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5 -1 13
2000 (1 + 0.06 × ) + 3000 (1 + 0.06 × ) -1 = x
12 12
1951.219512... + 2816.901408... = x
Therefore, we get x = $4768.120921... = $4768.12
Therefore, a single payment of $4768.12 in 5 months will settle both payments.
Self-Test Exercise 8, Solution 7:
Let P be the principal amount of the demand loan
From the days table,
Feb 16: 47th day of the year
52
t2 = years and r2 = 5.75%p.a.
365
I1 = interest charged for the above period at 6% p.a.
52
= Prt = 8000 × 0.0575 × = 65.534247…
365
Therefore, interest paid on the loan was 126.246575… + 65.534247…= $191.78
Self-Test Exercise 8, Solution 9:
90
S = 25,000 (1 + 0.05 × )
365
= $25,308.21918…= $25,308.22
Now since it is sold in 60 days.
30
The time remaining is 90 − 60 = 30 days = years
365
P = S (1 + rt) -1
30 -1
= 25,308.22 (1 + 0.06 × )
365
= $25,184.02481...
= $25,184.02
Therefore, the proceeds will be $25,184.02.
Self-Test Exercise 8, Solution 11:
120
Maturity value in Option (a) =$1000(1 + 0.0175 × ) = $1,005.753425...
365
Assume the interest rate offered on the 60-day GIC after 60 days from now is r2
60 60
Therefore, 1005.753425... = 1000(1 + 0.015× ) (1 + r2× )
365 365
60
1005.753425... = 1002.465753... (1 + r2× )
365
0.003279... = 0.164383... r2
r2 = 0.019950…
= 2.00%
Therefore, the interest rate of 2.00% should be offered on the 60-day GIC after 60 days from now for Roberto to
earn the same amount of money from either option.