Exam 3: The Time Value of Money: An Introduction to Financial Mathematics

What is the implied interest rate if you borrow $85 000 and promise to pay back $201 229 at the end of 10 years?

The ______ interest rate is an interest rate calculated after taking out the effects of inflation.

Five years ago,you entered into a loan agreement to borrow $100 000.The loan was to be paid off over 20 years through equal monthly instalments.If the interest rate was fixed at 12% p.a.for the entire loan term,how much do you pay per month?

You buy a perpetuity that makes one payment at the end of each year.If you invest $10 000 and the interest rate is 5% per annum,what is the payment each year?

Kristy has to make rental payments of $1000 at the start of every month,throughout the four-year duration of her university course.Her university fees are $4000 to be paid at the start of each year.She earns $1500 per month (paid at the end of each month)from a part-time job.Assume an interest rate of 8% p.a.and that she keeps the part-time job for the next four years.How much money,in present value terms,can she withdraw each month for the next four years?

Matthew earns $10 000 per month for the next 25 years,after which he retires.During the first five years of retirement,he withdraws $6000 at the start of each month,after which he dies.His son,Sean,inherits the remainder of Matthew's savings.It is further stipulated in Matthew's will that Sean will be paid the money in equal payments at the start of every month,for the next 20 years.Given a fixed interest rate of 9% p.a. ,calculate the amount of the monthly payments that Sean receives.

A financial contract is:

The interest rate where interest is charged at the same frequency as the quoted interest rate is the:

Karen has borrowed $12 000 in student loans at an annual interest rate of 9%.If she repays $1500 per annum,how long (to the nearest year)will it take to repay the loan?

You want to deposit amounts in the bank at the end of 2011,2012,2013 and 2014,so that you have $1259.71 in your account on 1 January 2015.Calculate how large each of your payments would need to be if the bank compounds quarterly at 8% p.a.

If a term deposit offers an interest rate of 10% p.a. ,compounding continuously,how much will an initial investment of $50 000 be worth after one year?

If the nominal interest rate is 12% p.a.and the inflation rate is expected to be 5% p.a. ,what is the real rate of interest?

In an interest-only loan,the principle reduces by a small amount at first,and more rapidly towards the end of the loan.

Peter borrowed $5000 and 18 months later repays the loan with a single payment of $6400. a.What is the implied annual simple interest rate? b.What is the implied annual compound interest rate?

A principle that a dollar is worth more the sooner it is to be received,all other things equal,is:

You have a goal to raise $1000 in four years' time.If your mother gives you $400 at the end of the first year,you make six deposits of equal amounts every six months thereafter,and all the money is deposited in a bank,which pays 8% p.a. ,compounded semi-annually,how large must each of the six payments be for you to reach your target?

The calculation that expresses the ratio of net cash inflows to net cash outflows produced by a financial contract is known as:

An annuity in which the first cash flow is to occur immediately is known as a/an:

The distinguishing feature of an annuity due is that the time period between the payment of each successive cash flow differs to the frequency with which the interest compounds.

What is the present value of $500 payable in 10 years' time if the interest rate is 6% p.a.?