1/ Gail can receive one of the following two payment streams

a/ 100 at time 0,200 at time n years, and 300 at time 2n years

b/ 604.42 at time (n+2) years

At an annual effective interest rate of i, the present values of the two payment stream are equal

If vⁿ =0.7. calculate i , the annual effective rate of interest.

2/ The simple discount rate is 7% per year. Kevin makes a deposit of X now, which accumulates to 10,000 at the end of 8 years. Determine X

b Redo question 3 using an annual effective discount rate ( compound discount) ]of 7%

3/ Bonnie deposit 1,800 into a saving account at time 0. the savings account pay simple interest at an annual rate of i

Clyde deposits 1,000 into different savings accounts at time 0. Clyde's saving account pays interest at an annual effective rate of i.

Bonnie and Clyde earn the same amount of interest during the 7th year

Calculate i.