Answered: Smith invests $5,000 at t = 0 into a…

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Smith invests $5,000 at t = 0 into a fund which earns interest under the following model: (0.06 8(t) = 0.03t 0

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Smith invests $5,000 at t = 0 into a fund which earns interest under the following model:
%3D
(0.06
8(t) = {0.03t
(0.03t + at²
0 <t< 5
5 <t< 10,
10 <t
where a is a constant. It is known that the force of interest at t = 20 is 10 times as much as
the force of interest at t
6. Find the accumulated value at t = 15 of this deposit. (Hint: find
the constant a first.)

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