Question 1

Calculate the proceeds of $8956.00 due in seven years, eleven months discounted at 7.5% compounded semi-annually.

Accepted Answer

n = (7 + )2 = 15.8333333 PV = 8956.00(1.0375)^-15.8333333= 8956.00(.5582838) = $4999.99

Question 2

Two debt payments, the first in the amount of $1600.00 due today, and the second in the amount of $7200.00 due in 15 months with interest at 9.6% p.a. compounded quarterly, are to be settled by a payment of $3400.00 nine months from now and a final payment in 21 months. Determine the size of the final payment if the money is worth 12.12% p.a. compounded monthly.

Accepted Answer

Let the focal day be in 21 months.
Payment of $7200:
FV = 7200.00(1.024)⁵ = 7200.00(1.1258999) = 8106.48
At focal date:
Let the final payment be $x.
i = 12.12%/12 = 0.0101
1600.00(1.0101)²¹ + 8106.48(1.0101)⁶ = 3400.00(1.0101)¹² + x
1600.00(1.2349569) + 8106.48(1.0621509) = 3400.00(1.1286456) + x
1975.93 + 8610.31 = 3835.76 + x
$6750.48 = x

Question 3

Alex's property taxes are $4768.00 for his house valued at $349 900 in Whitby due on July 1 of 2014. How much discount should city give, if Alex pays his property tax 8 months in advance, when the city can earn 3% compounded monthly on the surplus fund?

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Question 3

Correct Answer:

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i = = 0.0025
n = 8
PV = = = $4673.70
Discount = $4768 - $4673.70 = $94.30

Accepted Answer

i =   = 0.0025
n = 8
PV =   =   = $4673.70
Discount = $4768 - $4673.70 = $94.30

Question 4

A twenty-year note for $10 000.00 bearing interest at 12% compounded monthly is discounted at 8% compounded quarterly four years and six months before maturity. Find the proceeds of the note.

Accepted Answer

PV = 10000.00; i = 0.01; n = 2

Question 5

A $25 641.00 investment matures in seven years, two months. Find the maturity value if interest is 6.11% p.a. compounded quarterly.

Accepted Answer

PV = 25641.00; i = .015275; n

Question 6

What sum of money invested at 8% p.a., compounded quarterly, will grow to $10 000.00 in 12.5 years?

Accepted Answer

FV = 10000.00; i = 2

Question 7

The Rob U Blind Bank advertises capital savings at 7.128% compounded semi-annually while Take Your Money Trust offers premium savings at 7.1% compounded monthly. Suppose you have $4400.00 to invest for two years.
a) Which deposit will earn more interest?
b) What is the difference in the amount of interest?

Accepted Answer

a) Bank: PV = 4400.00; m = 2; i = @#IMG-DLM& = .03

Question 8

An investment of $21 700 is accumulated at 5.24% compounded quarterly for three and one-half years. At that time the interest rate is changed to 6.12% compounded monthly. How much is the investment worth two years after the change in interest rate?

Accepted Answer

Balance after 3.5 years @#IMG-DLM& = 217

Question 9

You owe $4510 due in 7 months. In addition you owe $3780 due in 13 months and $5125 due in 21 months. You are paying 8.64% compounded monthly on your loan. What single amount three months from now will pay off the entire loan of the three future payments?

Accepted Answer

A)  $12 440.86 
B)  $12 040.86 
C)  $12 404.86 
D)  $12 444.86 
E)  $12 884.86 
A)  $12 440.86 
B)  $12 040.86 
C)  $12 404.86 
D)  $12 444.86 
E)  $12 884.86

Question 10

You invest $12 300 of your money in a locked-in savings account that earns 4.92% compounded monthly for 7 months. You have a family emergency and need to withdraw your funds 2 months early. You sell the savings account at a 5.6% compounded quarterly interest rate. How much did you sell the account for?

Accepted Answer

A)  $11 569.61 
B)  $12 956.61 
C)  $12 540.61 
D)  $12 659.61 
E)  $12 666.61 
A)  $11 569.61 
B)  $12 956.61 
C)  $12 540.61 
D)  $12 659.61 
E)  $12 666.61

Question 11

An investment of $5000.00 earns interest at 6% p.a. compounded monthly for two years. At that time the interest rate is changed to 8% compounded semi-annually. How much will the accumulated value be three and a half years after the change?

Accepted Answer

Balance after 2 years:
PV = 5000.00; m =

Question 12

Alternative Savings offers five-year term deposits at 10% compounded annually while your credit union offers such deposits at 9.6% compounded quarterly. If you have $1000 to invest, what is the maturity value of your deposit
a) at Alternative Savings?
b) at your credit union?

