Exam 9: Compound Interest: Further Topics and Applications

If the population of Dodge City is decreasing at a rate of 19% per year, how long will it take to decrease from 7,700 to 2,000?

For a three-year investment, what rate compounded semiannually is equivalent to 4.6% compounded quarterly?

Calculate nominal rate of interest (to the nearest 0.01%):

A credit card company wishes to reduce its effective interest rate by 4%. It currently charges a periodic rate of 1.75% per month. Determine by what amount the company should it set its new monthly periodic rate.

A 30-year, Government of Canada $10,000 strip bond was discounted at 4.9% compounded semi-annually and traded for $4,722. How many years earlier had the bond been issued?

Anita contributes a lump sum of $50,000 and $350 per month in an investment earning 5.5% compounded monthly over a 10-year period. At the end of the 10th year, Anita plans to transfer her investment into another account where she can withdraw $4,000 per quarter for 10 years and still have $10,000 remaining. Based on quarterly compounding, determine what the rate of interest that will achieve this goal.

What is the semi-annually compounded nominal rate that is equivalent to 16% compounded quarterly?

The current (simple annualized) yield, based on the holding-period return for the most recent seven days, is reported for a money market mutual fund as 4.54%. What is the fund's corresponding effective (annualized) yield?

What monthly compounded rate is equivalent to 6% compounded quarterly?

Last year, Kristina purchased a new condominium in downtown Toronto for $450,000 and used the property for rental income. During the past year, she rented the condo for $2200 per month. Property taxes were $4500 for the year, and there were no other expenses. The current appraised value of the property is the same as the purchase price. What is Kristina's rate of total return?

The insurance premium on a building is 0.05% of the face value. The face value is 75% of the building's market value. The insurance premium is $1650. What is the face value of the policy?

If a $5,000 investment grew to $6,450 in 30 months of monthly compounding, what effective rate of return was the investment earning?

A $10,000 payment on March 15^th was not paid. Instead $10,158.63 was paid earning 6.4% interest compounded monthly. The payment was made on June 13.

How much will an investment of $100 be worth after 20 years if it increases in value by 25% in half of the years, but declines by 20% in the other years?

Jeff purchased some Mitel preferred shares on the Toronto Stock Exchange for $13.50. The shares pay a quarterly dividend of $0.50. Nine months later the shares were trading at $15.25. What was Jeff's rate of total return for the 9-month period?

For a five-year GIC investment, what monthly compounded nominal rate would put you in the same financial position as 8% compounded semiannually?

The Consumer Price Index rose from 131.2 to 132.1 during the second quarter of a year. What was the effective annualized rate of inflation during the quarter?

Rounded to the nearest month, calculate how long it will take for $1,000 to decline to $643.68 due to a 5.2% inflation rate.

The population of Canada grew from 24,820,000 at the start 1981 to 33,740,000 at the end of 2009. The annual rate of growth over 29 years was 1.06%

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