AS 5101 Midterm: AS5101-Exam#2-Fall 2015
29 Mar 2016
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Please answer the questions in order, show all work, and circle your final answers. Oliver purchases a geometrically varying 25-year annuity-due with semiannual payments. The first payment is 50 and each subsequent payment increases by 2%. Immediately after the 10th payment, he exchanges this annuity for a perpetuity-immediate with semiannual payments of m. Using a semiannual effective rate of interest of 1. 2%, determine m. (10 pts) At a nominal rate of interest of 8% compounded quarterly, calculate the present value of this perpetuity. (10 pts) Kathy makes deposits into an account continuously at a rate of (4+3t). She makes these deposits from time t=3 to time t=7. This account credits a force of interest of 1%. Calculate the present value of this account at time 3. (12 pts) Missy deposits 725 into a fund which credits: (i) during the first 2 years, a force of interest t =