Accepted Answer

a) FV = 1000.00(1.10)⁵ = 1000.0

Question 13

Determine the proceeds of $19 000 three years and three months before the due date if interest is 7.6% compounded semi-annually.

Accepted Answer

n = (3 + @#IMG-DLM& @#IMG-DLM& PV = 1900

Question 14

A three-year, $12 000 promissory note bearing interest at 11.6% compounded quarterly is discounted two years after the date of issue at 9.64% compounded semi-annually. What are the proceeds of the note?

Accepted Answer

Maturity value = 12000.00(1.02

Question 15

Aaron is planning to go on a vacation in 6 years. The vacation $7800.00. How much should he set-aside today in his savings account if the current interest rate is 7.6% p.a., compounded quarterly?

Accepted Answer

A)  $4965 
B)  $7800 
C)  $5026 
D)  $12254 
E)  $4951 
A)  $4965 
B)  $7800 
C)  $5026 
D)  $12254 
E)  $4951

Question 16

Suppose $4320.00 is invested for five years, eight months at 8.25% compounded annually. What is the compounded amount?

Accepted Answer

PV = 4320.00; i = 8.25% = .082

Question 17

You owe $4510 due in 7 months. In addition you owe $3780 due in 13 months and $5125 due in 21 months. You are paying 8.64% compounded monthly on your loan. What single amount three months from now will pay off the entire loan of the three future payments?

Accepted Answer

A)  $12 440.86 
B)  $12 040.86 
C)  $12 404.86 
D)  $12 444.86 
E)  $12 884.86 
A)  $12 440.86 
B)  $12 040.86 
C)  $12 404.86 
D)  $12 444.86 
E)  $12 884.86

Question 18

Determine the accumulated value of $4100.00 compounded semi-annually at 8% p.a. for seven years.

Accepted Answer

PV = 4100.00; i = 4%

Question 19

A debt of $8125 due today is to be settled by three equal payments due three months from now, 18 months from now, and 39 months from now respectively. What is the size of the equal payments at 6.8% compounded quarterly?

Accepted Answer

Let the size of the three equa

Question 20

Romeo started an RRSP on March 1, 2016, with a deposit of $35 000.00. She added $19 000.00 on December 1, 2017, and $8500.00 on September 1, 2018. What is the accumulated value of her account on December 1, 2020, if interest is 6.6% compounded monthly?

Accepted Answer

A)  $39272.78 
B)  $41260.10 
C)  $47846.07 
D)  $70993.80 
E)  $80850.58 
A)  $39272.78 
B)  $41260.10 
C)  $47846.07 
D)  $70993.80 
E)  $80850.58

Calculate the proceeds of $8956.00 due in seven years, eleven months discounted at 7.5% compounded semi-annually.

Alex's property taxes are $4768.00 for his house valued at $349 900 in Whitby due on July 1 of 2014. How much discount should city give, if Alex pays his property tax 8 months in advance, when the city can earn 3% compounded monthly on the surplus fund?

A twenty-year note for $10 000.00 bearing interest at 12% compounded monthly is discounted at 8% compounded quarterly four years and six months before maturity. Find the proceeds of the note.

A $25 641.00 investment matures in seven years, two months. Find the maturity value if interest is 6.11% p.a. compounded quarterly.

What sum of money invested at 8% p.a., compounded quarterly, will grow to $10 000.00 in 12.5 years?

An investment of $21 700 is accumulated at 5.24% compounded quarterly for three and one-half years. At that time the interest rate is changed to 6.12% compounded monthly. How much is the investment worth two years after the change in interest rate?

You owe $4510 due in 7 months. In addition you owe $3780 due in 13 months and $5125 due in 21 months. You are paying 8.64% compounded monthly on your loan. What single amount three months from now will pay off the entire loan of the three future payments?

An investment of $5000.00 earns interest at 6% p.a. compounded monthly for two years. At that time the interest rate is changed to 8% compounded semi-annually. How much will the accumulated value be three and a half years after the change?

Alternative Savings offers five-year term deposits at 10% compounded annually while your credit union offers such deposits at 9.6% compounded quarterly. If you have $1000 to invest, what is the maturity value of your deposit a) at Alternative Savings? b) at your credit union?

Determine the proceeds of $19 000 three years and three months before the due date if interest is 7.6% compounded semi-annually.

A three-year, $12 000 promissory note bearing interest at 11.6% compounded quarterly is discounted two years after the date of issue at 9.64% compounded semi-annually. What are the proceeds of the note?

Aaron is planning to go on a vacation in 6 years. The vacation $7800.00. How much should he set-aside today in his savings account if the current interest rate is 7.6% p.a., compounded quarterly?

Suppose $4320.00 is invested for five years, eight months at 8.25% compounded annually. What is the compounded amount?

