Suppose a bank agrees to lend $18,125 now and X three years from now in exchange for a payment of $152,449 in 16 years. Suppose that the bank charges interest at an effective annual rate of 4% for the first 8 years and at a force of interest δt  =   1/1+t   for t  ≥  8. Determine the value of X.

Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
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Suppose a bank agrees to lend $18,125 now and X three years from now in exchange for a payment of $152,449 in 16 years. Suppose that the bank charges interest at an effective annual rate of 4% for the first 8 years and at a force of interest δt  =   1/1+t
  for t  ≥  8. Determine the value of X.

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