By A. H. Pollard (Auth.)
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Extra info for An Introduction to the Mathematics of Finance
A. a. and the new equation of value . . B. T h e "capital gain" is here a loss of $4 on maturity which is an allowable deduction for tax purposes. e. a. a. a. a. a. '. V. 93 8-3 T h i s could also be obtained by interpolation, b u t it is simpler to use the result of Exercise 8-2. 75. V.
I) W h a t is his monthly commitment to the insurance company? (ii) W h a t is the a m o u n t of loan outstanding after 15 years? (iii) If the company expects to pay a n n u a l compound bonuses at 2 % based on the a m o u n t of policy and declared bonuses, what is the a m o u n t of the insurance cover at the end of 15 years? 11 (ii) T h e a m o u n t still owing after 15 years equals the then present value of his future payments on the loan. 02) » = $10,767 COMPOUNDING MORE FREQUENTLY THAN ANNUALLY 47 EXERCISES 8-1 W h a t is the effective a n n u a l rate of interest correspond, ing to .
A. ". a. a. *. 68 1-9 Let Ρ = a m o u n t asked for. T h e n Ρ m i n u s the interest in advance equals $1000. ·. V. V. *. 75 By interpolation /. a. a. 02 2-5 As the rate of interest earned on the investment (6%) is the same as that used in working the present value in exercise 2-4, we may simply add interest to that present value. Therefore the values will be . . a. a. '. η — 18 years I n 18 years the loan plus interest 18 = 5000 ( 1 . P. a. a. V. a. B. V. V. V. = 11,000Stö|T/ = $98,079 3-6 Let Ρ be the su i n r e q u i r e d .
An Introduction to the Mathematics of Finance by A. H. Pollard (Auth.)