The force of interest (t) at time t is at+bt2 where a and b are constants. An amount of 1000 invested
at time t = 0 accumulates to 1500 at time t = 5 and 2300 at time t = 10. Determine the value of a
and b. [5 marks]
6. 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<
:
0:06 0 t 5
0:01(t2 ?? t) 5 < t
(a) Calculate the present value of a unit sum of money due at time t = 10. [4 marks]
(b) Calculate the eective rate of interest over the period t = 9 to t = 10. [3 marks]
(c) In terms of t, determine an expression for v(t), the present value of a unit sum of money due
during the period 0 < t 5. [1 mark]
(d) Calculate the present value of a payment stream paid continuously for the period 0 < t 5,
where the rate of payment, (t), at time t, is e0:04t. [4 marks]
7. You are given that the nominal rate of discount per annum convertible every 2 months is 15%. Calculate
the product of the equivalent nominal rate of interest per annum convertible every three months i(4)
and the force of interest . [6 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