FM for Actuaries

Interest Accumulation and Time Value of Money 33
1.25 $2,000 is put into an account which credits interest at 4% per annum and
$1,500 is put into another account which credits interest at 6% per annum.
How long does it take for the balances of the two accounts to be equal? Apply
the compound-interest method for the remaining fraction of the conversion
period.
1.26 $2,000 is put into an account which credits interest at 4% per annum and
$1,500 is put into another account which credits interest at 6% per annum.
How long does it take for the balances of the two accounts to be equal? Apply
the simple-interest method for the remaining fraction of the conversion
period. Compare your answer with that in Exercise 1.25.
1.27 Which of the following are valid graphs for the amount function A(t)?
A(t)
A(t)
t
t
A(t)
A(t)
t
t
1.28 Irene invests $5,000 in an account that credits interest during the first two
years at a nominal interest rate of r (2) convertible semiannually. During
the third year, the account earns interest at a nominal discount rate of d (4)
convertible quarterly. At the end of the third year, the fund has accumulated
to $5,375.70. If r (2) = d (4) = x,findx.
1.29 Betty deposits $200 at the beginning of each year for 10 years into an account
which credits simple interest at an annual interest rate of i payable every year.
Find i if the accumulated value is $2,440 after 10 years.
1.30 You are given the following information: