Reference no: EM132360618

Question

1) $9,000 is invested into a term deposit and will be worth $17,500 in ten years. What is the continuously compounded nominal (annual) interest rate for this deposit?

2) An effective annual interest rate of 40% has been determined with continuous compounding. What is the nominal interest rate that was compounded continuously to get this number?

3) A man deposited $16,000 in a savings account when his son was born. The nominal interest rate was 10% per year, compounded continuously. On the son's 18th birthday, the accumulated sum is withdrawn from the account. How much will this accumulated amount be?

4) An individual makes six annual deposits of $3,500 in a savings account that pays interest at a rate of 6% compounded annually. Two years after making the last deposit, the interest rate changes to 10% compounded annually. Twelve years after the last deposit, the accumulated money is withdrawn from the account. How much is withdrawn?

5) Determine the current amount of money that must be invested at 10% nominal interest, compounded monthly, to provide an annuity of $12,000 (per year) for 6 years, starting 12 years from now. The interest rate remains constant over this entire period of time.