Reference no: EM133199447

Assignment:

Problem 1. Thermal Systems, a company that specializes in odor control for wastewater treatment plants, made deposits of $100,000 now and $25,000 every 6 months for 2 years. Determine the future worth after 2 years of the deposits for i = 16% per year, compounded quarterly.

Problem 2. Frontier Airlines hedged the cost of jet fuel by purchasing options that allowed the airline to buy fuel at a fixed price for 2 years. The savings in fuel costs were $140,000 in month 1, $141,400 in month 2, and amounts increasing by 1% per month through the 2-year option period. What was the present worth of the savings at an interest rate of 18% per year, compounded monthly?

Problem 3. What effective interest rate per 6 months is equal to a nominal 2% per month, compounded continuously?

Problem 4. A person is planning to open a retirement account. He plans is to deposit $1,000 per month for next 45 years. This person visits four local banks and recorded the interest rates:

Bank A) 0.08% per month compounded monthly

Bank B) 6.2% per year compounded continuously

Bank C) 8% per year compounded monthly

Bank D) 7% per year compounded semi-annually

Determine

1) Which bank should be selected?

2) How much money will be accumulated in 45 years in the selected bank?

Problem 5. Determine P & F for the diagram below:

For the first seven years, interest is 12% per year compounded monthly and for the last three years, the interest drops to 10% per year compounded annually.