Download Financial Mathematics - Quiz #3 Problems | MATH 1030 and more Quizzes Mathematics in PDF only on Docsity! Quiz 3 - Financial Math Math 1030 - Dylan Zwick’s Class Fall 2007 Name: Here are the formulas you may need: Compound Interest Formula for Annual Compounding A = P × (1 + APR)Y Compound Interest Formula for Interest Paid n Times Per Year A = P ( 1 + APR n )nY Compound Interest Formula for Continuous Compounding A = P × eAPR×Y Savings Plan Formula (Regular Payments) A = PMT × [ ( 1 + APR n )nY − 1 ] ( APR n ) Variable Definitions A = Accumulated Amount P = Starting Principal APR = Annual Percentage Rate (express as a decimal) Y = Number of Years n = Number of Compounding Periods per Year PMT = Regular Payment 1 1. Different Compounding Periods - 15 points Suppose you invest $2, 500 in an account that generates compound interest with an APR of 5% for 30 years. (a) If your account compounds every year, how much money will you have in the account after 30 years? (3 points) (b) If your account compounds every month, how much money will you have in the account after 30 years? (3 points) (c) If your account compounds continuously, how much money will you have in the account after 30 years? (3 points) 2 (c) Suppose that instead of putting away the money in monthly in- stallments you invest one lump sum at the start and let it accu- mulate interest for 35 years in this account. How much money would you need in this lump sum in order to have $2, 000, 000 after 35 years? (3 points) 5 3. Extra Credit - 5 points (a) Suppose you invest $5, 000 in a compound interest savings ac- count with an APR of 5% that compounds annually. After Y number of years you have $17, 778.36 in your account. What is Y ? (Hint - logarithms) (4 points) (b) Name one character that appears in more than 3 of Shakespeare’s plays. (1 point) More Extra Credit - Wednesday of next week is Halloween. We will have a costume contest the first 5 minutes of class. The people with the top 3 costumes, chosen democratically, will be awarded extra credit points on this quiz. Best Costume - 3 points Runner Up - 2 points Second Runner Up - 1 point 6
