# Quiz 11: Annuities: Periodic Payment, Number of Payments, and Interest Rate

Business

Q 1Q 1

What regular investment, made at the end of every three months and earning 10% compounded quarterly, would accumulate to $475,000 in 20 years?
A) $3,492.86
B) $17,616.21
C) $7,856.83
D) $1,912.37
E) $7,916.67

Free

Multiple Choice

D

Q 2Q 2

Marvin hopes to accumulate $1,000,000 in his retirement plan by making equal contributions at the end of each month for 35 years. He is planning to earn 10.8% compounded monthly. What amount should he deposit every month?
A) $119.90
B) $213.87
C) $569.05
D) $963.27
E) $2,380.95

Free

Multiple Choice

B

Q 3Q 3

Sally has invested a constant amount at the end of every six months for the last 40 years. She has made wise investment decisions and has earned a return of 16.4% compounded semi-annually. Today the value of her savings has reached $2,500,000. What amount has she been investing every half-year?
A) $91.66
B) $375.29
C) $5,834.15
D) $61,983.84
E) $205,375.29

Free

Multiple Choice

B

Q 4Q 4

How much will Clarence have to invest at the end of every year at 11% compounded annually if he is going to accumulate $25,000 in five years?
A) $2,758.93
B) $3,870.52
C) $4,014.25
D) $4,989.01
E) $5,562.50

Free

Multiple Choice

Q 5Q 5

A loan of $17,200 at 9% compounded monthly is to be paid off by equal payments to be made at the end of every month for three years. What is the size of the monthly payment?
A) $561.48
B) $679.49
C) $606.78
D) $477.78
E) $546.96

Free

Multiple Choice

Q 6Q 6

Vince has $35,000 to purchase an annuity that will provide him with equal payments at the end of every three months for the next six years. If the funds earn 8% compounded quarterly, what is the size of the quarterly payments he will receive?
A) $2,335
B) $1,850
C) $3,734
D) $3,324
E) $7,571

Free

Multiple Choice

Q 7Q 7

The interest rate charged on a loan of $85,000 is 7.75% compounded annually. If the loan is to be paid off over seven years, calculate the size of the annual payments.
A) $13,084
B) $1,314
C) $9,599
D) $16,187
E) $17,492

Free

Multiple Choice

Q 8Q 8

Fred must pay a $25,000 obligation one year from now. What end-of-month payments for twelve months would put the creditor in an equivalent financial position if the creditor can earn 9% compounded monthly?
A) $2,186.29
B) $1,863.67
C) $1,998.79
D) $2,170.01
E) $1,983.91

Free

Multiple Choice

Q 9Q 9

An investment of $25,000 is made for a 10-year term. After the term expires, equal withdrawals will be made at the end of every month for 15 years. What will the size of the monthly withdrawal be if the investment earns 9% compounded monthly for both the deposit and withdrawal periods.
A) $253.57
B) $161.95
C) $621.58
D) $251.68
E) $616.96

Free

Multiple Choice

Q 10Q 10

If the invested funds earn 13% compounded quarterly what amount invested at the end of every six months for 15 years will accumulate to $295,000?
A) $23,415
B) $22,838
C) $5,953
D) $1,649
E) $3,352

Free

Multiple Choice

Q 11Q 11

Given the time-value of money of 11% compounded annually, calculate the size of the month-end payments for the next five years that would be equivalent to a single payment of $13,285 payable five years from now.
A) $285.42
B) $221.42
C) $169.39
D) $177.76
E) $299.54

Free

Multiple Choice

Q 12Q 12

What annual deposit should Martina make to her RRSP at the end of every year if the funds earn 12% compounded monthly and her goal is to accumulate $1,000,000 at the end of 25 years?
A) $4,000
B) $6,750
C) $7,500
D) $12,750
E) $13,358

Free

Multiple Choice

Q 13Q 13

Calculate the size of the monthly mortgage loan payment if a $121,500 loan at 7% compounded semi-annually is to be paid off over 18 years.
A) $983.75
B) $990.84
C) $998.00
D) $598.80
E) $716.44

