi-annually, will yield 6.25%?
Solution.
9. (Exercise 9 in Compound Interest) Open the sheet Limit in Comp. Int.xls and
experiment until you find the smallest integer, m, such that 1  1 / mm  2.718 .
Solution.
10. (Exercise 10 in Compound Interest) Open the sheet Limit in Comp. Int.xls and
experiment until you find the smallest integer, m, such that 1  1 / mm  e , rounded to
five decimal places. (You have to see the value of m for which 1  1 / m  goes above
2.71828).
m
Solution.
11. (Exercise 16 in Compound Interest) Redo Example 6 in Compound Interest using
an interest rate of 6.25%.
Solution.
12. Redo Example 6 in Compound Interest using an interest rate of 4.25%.
Solution.
13. (Exercise 22 in Compound Interest) How long, to the nearest whole month, will it
take $40,000 to grow to $80,000 if interest is earned at a rate of 6.0%, compounded
daily?
Solution.
14. How long, to the nearest whole month, will it take $50,000 to grow to $200,000 if
interest is earned at a rate of 4.0%, compounded quarterly?
Solution.
15. How long, to the nearest whole month, will it take $75,000 to grow to $150,000 if
interest is earned at a rate of 6.5%, compounded monthly?
Solution.
16. How long, to the nearest whole month, will it take $15,000 to grow to $60,000 if
interest is earned at a rate of 4.5%, compounded semi-annually?
Solution.