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Find constant annual discount rate for initial deposit

Roger makes an inital deposit of K into an account governed by the time-varying force of interest dt = 9/10pvt(per annum).

At the same time, Harry makes an initial deposit at the same amount into an account governed by the constant annual discount rate d.

There are no subsequent deposits to or withdrawals from either of the two accounts.

After 4 years, Roger and Harry realize that the balances in their accounts are equal. Which of the following is the closest to d?

(a) e^-^6/5

(b) e^-^1/5

(d) 1 - e^-^6/5

(e) 1

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Solution Preview :

Prepared by a verified Expert

Accounting Basics: Find constant annual discount rate for initial deposit

Reference No:- TGS0697886

Have a Question? (oR Write a Review)

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Solution Preview :

Prepared by a verified Expert

Accounting Basics: Find constant annual discount rate for initial deposit

Reference No:- TGS0697886

Recent Questions Asked Accounting Basics

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