1. Suppose £50 000 is invested at a nominal interest rate of 5.5% per annum. Interest is calculated (a) annually as simple interest, (b) annually as compound interest, (c) four times annually as compound interest, (d) continuously. (i) Calculate the value of the investment at the end of each year for the first five years. (ii) Calculate the number of years it will take for the investment to double in value. 2. Suppose £5000 is invested for five years. Calculate the amount accumulated at the end of five years if interest is compounded continuously at a nominal annual rate of (a) 5%, (b) 7%, (c) 10%.
1. Suppose £50 000 is invested at a nominal interest rate of 5.5% per annum. Interest is calculated (a) annually as simple interest, (b) annually as compound interest, (c) four times annually as compound interest, (d) continuously. (i) Calculate the value of the investment at the end of each year for the first five years. (ii) Calculate the number of years it will take for the investment to double in value. 2. Suppose £5000 is invested for five years. Calculate the amount accumulated at the end of five years if interest is compounded continuously at a nominal annual rate of (a) 5%, (b) 7%, (c) 10%.
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Transcribed Image Text:1. Suppose £50 000 is invested at a nominal interest rate of 5.5% per annum. Interest is calculated
(a) annually as simple interest, (b) annually as compound interest, (c) four times annually as
compound interest, (d) continuously.
(i) Calculate the value of the investment at the end of each year for the first five years.
(ii) Calculate the number of years it will take for the investment to double in value.
2. Suppose £5000 is invested for five years. Calculate the amount accumulated at the end of
five years if interest is compounded continuously at a nominal annual rate of (a) 5%, (b) 7%,
(c) 10%.
3. Calculate the APR for a 6% per annum nominal rate of interest that is compounded (a) 4 times
per year, (b) 12 times per year, (c) continuously.
4. Suppose £2500 is invested at a nominal rate of interest of 5% per annum. Calculate the amount
accumulated at the end of 10 years if interest is calculated (a) annually, (b) 4 times annually,
(c) 52 times per year, (d) continuously.
5. Calculate the APR for a 6% per annum nominal rate of interest compounded 20 times
annually.
6. Calculate the APR for an 8% per annum nominal rate of interest compounded four times
annually.
7. Calculate the APR for an 8% per annum nominal rate of interest compounded continu-
ously.
8. Calculate the APR for a 3% per annum nominal rate of interest compounded continu-
ously.
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