Jeff deposits 10 into a fund today and 20 fifteen years later. Interest is credited at a nominal discount rate of d compounded quarterly for the first 10 years, and at a nominal interest rate of 6% compounded semiannually thereafter. The accumulated balance in the fund at the end of 30 years is 100.

• 4.33%
• 4.43%
• 4.53%
• 4.63%
• 4.73%

Calculate d.

References

Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.

Solution: C

[[math]] \frac{10}{(1-d / 4)^{40}}\left(1+\frac{.06}{2}\right)^{40}+20\left(1+\frac{.06}{2}\right)^{30}=100 [[/math]]

Solve for [math]d[/math] to get [math]d=0.04531789[/math] or [math]4.53 \%[/math].

References

Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.