Free

Multiple Choice

Q 14Q 14

If you have $45,000 earning 9.6% compounded monthly, how much money could you take out of the investment at the end of every year for 10 years?
A) $8,820
B) $7,334
C) $2,819
D) $7,198
E) $2,878

Free

Multiple Choice

Q 15Q 15

A loan of $45,000 calls for equal payments at the end of every three months for the next six years. What is the size of the payments if the interest rate is 14% compounded semi-annually?
A) $3,924
B) $2,802
C) $3.817
D) $2,785
E) $3,395

Free

Multiple Choice

Q 16Q 16

Today, Barry reached his 50

^{th}birthday and he has $70,000 in his retirement fund. His goal is to have $500,000 on his 65^{th}birthday. He can expect his investments to earn 13% compounded semi-annually. How much will he have to invest at the end of every six months for the next 15 years in order to reach his goal? A) $4,978.30 B) $1,722.84 C) $428.30 D) $926.14 E) $2,388.89Free

Multiple Choice

Q 17Q 17

Heather is planning to invest a constant amount of money at the end of every year for 15 years and then allow her money to accumulate interest for 15 more years without any additional deposits. If her investments earn 11% compounded annually and she must have $650,000 in 30 years, how much will she invest at the end of each of the next 15 years?
A) $3,266
B) $2,167
C) $1,889
D) $3,612
E) $3,949

Free

Multiple Choice

Q 18Q 18

If a single sum of $25,000 is invested at age 25 at 13% compounded annually, what amount will the investor be able to withdraw from the savings, at the end of every month for 20 years, beginning at age 65? At age 65 the investor will put his money into a safer investment that earns only 6% compounded monthly.
A) $13,831
B) $18,567
C) $23,782
D) $41,009
E) $7,185

Free

Multiple Choice

Q 19Q 19

Vanessa wants to retire in 25 years with enough saved to be able to withdraw $5,000 monthly for 20 years. She has already accumulated $48,000 in her investment account. Assume that the rate of interest is 4.8% compounded annually for the 25 years of her contributions, and changes to 3.6% compounded monthly for the next 20 years. Determine what annual contributions she has to make for the next 25 years in order to meet her objective.
A) $38,449.13
B) $22,923.85
C) $20,202.68
D) $18,468.85
E) $15,066.33

Free

Multiple Choice

Q 20Q 20

A 25-year annuity is purchased for $650,000. Determine the payments it will deliver on a quarterly basis if the rate of interest is 5.05% compounded monthly.
A) $10,554.66
B) $11,004.66
C) $11,504.66
D) $12,004.66
E) $12,554.66

Free

Multiple Choice

Q 21Q 21

Jenny has two investments. The first is a trust fund that was setup 18 years ago when she was born with a lump sum deposit of $25,000 earning 4.8% interest compounded annually. The second investment is a fund setup two years ago that Jenny contributes $800 per quarter. This fund earns 3.1% compounded semi-annually. Determine Jenny's total investment value 20 years from now.
A) $266,665.73
B) $296,665.73
C) $302,665.73
D) $366,665.73
E) $396,665.76

Free

Multiple Choice

Q 22Q 22

A $350,000 loan has an interest rate of 6.2% compounded semi-annually. Determine the semi-annual payments that will reduce the balance to $80,000 after 4 years
A) $47,909.55
B) $45,089.24
C) $44,224.58
D) $42,806.17
E) $41,105.65

Free

Multiple Choice

Q 23Q 23

Bosley has $750,000 which is earning 7.2% compounded monthly. At the end of every month for the next 10 years he plans to withdraw $5,000. After that he wants to increase his equal monthly withdrawals to the largest amount possible for 15 more years. What is that amount?
A) $5,733
B) $5,917
C) $6,029
D) $6,315
E) $6,977

