MATH 2581 Lecture Notes - Effective Interest Rate
22 Jul 2014
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Steve has a line of credit account that allows him to make paymenets or withdrawals from the account at any time. Balences in the ac- count, whether positive or negative, earns in- terest at rate i per period. Solve for i for each of the following sets of transactions on steve"s line of credit: a0 = 0, a1 = 230, a2 = 0, B0 = 100, b1 = 0, b2 = 132: a0 = 0, a1 = 230, a2 = 0, B0 = 100, b1 = 0, b2 = 133. Example 2 (a) a project requires an initial capital outlay of. , 000 and will return the following amounts (paid at the ends of the next 5 years): Find the net present value based on a cost of capital of 10% per year. (b) an investment of , 000 produces the following net cash ows at the end of each year for 5 years.
