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Western University

Management and Organizational Studies

Management and Organizational Studies 2275A/B

Milford Green

Winter

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2.5 Calc Nominal interest A PNOTE dated for April 5, 2010 is due on Oct Ordinary annuity
rate..P=2000…..S=3000…..t = 15yrs, annually 4,2014……j1=3%. On june 7, 2011, the holder has
it discounted to a bank that charges j4=3.5%. =payments made at end of payment period
Proceeds and compound discount?? (starts 1 period before payment period)
=AV is right after last deposit
=focal date = date of last payment
Annuity due
Find time, P=1800 S=2200 r=8%, quarterly 2.8 ireal = i-r/1+r
=payment made at the beginning of payment
What annual growth rate will a population double in period
11 yrs?
=starts at the time of first payment and ends one
payment period after the date of the last payment
(one period to left on time diagram)
=S value due one period after the last period
How long Double deposit at j365=7%
Deferred Annuity
You need $X US 1yr from now and can invest
funds in a US-dollar account for the next year at =First payment is due sometime later
j1=6%. Alternatively, you can inv in a C-dollar
account for the next year at j1=6%. Exchange rate =deferred for k periods
= 0.91US =1C, what is the implied exchange rate 1 Forboorne Annuities
yr from now. Both options need same amount of
currency today =has a period of time after last payment/deposit
made
=m periods after n
how many yrs. and days should a single payment
of $2000 be made in order to be equiv to payments
of $500 now and $800 in 3yrs if interest is j1=8% Ian has retirement fund at annual effective rate of
9% that will provide him with an income of 12 000
and simple interest is allowed for part of a year per yr for 20 yrs. The first payment on his 65 bday.
If he wishes to reduce the number of retirement
payments to 15, what should he receive annually?
3.2 Ian deposits R dollars every 3 mths begin
march 17, 2006 to sept 17 2009, after which
deposits 2R beginning dec 17, 2009 until june 17
2015, when he will have $2500……j4=6% what is
R?
Today Bob bought cottage and boat with combined
P=390 000. For cottage, bob agreed to pay 60 000
Beginning June 30, 2010 and continuing every 3 down and 2100 at the end of each month for 20yrs.
months until dec 31,2014, albert deposits 300 into
a mutual fund account. Starting sept 30, 2015 he For boat, 6000 down and $R at the end of each
mth for 4 yrs……j12=12%......R???
makes quarterly withdrawl of $500. Whats balance
2.6 Ian borrows 3000, due in 2 years, j12=9%....Ian after the W/D on June 30,2017 ……mutual fund
repays 1000 in 6mths, 1500 in 12mths and $X in j4=8% until march 31, 2013 and j4 = 6% afterward
30 months. If money is worth j2=6%, what is X
3.3 A car purchas

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