Monthly interest payments-annual interest rate

Reference no: EM13293911

1. An investor pays P for an annuity which provides payments of 100 at the beginning of each month for 10 years. These payments are invested at a nominal annual interest rate of 12% convertible monthly. Monthly interest payments are reinvested at a nominal annual interest rate of 6% convertible monthly. The annual yield rate over the 10-year period is 8% effective. Calculate P.

2. Mr. smith was age 45 on January 1, 19993. Hs annual salary for the calandar year beginning 1/1/1993 is $44,000. Mr. Smith was hired January 1, 1983. Since his hire date, is salary has increased 6% per year, and each December 31 since his hire date he has placed 4% of his annual salary in a fund earning 8% per year. Assuming Mr. Smith's salary continues to increase 6% per year and he continues to make deposits of 4% of his annual salary into a fund earning 8% per year, what is the amount in the fund immediately after the December 31, 2012 deposit is made?

Reference no: EM13293911

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