Exam 9: Compound Interest: Further Topics and Applications

Vitaly's shares of Dominion Petroleum have dropped in value from $36.75 to $32.25 during the past year. The shares paid a $0.50 per share dividend 6 months ago. Calculate Vitaly's income yield, capital gain yield, and rate of total return for the year.

An investment of $7,500 at 8% compounded monthly is now worth $13,280. How long ago was the investment made?

Twenty years ago the population of a village in Newfoundland was 964. Now it is 612. At what average annual rate has the population of the village declined over the last 20 years?

What is the monthly compounded nominal rate that is equivalent to 19.56% compounded annually?

Calculate the term of the loan or investment:

The current (simple annualized) yield on a money market mutual fund, based on the return for the most recent seven days, is 5.62%. What effective (annualized) yield will be reported for the fund?

A few years ago Avtar invested $6,000 in a compound-interest GIC that earned 4.5% compounded semiannually. He recently received the maturity value of $7,168.99. What was the term of the GIC?

Calculate the missing interest rate (to the nearest 0.01%)

If an invoice indicates that interest at the rate of 1.2% per month will be charged on overdue amounts, what effective rate of interest will be charged?

Calculate the equivalent interest rate (to the nearest 0.01%)

What amount invested at 10% compounded semiannually will be worth $6380.00 after 38 months?

After two consecutive years of 10% losses, what rate of return in the third year will produce a cumulative loss of 30%?

Pat and Jaimie are twins. They will both invest $2,500 on their 20^th birthday. Pat's money will accumulate at 14% compounded annually for 35 years until their 55^th birthday. Being less of a risk taker Jamie will select an investment that will provide a return of only 8.5% compounded annually. If when they reach age 055, Jamie decides to leave the money growing at 8.5% how many more years will it take for Jamie's investment to reach the value that Pat's will be at age 55?

A $4,000 loan at 4.8% compounded monthly was settled by a single payment of $5,000 including accrued interest. Rounded to the nearest day, how long after the initial loan was the $5,000 payment made? For the purpose of determining the number of days in a partial month, assume that a full month has 30 days.

Anders discovered an old pay statement from 11 years ago. His monthly salary at the time was $2,550 versus his current salary of $4,475 per month. At what (equivalent) compound annual rate has his salary grown during the period?

Calculate the missing interest rate (to the nearest 0.01%)

Calculate the effective annual rate for 19.2% compounded semi-annually.

Calculate the effective annual rate for 14.4% compounded monthly.

A $45,000 payment on August 11^th was not paid. Instead $46,306.41 was paid earning 8.8% interest compounded quarterly. The payment was made on Dec 20.

A mutual fund paid 5.5%, 9%, -8%, 3.5%, and 5% over the past five years. If you had invested $2,000 at the beginning of the five-year period, what was your investment worth at the end of the five-year period?