MATA32H3 Midterm: 5-Midterm Review
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MATA32H3 Full Course Notes
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Review: mathematics of finance (5. 1 - 5. 5) k -- the number of interest compounded a year t -- the number of years. r -- annual rate n = kt and rp = r/k. Effective rate under continuous interest re = er 1. Example: a total debt of due two years from now and due four year from now is to be repaid with a monthly payment of four years from now. If the interest is 3% apr compounding monthly. Find the amount of monthly payments rounded up to the nearest dollar. A complete solution includes labeled money-time diagram and a clear equation of value. Example: tom deposited monthly into account at his local bank for 15 years. 3% interest per year compounded monthly for first 6 years. During the remaining 9 years the interest per year compounded monthly was raised to 6%. L xf lim a x lim x a: limit at a:
