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ETC2430 - Actuarial cash flow modelling - S1 2025

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An investor pays into an account today. The account pays simple interest at a rate of  pa. Which of the following is the amount in the account in five years' time?

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In the following figure, identify the curves of simple and compound interest.

Image failed to load: Two curves on a graph, where the x-axis corresponds to time, and the y-axis corresponds to the accumulated value

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For a fixed principal amount, after exactly one unit of time, simple interest and compound interest rates with equal value are equivalent.

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Let be the rate of interest and be the equivalent rate of discount. Which of the following relationships is true?

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