1. ( A financial instrument makes continuous payments for 15 years. The rate of payment at time t is (100+10t) per annum, for 0 ≤ t ≤ 15 and the force of interest at time t is (0.05 +0.005t). (a) Calculate the present value of the annuity at time t = 0. (b) Calculate the accumulated value of the annuity at the end of 15 years.

1. ( A financial instrument makes continuous payments for 15 years. The rate of payment at time t is (100+10t) per annum, for 0 ≤ t ≤ 15 and the force of interest at time t is (0.05 +0.005t). (a) Calculate the present value of the annuity at time t = 0. (b) Calculate the accumulated value of the annuity at the end of 15 years.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A financial instrument makes continuous payments for 15 years. The rate of payment at time t is
(100+10t) per annum, for 0 ≤ t ≤ 15 and the force of interest at time t is (0.05 +0.005t).
(a) Calculate the present value of the annuity at time t = 0.
(b) Calculate the accumulated value of the annuity at the end of 15 years.
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