Free

Multiple Choice

Q 24Q 24

Five years before her daughter was expected to enter college, Frieda deposited $15,000 in an education fund. Her daughter will make 48 equal quarterly withdrawals from the fund starting on the date she enters college. If the education fund earns 10% compounded quarterly, what will be the maximum quarterly withdrawal?
A) $863.41
B) $540.09
C) $526.92
D) $263.92
E) $885.00

Free

Multiple Choice

Q 25Q 25

MaryAnne is taking out a loan of $70,000 at 8% compounded semi-annually. Calculate the monthly payments that will reduce her balance owing to $30,000 in five years.
A) $2,968
B) $1,005
C) $809
D) $669
E) $666

Free

Multiple Choice

Q 26Q 26

If $2,000 were invested at the end of every three months, how long would it take to accumulate $475,000 at 10% compounded quarterly? (rounded up to the nearest whole year)
A) 60 years
B) 79 years
C) 27 years
D) 20 years
E) 14 years

Free

Multiple Choice

Q 27Q 27

Marvin's goal is to accumulate $1,000,000 in his retirement plan by making contributions of $250 at the end of each month. He expects to earn 10.8% compounded monthly. How long will it take Marv to reach his goal? (rounded up to the nearest whole year)
A) 34 years
B) 41 years
C) 155 years
D) 14 years
E) 26 years

Free

Multiple Choice

Q 28Q 28

For a long time, Sally has been investing $7,000 at the end of every six months. The value of her savings today is $2,500,000. She has made wise investment decisions and has earned a return of 16.4% compounded semi-annually. How long ago (rounded off to the nearest whole year) did Sally start this savings plan?
A) 17 years
B) 22 years
C) 27 years
D) 32 years
E) 41 years

Free

Multiple Choice

Q 29Q 29

Clarence has been investing $1,000 at the end of every year at 11% compounded annually. With today's contribution his investment has grown to $44,500. How many years ago did he make the first contribution?
A) 26 years
B) 49 years
C) 17 years
D) 31 years
E) 12 years

Free

Multiple Choice

Q 30Q 30

A loan of $16,525 at 10.8% compounded monthly is to be paid off by equal monthly payments of $650. How long will it take to pay off the loan?
A) 26 months
B) 29 months
C) 32 months
D) 36 months
E) 48 months

Free

Multiple Choice

Q 31Q 31

Moses' goal, when he retires from work in seven years, is to have $400,000 in his Retirement Fund. Assuming he achieves his goal and the fund earns 7% compounded semi-annually after he retires, Moses will, at the end of every six months, take $20,000 out of his Retirement Fund. For how long will he be able to do that before the money runs out?
A) 15.4 years
B) 35.0 years
C) 20.0 years
D) 12.9 years
E) 17.5 years

Free

Multiple Choice

Q 32Q 32

Vince has $35,000 to purchase an annuity that will provide him with payments of $1,000 at the end of every three months. If the funds earn 8% compounded quarterly, how long will the payments continue?
A) 35 years
B) 36 years
C) 15 years
D) 9 years
E) 60 years

Free

Multiple Choice

Q 33Q 33

If deposits of $9,900 invested at the end of every six months earn 13% compounded quarterly, how long will it take to accumulate $295,000?
A) 4.25 years
B) 8.5 years
C) 17.0 years
D) 34.0 years
E) 68.0 years

Free

Multiple Choice

Q 34Q 34

Given the time-value of money of 11% compounded annually, calculate the term of an ordinary annuity of $425 monthly payments with a future value of $37,725.
A) 66.0 years
B) 33.0 years
C) 14.3 years
D) 11.0 years
E) 5.5 years

Free

Multiple Choice

Q 35Q 35

Martina's RRSP earns 12% compounded monthly and her goal is to accumulate $1,000,000 by making deposits of $4,100 at the end of every year. How many years will it take to reach her goal?
A) 24 years
B) 29 years
C) 33 years
D) 47 years
E) 125 years

