Exam 9: Compound Interest: Further Topics and Applications

-Calculate the missing quantities in Row

a) The population of Canada grew from 24,343,000 in 1981 to 33,505,000 in 2008. What was the overall compound annual rate of growth in our population during the period? b) According to the Canadian Real Estate Association, the average selling price of Canadian homes rose from $67,000 in 1980 to $315,000 in 2008. What has been the overall compound annual appreciation of home prices?

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

What quarterly compounded rate is equivalent to 7.5% compounded semiannually?

If FV is less than PV, what can you predict about the value for i?

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

What is the effective interest rate corresponding to a nominal annual rate of: a. 6% compounded semiannually? b. 6% compounded quarterly? c. 6% compounded monthly?

-Calculate the missing quantities in Row K.

If FV is less than PV, what can you predict about the value for i?

If the Consumer Price Index rose by 1% over a two-month period, what were the simple and effective annualized rates of inflation during the two-month period?

Assume that the TD Bank shares in Table 9.3 will pay a $2.04 per share dividend in 2007. What must the share price be at the end of 2007 for a total rate of return in 2007 of 10%?

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

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

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

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

The following table presents the rates of total return in successive years from 2004 to 2008 for the Ethical Growth Fund and for the benchmark Toronto Stock Exchange S&P/TSX Composite Index. By how much did the mutual fund's overall percentage return exceed or fall short of the Index's growth?

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

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

The home the Bensons purchased 13 years ago for $85,000 is now appraised at $215,000. What has been the annual rate of appreciation of the value of their home during the 13- year period?

What compound annual rate of return is required for an investment to double in: a) 12 years? b) 10 years? c) 8 years? d) 6 years? For each case, multiply the annual rate of return (in %) by the time period (in years). Compare the four products. Does the comparison suggest a general rule-of-thumb?