1. $10,000 is initially deposited in an account at the annual interest rate of 3% compounded continuously. Suppose that additional $200 is deposited quarterly the first year and this amount is increased by 20% each year thereafter. A) find the change in the amount of money at time delta(t) B) Derive the differential equation from the above C) Solve the Initial value problem D) Find A(5) E) Find A(5) by quarters.
2. You bought a 3% coupon bond with a face value of $1,000 one year ago for $1,200, and you just sold it for $1,260. What was your return (or rate of return) on the bond?