CPAN112_CompoundInterest_Tyler_Escobar.docx

Fundamentals of Numeric Computing CPAN 112 Compound Interest Program and Assignment Please read the following instruction very carefully before answering any questions:  Please read all the questions very carefully.  Please provide your answers in the boxes below each question, and do not change the text colour.  Your answer MUST show the solution procedure. There is no credit if you only state the final answer.  Please highlight your final answer to each question.  Please keep the naming conventions requested in this lab and each question.  Once you complete your lab, rename your word document file to the ( CPAN112_CompoundInterest_FirstName_LastName ). Replace FirstName and LastName with your first name and last name, respectively. It will be a 10% mark deduction if you do not follow the guidelines mentioned above.

1) For a sum of money borrowed at 7.25% compounded bi-weekly for 84 months, state [10 points] a. the nominal annual rate of interest ( j ); b. the number of compounding interest periods per year ( m ); c. the periodic rate of interest ( i ); d. the number of compounding periods in the term ( n ); e. the compounding factor (1 + i ) n ; f. the numerical value of the compounding factor. j = 7.25%/0.0725; the nominal annual rate m = Bi-weekly = twice per month = 2 m = 52 weeks per year, 52/2 = 26 i = number of years in term * number of compounding periods per year i = j/m i = 0.0725/26 n = number of years in term * m n = 84 months = 7 years (7 * 26) FV = PV(1+I) n (1 + i) n = (1 + 0.0725/26) 7 * 26 Numerical Value is 1.65996039 2) You have a line of credit loan with Scotiabank. The initial loan balance was $6000.00. Payments of $2000.00 and $1500.00 were made after five months and ten months, respectively. At the end of one year, you borrowed an additional $3200.00. Eight months later, the line of credit loan was converted into a collateral mortgage loan. What was the amount of the mortgage if the line of credit interest was 6.15% compounded monthly? [20 points] Initial Loan Balance = 6000.00 2000.00 payment after 5 months 1500.00 payment after 10 months Addition 3200.00 loan added

Eight month later credit loan converted to collateral mortgage loan 6.15 % annual rate Compounded monthly, once per month FV = PV(1 + i) n FV = 6000(1 + i) n I = j/m J = 6.15%/0.0615 M = 12 I = 0.0615/12 N = 12 * 5/12 = 5 FV = 6000(1 + 0.0615/12) 5 FV = 6000(1.025889006) FV = 6155.33 6155.33 - 2000 = 4155.33 FV = 4155.33 (1 + 0.0615/12) 5 FV = 4262.91 4262.91 - 1500 = 2762.91 FV = 2762.91 (1 + 0.0615/12) n N = 12 * 2/12 = 2 FV = 2762.91 (1 + 0.0615/12) 2 FV = 2791.302397 2791.30 + 3200 = 5991.30 FV = 5991.30 (1 + 0.0615/12) n N = 12 * 8/12 = 8 FV = 5991.30 (1 + 0.0615/12) 8 FV = 6241.40 The amount of mortgage after the eight months would be $6241.40

3) Harpreet's parents deposited a lump sum of money into a savings account for him on his tenth birthday at an interest rate of 5% compounded semi- annually. Three years later, they opened a new account for him. They deposited $5000 to this new account and transferred over the balance from th e original account. The new account paid interest at 4.95% compounded daily. How much money was originally invested if Harpreet had $15 000.67 in the account on the day he turned 19? [20 points] 1500.67 = PV(1 + i) n I = j/m J = 4.95%/0.0495 M = daily/365 I = 0.0495/365 N = 365 * 6 = 2190 15000.67 = PV(1 + 0.0495/365) 2190 PV = 15000.67/1 + 0.0495/365) 2190 (Finding Value at age 13) PV = 11146.38 11146.38 - 5000 = 6146.38 PV = 6146.38/(1 + i) n 4) On April 15, 2023, a 10-year note dated June 15, 2018, is discounted at 10% compounded quarterly. If the face value of the note is $4000 and interest is 8% compounded quarterly, calculate the compound discount. [20 points] FV = PV(1 + I) n PV = FV/(1 + I) n 4000 = FV I = j/m J = 8% or 0.08 M = quarterly = 4 I = 0.08/4 N = 4 x 10 years = 40 PV = 4000/(1 + 0.08/4) 40 PV = 1811.56

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help