1.) If one places $60,000 in a savings account today that pays 12% per year compounded semi-annually, how

much can be withdrawn every year starting six (6) months from now so that the savings account balance

will be zero two and a half years (30 months) from now? Please show your work!

2.) Mr. Gold N. Halo, an elderly alumnus of SU, has been thinking about establishing a trust fund for his

granddaughter’s SU tuition. He plans to make equal, annual payments, beginning a year from today,

into an account that will yield 5 percent per year. If he makes equal, annual payments of $2,250, how

many payments will he have to make to have $15,300 immediately after he makes his last payment?

[Hint: Is this an end of period or beginning of period problem? Better draw a picture.]

3.) Which of the following interest rates provides the larger final dollar amount in the future, if both future

periods are equal? Please show your analyses.

a) 7.5 % per year compounded continuously? e = 2.7183

b) 8% per year compounded quarterly?

Subject | Mathematics |

Due By (Pacific Time) | 04/02/2015 04:00 pm |

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