Homework 3.1

question 1

Present value. A promissory note will pay $65,000 at maturity 10 years from now. How much should you be willing to pay for he note now if money is worth 5.25% compounded continuously? $ (Round to the nearest dollar.) Solving A = Pe" for P, we obtain P = Ae ""which is the present value of the amount A due in t years if money earns interest at an annual nominal rate r compounded continuously. For the function P = 6,000e ., in how many years will the $6,000 be due in order for its present value to be $3,000? In years, the $6,000 will be due in order for its present value to be $3,000. (Type an integer or decimal rounded to the nearest hundredth as needed.)An investor bought stock for $40,000. Nine years later, the stock was sold for $60,000. If interest is compounded continuously, what annual nominal rate of interest did the original $40,000 investment earn? The annual nominal rate of interest earned is %. (Round to two decimal places as needed.)Recently, a certain bank offered a 5-year CD that earns 2.53% compounded continuously. Use the given information to answer the questions. (a) If $60,000 is invested in this CD, how much will it be worth in 5 years? approximately $|:| (Round to the nearest cent.) Use a calculator and evaluate A to the nearest cent. A = $6,000 e 0.08t for t = 5, 8, and 10 If t = 5, A~ $ (Do not round until the final answer. Then round to the nearest hundredth.)