The force of interest, 8(t) is a function of time and at any time t, measured...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The force of interest, 8(t) is a function of time and at any time t, measured in years given by the formula: i. ii. s(t) = {0.09 -0.003t 0t10 0.06 t> 10 Calculate the corresponding constant effective annual rate of interest for the period from t = 0 tot = 10. [4 marks] Express the rate of interest in part (i) as a nominal rate of discount per annum convertible half-yearly. [1 mark] 111. Calculate the accumulation at time t = 15 of RM1500 invested at time t = 5. [3 marks] iv. Calculate the corresponding constant effective annual rate of discount for the period t = 5 to t = 15. V. [1 mark] Calculate the present value at time t = 0 of a continuous payment stream payable at a rate of 10e0.01t from time t = 11 to time t = 15. [6 marks] An investment fund is valued at RM120m on 1 January 2010 and RM140m on 1 January 2011. Immediately after the valuation on 1 January 2011, RM200m is paid into the fund. On 1 July 2012, the value of the fund is RM600m. i. ii. Calculate the annual effective time-weighted rate of return over the two-and-a- half-year period. [3 marks] Explain why the money-weighted rate of return would be higher than the time- weighted rate of return. [2 marks] The force of interest, 8(t) is a function of time and at any time t, measured in years given by the formula: i. ii. s(t) = {0.09 -0.003t 0t10 0.06 t> 10 Calculate the corresponding constant effective annual rate of interest for the period from t = 0 tot = 10. [4 marks] Express the rate of interest in part (i) as a nominal rate of discount per annum convertible half-yearly. [1 mark] 111. Calculate the accumulation at time t = 15 of RM1500 invested at time t = 5. [3 marks] iv. Calculate the corresponding constant effective annual rate of discount for the period t = 5 to t = 15. V. [1 mark] Calculate the present value at time t = 0 of a continuous payment stream payable at a rate of 10e0.01t from time t = 11 to time t = 15. [6 marks] An investment fund is valued at RM120m on 1 January 2010 and RM140m on 1 January 2011. Immediately after the valuation on 1 January 2011, RM200m is paid into the fund. On 1 July 2012, the value of the fund is RM600m. i. ii. Calculate the annual effective time-weighted rate of return over the two-and-a- half-year period. [3 marks] Explain why the money-weighted rate of return would be higher than the time- weighted rate of return. [2 marks]
Expert Answer:
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
Students also viewed these finance questions
-
Stellar ?Inc. has two projects as follows: Project Initial CF CF 1 CF 2 CF 3 CF 4 A - 2,400 800 1,150 1,000 1,850 B - 2,950 700 1,450 1,000 3,850 If? Stellar ?set? 2.49 ?years as a cut-off period for...
-
How many years will it take for $ 1 6 6 , 0 0 0 to grow to be $ 3 5 4 , 0 0 0 if it invested in an account with an annual interest rate of 9 % ?
-
A firm makes three types of furniture: beds, chairs and tables. The manufacturing times required to make them, the profit and capacity available at each work centre are given below; To make one unit...
-
What are the three major legal forms of business organizations? Which one is chosen by most of the largest companies in the United States?
-
A company decides to establish a sinking fund to replace a piece of equipment in 6 years at an estimated cost of $50,000. To accomplish this, they decide to make fixed monthly payments into an...
-
Plaintiff grounds manager sued a manufacturer, Monsanto, alleging that herbicide use caused his non-Hodgkins lymphoma. The jury awarded the plaintiff \($39.3\) million in compensatory damages and...
-
A company has sales of $1,000,000, variable costs of $250,000, and fixed costs of $600,000. Compute the following: 1. Contribution margin ratio. 2. Break-even sales volume. 3. Margin of safety ratio....
-
3. (5 Marks) An engineering project requires $25,000 as first cost and has a planning horizon of six years. Operating costs are $2,300 per year, and expected annual revenue is $9,200 (both real...
-
Archer Corporation owns 100% of the stock of Connor Corporation. On July 1, 2023, Connor adopts a plan of complete liquidation and distributes the following assets to Archer. Cash $100,000 Land Fair...
-
Assume that the principal residence is sold this year at a price equal to its FMV with a 6% commission. The adjusted basis of the home is the original purchase price of $155,000. What is the...
-
a cash-basis individual, wins a $1m lottery price and becomes entitled to the prize on August 1. Con has until September 30 to choose either 20 annual payments of $50,000 each or a lump-sum payment...
-
Raffy deposited $5000 in an investment account for 3 months. The account paid simple interest at a rate of 2.4 percent. What is the future value of his investment?
-
The wiring in a house must be thick enough so it does not become so hot as to start a fire. Part A What diameter must a copper wire be if it is to carry a maximum current of 30 A and produce no more...
-
Six 5 N blocks are stacked vertically. The coefficient of static friction between the blocks is = 0.20. Determine the horizontal force that must be applied to the second block from the bottom in...
-
1. What is the matter with the following claim: The good is good because of what it does for you. 2. What is the matter with the following claim: "Doing the right thing depends on what you are...
-
Show that the peak of the black body spectrum as a function of ? is given by eq. (22.14) kg T Wmax = 2.82
-
The following additional information is available for the Dr. Ivan and Irene Incisor family. Ivan and Irene have the following investment income, in addition to that reported in Chapter 1: Dividends...
-
In 2012, Lou has a salary of $54,000 from her job. She also has interest income of $1,700. Lou is single and has no dependents. During the year, Lou sold silver coins held as an investment for a...
-
Sherry rents her vacation home for 6 months and lives in it for 6 months during the year. Her gross rental income during the year is $4,000. Total real estate taxes for the home are $950, and...
-
Consider the two-tank liquid-level system shown in Figure 7.17. The liquid is pumped into tanks 1 and 2 through valves of linear resistances \(R_{1}\) and \(R_{2}\), respectively. The pressure of the...
-
The room shown in Figure 7.34 has a heater with heat flow rate input of \(q_{0}\). The thermal capacitances of the heater and the room air are \(C_{1}\) and \(C_{2}\), respectively. The thermal...
-
Consider the single-tank liquid-level system shown in Figure 7.16, where the volume flow rate into the tank through a pipe is \(q_{\mathrm{i}}\). A pump is connected to the bottom of the tank through...
Study smarter with the SolutionInn App