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1. Fund A is invested at a rate of interest j = 3% compounded annually. Fund B is invested at a rate of interest
1. Fund A is invested at a rate of interest j = 3% compounded annually. Fund B is invested at a rate of interest of j = 2.5% compounded annually. At the end of 20 years, the total amount in the two funds is 10,000. At the end of 31 years, the amount in fund A is twice the amount in fund B. Calculate the total amount in the two funds at the end of 10 years. [5 marks] 2. You deposit 1, 000 today and 2, 000 in five years into a fund that pays simple discount at 5% per annum. Your friend makes the same deposits into another fund but at times n and 2n respectively and the fund credits interest at an annual effective rate of interest of 10%. At the end of 10 years, the accumulated value of your friend's deposits is exactly the same as the accumulated value of your deposits. Calculate n 3. David can receive one of the following two payment streams: i. 150 at time 0, 300 at time n and 450 at time 2n ii. 900 at time 10 [5 marks] At an annual effective rate of interest i, the present value of the two streams are equal. Given "=0.76, determine i. 4. If a 5 and 8 = 15,find i. [5 marks] [5 marks]
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