Welcome to the hotseat. We've prepared a guide if you'd like to read more about how it works.

Nov 2016 Exam Q4a. "Solve for i" style of question.

0 votes
31 views
asked Oct 27 in BUS 2016H - Financial Mathematics by anonymous

Hi, I've attempted this question multiple times and I'm not sure what I'm doing incorrectly, but the answer that I get definitely seems wrong. This is the question:


4a. To accumulate R8000 at the end of 3n years, deposits of R98 are made at the end of each of the first n years and R196 at the end of each of the next 2n years.

The annual effective rate of interest is i. You are given delta = 2/n where delta is the force of interest.

Calculate i.


The answer that I keep getting is i = 558.63%. I'm thinking that the present value equation I've made has multiple solutions for i and this is just one of them, but I'm not sure how to go about finding the rest.


Thank you.


IMG_3182.heic (0,7 MB)

1 Answer

0 votes
answered Oct 28 by TianheRen (460 points)
 
Best answer

Hi

I tried to do the question a few times as well, and got i = 558,633% all the time.

I can’t view your picture on my phone for some reasonimage , but let me just upload my attempt. 

...