You owe $4510 due in 7 months. In addition you owe $3780 due in 13 months and $5125 due in 21 months. You are paying 8.64% compounded monthly on your loan. What single amount three months from now will pay off the entire loan of the three future payments?

Determine the accumulated value of $4100.00 compounded semi-annually at 8% p.a. for seven years.

A debt of $8125 due today is to be settled by three equal payments due three months from now, 18 months from now, and 39 months from now respectively. What is the size of the equal payments at 6.8% compounded quarterly?

Romeo started an RRSP on March 1, 2016, with a deposit of $35 000.00. She added $19 000.00 on December 1, 2017, and $8500.00 on September 1, 2018. What is the accumulated value of her account on December 1, 2020, if interest is 6.6% compounded monthly?

Review of Arithmetic

Review of Basic Algebra

Ratio, Proportion, and Percent

Linear Systems

Cost-Volume-Profit Analysis and Break-Even

Trade Discounts, Cash Discounts, Markup, and Markdown

Simple Interest

Simple Interest Applications

Compound Interest - Further Topics

Ordinary Simple Annuities

Ordinary General Annuities

Annuities Due, Deferred Annuities, and Perpetuities

Amortization of Loans, Residential Mortgages, and Sinking Funds

Bond Valuation

Investment Decision Applications

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Exam 9: Compound Interest - Future Value and Present Value

Calculate the proceeds of $8956.00 due in seven years, eleven months discounted at 7.5% compounded semi-annually.

Alex's property taxes are $4768.00 for his house valued at $349 900 in Whitby due on July 1 of 2014. How much discount should city give, if Alex pays his property tax 8 months in advance, when the city can earn 3% compounded monthly on the surplus fund?

A twenty-year note for $10 000.00 bearing interest at 12% compounded monthly is discounted at 8% compounded quarterly four years and six months before maturity. Find the proceeds of the note.

A $25 641.00 investment matures in seven years, two months. Find the maturity value if interest is 6.11% p.a. compounded quarterly.

What sum of money invested at 8% p.a., compounded quarterly, will grow to $10 000.00 in 12.5 years?

An investment of $21 700 is accumulated at 5.24% compounded quarterly for three and one-half years. At that time the interest rate is changed to 6.12% compounded monthly. How much is the investment worth two years after the change in interest rate?

You owe $4510 due in 7 months. In addition you owe $3780 due in 13 months and $5125 due in 21 months. You are paying 8.64% compounded monthly on your loan. What single amount three months from now will pay off the entire loan of the three future payments?

An investment of $5000.00 earns interest at 6% p.a. compounded monthly for two years. At that time the interest rate is changed to 8% compounded semi-annually. How much will the accumulated value be three and a half years after the change?

Alternative Savings offers five-year term deposits at 10% compounded annually while your credit union offers such deposits at 9.6% compounded quarterly. If you have $1000 to invest, what is the maturity value of your deposit a) at Alternative Savings? b) at your credit union?

Determine the proceeds of $19 000 three years and three months before the due date if interest is 7.6% compounded semi-annually.

A three-year, $12 000 promissory note bearing interest at 11.6% compounded quarterly is discounted two years after the date of issue at 9.64% compounded semi-annually. What are the proceeds of the note?

Aaron is planning to go on a vacation in 6 years. The vacation $7800.00. How much should he set-aside today in his savings account if the current interest rate is 7.6% p.a., compounded quarterly?

Suppose $4320.00 is invested for five years, eight months at 8.25% compounded annually. What is the compounded amount?

You owe $4510 due in 7 months. In addition you owe $3780 due in 13 months and $5125 due in 21 months. You are paying 8.64% compounded monthly on your loan. What single amount three months from now will pay off the entire loan of the three future payments?

Determine the accumulated value of $4100.00 compounded semi-annually at 8% p.a. for seven years.

A debt of $8125 due today is to be settled by three equal payments due three months from now, 18 months from now, and 39 months from now respectively. What is the size of the equal payments at 6.8% compounded quarterly?

Romeo started an RRSP on March 1, 2016, with a deposit of $35 000.00. She added $19 000.00 on December 1, 2017, and $8500.00 on September 1, 2018. What is the accumulated value of her account on December 1, 2020, if interest is 6.6% compounded monthly?

Review of Arithmetic

Review of Basic Algebra

Ratio, Proportion, and Percent

Linear Systems

Cost-Volume-Profit Analysis and Break-Even

Trade Discounts, Cash Discounts, Markup, and Markdown

Simple Interest

Simple Interest Applications

Compound Interest - Further Topics

Ordinary Simple Annuities

Ordinary General Annuities

Annuities Due, Deferred Annuities, and Perpetuities

Amortization of Loans, Residential Mortgages, and Sinking Funds

Bond Valuation

Investment Decision Applications

Filters