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Problem 2. The original amount of an inheritance was just sufficient at an 8% annual effective rate of interest to pay $5,000 at the end
Problem 2. The original amount of an inheritance was just sufficient at an 8% annual effective rate of interest to pay $5,000 at the end of each year for 10 years. The payments of $5,000 were made at the end of each of the first 5 years even though the fund actually earned 10% annual effective rate of interest. How much excess interest? was in the fund at the end of 5 years? At 8% annual effective rate of interest the fund was expected to have a certain balance at the end of 5 years. Since it earned 10% instead, the balance at the end of 5 years will turn out to be higher than originally expected. The amount by which the fund is larger than expected is the excess interest
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