Free

Multiple Choice

Q 36Q 36

How many monthly payments of $919 will it take to pay off a mortgage loan if a $121,500 loan at 7% compounded semi-annually?
A) 132
B) 178
C) 212
D) 236
E) 249

Free

Multiple Choice

Q 37Q 37

You have $45,000 earning 9.6% compounded monthly. For how long will you be able to withdraw $5,000 at the end of every year?
A) 10.7 years
B) 13.9 years
C) 21.8 years
D) 24.4 years
E) 29.5 years

Free

Multiple Choice

Q 38Q 38

A loan of $47,000 calls for payments of $2,700 at the end of every three months until the debt is settled. At an interest rate of 14% compounded semi-annually, how many payments will be made?
A) 14
B) 17
C) 24
D) 27
E) 40

Free

Multiple Choice

Q 39Q 39

How many monthly withdrawals of $1,400 will an investment of $75,000 sustain if the first withdrawal is made 13 months from now and the money earns 8.4% compounded monthly?
A) 96
B) 75
C) 66
D) 53
E) 45

Free

Multiple Choice

Q 40Q 40

A loan of $25,000 is to be repaid by monthly payments of $400. The interest rate is 9% compounded monthly. How many months will it take for the amount owing on the debt to be reduced to less than $10,000?
A) 57
B) 68
C) 74
D) 85
E) 92

Free

Multiple Choice

Q 41Q 41

A $12,000 loan is repaid by semi-annual payments of $1,500 each. Interest on the loan is 10% compounded semi-annually. How long will it take to pay off the loan?
A) 5.5 years
B) 5 years
C) 21 years
D) 10 years
E) 10.5 years

Free

Multiple Choice

Q 42Q 42

Determine how long a $45,000 deposit will sustain quarterly withdrawals of $800 if interest is at 6.14% compounded annually.
A) 100 quarters
B) 125 quarters
C) 150 quarters
D) 175 quarters
E) 200 quarters

Free

Multiple Choice

Q 43Q 43

Determine how much faster monthly payments of $248.69 will accumulate to $10,000 if interest is at 7.2% compounded monthly, compared to monthly payments of $182.61 at 6.6% interest compounded monthly.
A) 6 months
B) 8 months
C) 10 months
D) 12 months
E) 14 months

Free

Multiple Choice

Q 44Q 44

How much longer will it take for an initial deposit of $10,000 and annual payments of $1,000 accumulate to $25,000 if interest was at 4.11% compounded annually versus 5.45% compounded annually.
A) 1 year
B) 2 years
C) 3 years
D) 4 years
E) 5 years

Free

Multiple Choice

Q 45Q 45

It was estimated that a famous baseball player with a personal fortune of $40 million dollars depleted his funds by spending $1,500,000 and over a period of time became $60 million in debt. If interest is at 3.8% compounded monthly, determine how long it took for the player to get into this situation.
A) 75 months
B) 70 months
C) 76 months
D) 82 months
E) 88 months

Free

Multiple Choice

Q 46Q 46

Janice has $200,000 in an investment and wishes to use this money to take time off and get her Master's degree. She plans to withdraw $2,000 per month for the first 3 years for her monthly expenses. Afterwards, she intends to increase her withdrawals to $3,000 per month. Determine how many monthly payments can be extracted after the third year if interest throughout is 5.2% compounded monthly.
A) 59 months
B) 60 months
C) 61 months
D) 62 months
E) 63 months

Free

Multiple Choice

Q 47Q 47

Corey has $50,000 deposited in an account earning 6.2% compounded monthly. He plans to withdraw $2,000 per month for two years. Afterwards, he plans to replenish his account by contributing $3,000 per quarter to bring his investment back to the original $50,000. Determine how many payments will be needed for the quarterly payments.
A) 15
B) 14
C) 13
D) 17
E) 11

