(a) If jk is the rate of simple interest for period k, where k = 1, 2, ..., n,

show that a(n) − a(0) = j1 + j2 + ... + jn, where a(n) is the accumulation factor from 0 to n.

(b) Assume that the effective annual compound interest rates over an n-year period are: i1 in the first year, i2 in the second year,..., in in the nth year, and the annual compound rate of interest is j. If these rates are equivalent, show that 1 1 + j ≤ 1 n · 1 1 + i1 + 1 1 + i2 + ... + 1 1 + in .

Answer rating: 100% (QA)

Solution 18 given Show that oth at 1it in simple interset an 90 ... View the full answer