DSC 1630 Assignment 3 Semester12022 Questions and Answers
DSC1630
Introductory Financial Mathematics Department of Decision Sciences Assignment 03 for Semester 01 2022
Unique assignment number: Due Date: 24 March 2022
Question 1
Mabel borrowed an amount of money f...
Unique assignment number: 179653
Due Date: 24 March 2022
Question 1
Mabel borrowed an amount of money from her father. The loan will be paid back by means of
payments of R25 000 each every second month for six years. An interest rate of 7,5% per year,
compounded every two months, will be applicable. The amount of the loan is
In this problem we have equal payments in equal time periods plus the interest rate that is
specified is compounded. Thus, we are working with annuities. As the payments are not specified
as being paid at the beginning of the period, we assume them as being paid at the end of each
time period.
We therefore have to calculate the present value of an ordinary annuity or . Now
given is the payments of R25 000, the interest rate of 7,5% compounded every two months,
thus
𝑚 = 6, and the time period is 6 years. The time line is
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