Free

Multiple Choice

Q 48Q 48

When Barry reaches his 40

^{th}birthday he will receive $10,000 which he will put into his retirement fund. His goal is to have $500,000 in the retirement fund on his 65^{th}birthday. To reach his goal, he will make equal deposits of $1,520 at the end of every six months leading up to his 65^{th}birthday. He can expect his investments to earn 13% compounded semi-annually. At what age must he start the semi-annual deposits of $1,520 in order to reach his goal? A) 25 B) 30 C) 35 D) 40 E) 45Free

Multiple Choice

Q 49Q 49

Heather's investments will earn 11% compounded annually and, in 30 years, she must have $645,000. For the next 20 years she can make year-end contributions of $10,000. She will not be able to make any contributions after 20 years from now. She wants to know if she has to start the $10,000 annual contributions now in order to reach her goal. If not, how many years can she wait before starting the $10,000 annual contributions?
A) She must start now.
B) She can wait for 4 years.
C) She can wait for 8 years.
D) She can wait for 12 years.
E) She can wait for 16 years.

Free

Multiple Choice

Q 50Q 50

Mr. Johnston has been investing $5,000 into his savings plan at the end of every year for the last 17 years. His investments have earned 10.6% compounded semi-annually. If he increases his annual contributions to $6,000, how much longer will it take for his savings plan to reach $1,000,000?
A) 9 years
B) 11 years
C) 13 years
D) 15 years
E) 17 years

Free

Multiple Choice

Q 51Q 51

Clarence has a retirement fund of $300,000 that earns 11% compounded monthly. His plan is to withdraw $3,000 at the end of every month for 12 years and then increase the monthly withdrawals to $5,000. How many $5,000 withdrawals will he be able to make?
A) 30
B) 43
C) 48
D) 51
E) 59

Free

Multiple Choice

Q 52Q 52

A $15,000 deposit earns 6% compounded quarterly. Rounded to the nearest month, how long (before the first withdrawal) must the deposit be allowed to grow before it can provide 24 quarterly withdrawals of $1,200.
A) 7 years
B) 7 years and 3 months
C) 7 years and 11 months
D) 8 years and 3 months
E) 8 years and 5 months

Free

Multiple Choice

Q 53Q 53

A stereo priced at $1,057.53 was paid for by 12 monthly payments of $100 with the first payment made one month after the date of purchase. What monthly compounded nominal interest rate was charged?
A) 2.00%
B) 2.33%
C) 27.97%
D) 24.00%
E) 24.96%

Free

Multiple Choice

Q 54Q 54

A $50,000 mortgage loan requires monthly payments of $520 for 20 years. What is the annually compounded nominal rate of interest on the loan?
A) 11.3752%
B) 11.6987%
C) 11.1146%
D) 0.9381%
E) 11.2573%

Free

Multiple Choice

Q 55Q 55

What compounded rate of return will allow investments of $800 at the end of every six months to accumulate to $24,000 after 10 years?
A) 14.876%
B) 8.062%
C) 8.143%
D) 8.309%
E) 15.286%

Free

Multiple Choice

Q 56Q 56

A life insurance company will sell a 20-year annuity paying $1,600 at the end of each month for $175,000. What annual compounded nominal rate of interest will the annuitant earn?
A) 9.401%
B) 8.735%
C) 9.226%
D) 9.335%
E) 9.297%

Free

Multiple Choice

Q 57Q 57

A $10,000 debt is repaid by payments of $800 at the end of each quarter for five years. What quarterly-annually compounded nominal interest rate was charged on the loan?
A) 23.10%
B) 4.96%
C) 11.08%
D) 9.81%
E) 19.86%

Free

Multiple Choice

Q 58Q 58

For the next 15 years Andre expects to earn 12% compounded semi-annually on the Retirement Savings Plan (RSP) that he is starting. For the subsequent 10 years he expects a return of 7% compounded semi-annually. How much money is he planning to have in 25 years if he invests $3,500 at the end of every six months for the 25 years?
A) $411,922
B) $610,059
C) $382,600
D) $451,603
E) $1,068,912

