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please provide complete steps.. these are subparts of same problem.. i need 2.38 , 2.39 2.37 A paused rainbow is a cash-flow stream which pays
please provide complete steps.. these are subparts of same problem.. i need 2.38 , 2.39
2.37 A paused rainbow is a cash-flow stream which pays $1 at time 1 and 2n; $2 at time 2 and 2n 1; ...;$(n-1) at time n - 1 and n + 2; and $n at time n and n + 1. Find the present value of the paused rainbow. 2.38 (a) Find the present value of a perpetuity of $1 at time 0, $2 at time 3, $3 at time 6, $4 at time 9, at an effective rate of interest of 3%. (Hint: Use the result in Exercise 2.25.] (b) Hence, find the present value of a perpetuity which pays $1 at the end of the 3rd, 4th and 5th year, $2 at the end of the 6th, 7th and 8th year, $3 at the end of the 9th, 10th, 11th year and so on, at an effect rate of interest of 3%. 2.39 Express (D3), in terms of i and n under simple interest. [Hint: The symbol (D3) is defined similarly as in Exercise 2.25.] 2.40 Eric makes deposits into a retirement fund earning an annual effective rate of 7%. The first deposit of $1,000 is made on his 38th birthday and the last deposit is made on his 64th birthday. Every year his deposit increases by 3%. When he attains age 65, he will withdraw all the money in the re- tirement fund to purchase an annuity-immediate which provides him with monthly payment for 25 years. The nominal rate of interest on the annuity is convertible monthly at 6%. Find the amount of each monthly paymentStep by Step Solution
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