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Question 1. Suppose that you invest P dollars into a savings account at the beginning of every week. Your crazy banker decides to compound interest
Question 1. Suppose that you invest P dollars into a savings account at the beginning of every week. Your crazy banker decides to compound interest at a simple rate r at the end of Week 3, Week 8, and Week 12. Your banker will also compound interest at a simple rate s at the end of Week 7 and Week 11. 1. What is the value of the account at the end of Week 15? 2. At the end of the Week 15, you need to spend $10, 000 on a car. How much money must you invest weekly to ensure you have exactly $10,000 after Week 15 if the simple interest rates are r = 8% and s = 5%? Question 2. Your crazy banker presents another investment opportunity for 2023, where you are told that for the first six months of the year you will have an APR of ri compounded monthly, and for the second half of the year the APR will be r2 compounded daily. Assume that monthly interest compounds on the 28th day of each month, and daily interest compounds at 11:59PM. 1. The banker tells you that for the first six months of the year the effective continuous rate is a1 = 6%, but they refuse to divulge the value of r, directly. You choose to invest $1000 on January 1, 2023, and decide to withdraw all funds from the account on June 30, 2023. What was the value of your account upon withdrawal? 2. The banker then informs you that for the last six months of the year the effective annual rate is cy = 10%. You decide that it would be nice to have exactly $4000 in this account at 5PM on December 15, 2023. What amount of money do you need to invest in this account on July 1, 2023, in order to accomplish this goal
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