Free

Multiple Choice

Q 59Q 59

What monthly compounded nominal rate of return must Rachel earn in her RRSP in order for month-end contributions of $600 to accumulate to $750,000 in 25 years?
A) 8.04%
B) 9.65%
C) 10.09%
D) 11.48%
E) 13.50%

Free

Multiple Choice

Q 60Q 60

What would be the effective rate of interest if $100,000 was accumulated by investments of $3,500 made at the end of every three months for five years?
A) 15.20%
B) 14.40%
C) 8.65%
D) 13.12%
E) 34.61%

Free

Multiple Choice

Q 61Q 61

After 15 years of contributions of $3,500 at the end of every six months to a Retirement Savings Plan, the accumulated amount stood at $232,536. What semi-annually compounded nominal rate of return was earned by the funds in the RSP?
A) 2.5%
B) 5.0%
C) 7.5%
D) 10.0%
E) 12.5%

Free

Multiple Choice

Q 62Q 62

What monthly compounded nominal rate of return would one need to achieve in order to have investments of $100 made at the end of every month for 35 years to accumulate to $1 million?
A) 14.50%
B) 14.76%
C) 13.62%
D) 12.93%
E) 11.35%

Free

Multiple Choice

Q 63Q 63

You have the option receiving $4,000 at the end of every six months for 15 years or a single lump sum of $250,000 at the end of the 15 years. What effective interest rate would make the two options equal in value?
A) 9.500%
B) 4.642%
C) 9.770%
D) 5.250%
E) 9.285%

Free

Multiple Choice

Q 64Q 64

A life insurance company advertises that $75,000 will purchase a 25-year annuity paying $456.10 at the end of each month. What monthly compounded nominal rate of return does the annuity investment earn?
A) 5.4%
B) 6.2%
C) 5.7%
D) 5.6%
E) 4.5%

Free

Multiple Choice

Q 65Q 65

A life insurance company advertises that $50,000 will purchase a 20-year annuity paying $402.80 at the end of each month. What effective rate of return does the annuity investment earn?
A) 6.15%
B) 6.92%
C) 7.76%
D) 7.18%
E) 7.50%

Free

Multiple Choice

Q 66Q 66

Royal Niagara Golf and Country Club allows members to pay the annual membership fee by a single payment of $11,000 at the beginning of the year or by payments of $1,000 at the end of each month. What monthly compounded nominal rate of interest is being paid by members who select the monthly plan?
A) 19.166%
B) 16.376%
C) 15.972%
D) 17.663%
E) 21.845%

Free

Multiple Choice

Q 67Q 67

A loan of $25,000,000 is to be repaid by annual year-end payments of $3,000,000 for 30 years. What is the effective interest rate on this loan?
A) 9.746%
B) 43.62%
C) 3.600%
D) 11.548%
E) 21.598%

Free

Multiple Choice

Q 68Q 68

Susan's car loan payments are $265.08 at the end of each month for four years. The amount she borrowed was $12,000. What is the monthly compounded nominal interest rate?
A) 6.500%
B) 2.900%
C) 10.500%
D) 4.750%
E) 6.000%

Free

Multiple Choice

Q 69Q 69

What annually compounded rate of return must Rachel earn in her RRSP in order for month-end contributions of $450 to accumulate to $750,000 in 25 years?
A) 12.26%
B) 9.43%
C) 10.71%
D) 11.32%
E) 11.93%

Free

Multiple Choice

Q 70Q 70

A lottery winner must decide between receiving $5,000 at the end of every month for 10 years or one lump sum of $1,000,000 after 10 years. What annually compounded nominal rate of interest would make the two options equal in value?
A) 10.152%
B) 7.984%
C) 9.774%
D) 7.807%
E) 9.580%

Free

Multiple Choice

Q 71Q 71

What effective interest rate will Frankie have to earn if his investments of $2,000 at the end of every three months for 20 years are to have a maturity value in 20 years of $1,000,000?
A) 11.56%
B) 13.81%
C) 15.29%
D) 16.19%
E) 17.49%

