1. Assuming an interest rate of 12% pa convertible monthly,
(a) Calculate the combined present value of an immediate annuity payable monthly in arrears such
that payments are KSh.100,000 pa for the rst 6 years and KSh.40,000 pa for the next 4 years,
together with a lump sum of KSh.200,000 at the end of the 10 years. [3 marks]
(b) Calculate the amount of the level annuity payable continuously for 10 years having the same
present value as the payments in (i). [3 marks]
(c) Calculate the accumulated values of the rst 7 years” payments at the end of the 7th year for the
payments in (i) and (ii). [4 marks]
2. The force of interest (t) is a function of time and at any time t (measured in years) is given by the
formula
(t) =
8>>><
>>>:
0:03 + 0:001t2 0 t < 7
0:01t 7 t < 10
0:1 10 t
(a) An investment of 1 is made at time t = 4. Find the value to which it will have accumulated by
time t = 6:5. [5 marks]
(b) Find the present value (at time t = 0) of an investment of 15 due at time t = 20. [4 marks]
(c) Find the constant force of interest which would lead to the same present value in (ii) being
obtained. [3 marks]
(d) What is the eective rate of interest from time t = 8 to time t = 9. [2 marks]
3
STA 2191 Jane Akinyi Aduda
4. You are given that the nominal rate of discount per annum convertible every 2 months is 15%. Calculate
the nominal rate of interest per annum convertible every three months. [3 marks]
5. A fund is earning 7% simple interest. Calculate the eective interest rate in the 8th year. [2 marks]
6. At a certain simple rate of interest, 1,000 will accumulate to 1,110 after a certain period of time. Find
the accumulated value of 500 at a simple rate of interest three fourths as great over twice as long a
period of time. [2 marks]
7. Dene the accumulation factor A(t; t + h) and give the formula for the force of interest (t) per unit
time in terms of the accumulation factor. [3 marks]
28. Given a nominal interest rate of 7:5% convertible semi-annually, determine the sum of the force of
interest, ; and nominal discount rate compounded monthly, d(12). [5 marks]

 

 

 

 

 

 

 

For a custom-written paper on the above topic, place your order now!

What We Offer
• On-time delivery guarantee
• PhD-level professionals
• Automatic plagiarism check
• 100% money-back guarantee
• 100% Privacy and Confidentiality
• High Quality custom-written papers

Found something interesting ?

• On-time delivery guarantee
• PhD-level professional writers
• Free Plagiarism Report

• 100% money-back guarantee
• Absolute Privacy & Confidentiality
• High Quality custom-written papers

Related Model Questions

Feel free to peruse our college and university model questions. If any our our assignment tasks interests you, click to place your order. Every paper is written by our professional essay writers from scratch to avoid plagiarism. We guarantee highest quality of work besides delivering your paper on time.

Grab your Discount!

25% Coupon Code: SAVE25
get 25% !!