ACTB40 Study Guide - Midterm Guide: University Of Toronto Scarborough
9 Jun 2019
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Instructions: there are 5 questions on 6 pages in total (including this cover sheet) for this exam, write your student number at the top of each page, answer all questions directly on the examination paper. Use the last pages if you need more space, and provide clear pointers to your work: show your intermediate work, and write clearly and legibly, read the questions carefully and answer the question that is being asked. Consider an arithmetically increasing perpetuity immediate that pays in the first year and increases by each year thereafter, i. e. the payments are: The present value of this perpetuity at a constant annual interest rate of i is equal to. We can decompose the perpetuity into a level perpetuity + an arithmetically increasing perpetuity. After 5 years (i. e. right after the 60th payments), bank i for the remainder of the loan. If bank a charges a 6% penalty on: (10 marks)