Free

Multiple Choice

Q 72Q 72

The Jacksons have agreed to pay $1,419 at the end of every month for 15 years on their mortgage loan of $167,000. What annually compounded nominal rate are they paying?
A) 5.09%
B) 7.23%
C) 8.11%
D) 7.29%
E) 6.11%

Free

Multiple Choice

Q 73Q 73

A loan of $88,700 can be paid off by monthly payments of $1,000 for 11 years. What is the annually compounded nominal interest rate?
A) 9.81%
B) 6.45%
C) 7.74%
D) 7.86%
E) 8.02%

Free

Multiple Choice

Q 74Q 74

Malcolm wants to purchase an annuity that will pay him $7,000 at the end of every three months for 15 years. His financial advisor has told Malcolm that this annuity will cost him $250,000. What annually compounded nominal interest rate was used in this calculation?
A) 7.56%
B) 9.3%
C) 12.60%
D) 18.89%
E) 22.67%

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Multiple Choice

Q 75Q 75

David has the option to pay for auto insurance on either a lump sum basis of $2,000 per year or $180 per month. Determine the effective rate of interest (based on monthly compounding) if David chooses the monthly payment option.
A) 11.52%
B) 12.45%
C) 13.52%
D) 14.52%
E) 15.45%

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Multiple Choice

Q 76Q 76

A $10,000 deposit along with quarterly contributions of $150 accumulates to $18,000 in 5 years. Determine the nominal rate of interest if interest is compounded annually.
A) 7.58%
B) 8.58%
C) 9.68%
D) 10.28%
E) 13.28%

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Multiple Choice

Q 77Q 77

Inflation is a major concern for economists. Many are predicting higher inflation rate in the coming year. If a loaf of bread cost $1.99 last year and is now $2.25, determine the annual rate of inflation.
A) 13.06%
B) 11.08%
C) 10.28%
D) 9.54%
E) 8.63%

Free

Multiple Choice

Q 78Q 78

After 12 ½ years contributions of $750 at the end of each semi-annual period has accumulated into $24,510.47. If interest rate is compounded semi-annually, determine the effective annual rate of the investment.
A) 8.08%
B) 8.62%
C) 9.08%
D) 9.58%
E) 10.08%

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Q 79Q 79

David and Hana plan to purchase a house in 5 years' time. David already has $20,000 that he invested in an account two years ago that is earning 0.308% interest compounded monthly. Hanna plans to contribute $675 per month for the next 5 years into her account. Determine what the nominal rate of interest (based on monthly compounding) that Hanna's investment should earn if their combined savings is to total $70,000.
A) 3.07%
B) 4.22%
C) 3.68%
D) 4.04%
E) 4.59%

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Q 80Q 80

One payment stream is being compared to another. The first option is for $500 semi-annual payments over 5 years at an interest rate of 6% compounded semi-annually. The second option is for $250 quarterly payments over 5 years, with interest compounded quarterly. Determine the nominal rate of interest to be offered on the second option for both options to have equal future values.
A) 4.95%
B) 5.25%
C) 5.65%
D) 6.05%
E) 6.85%

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Q 81Q 81

One payment stream is being compared to another. The first option is for $600 quarterly payments over 8 years at an interest rate of 4% compounded quarterly. The second option is for $50 monthly payments over 8 years, with interest compounded monthly. Determine the nominal rate of interest to be offered on the second option for both options to have equal future values.
A) 10.31%
B) 10.21%
C) 10.11%
D) 11.01%
E) 10.93%

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Q 82Q 82

Sandy is planning to accumulate $500,000 after 30 years by making investments of $300 at the end of each month for 20 years and leaving the money to grow at 7% compounded semi-annually for 10 more years. What monthly compounded nominal rate will Sandy have to be earning over the 20 years that she makes the monthly deposits?
A) 8.96%
B) 11.97%
C) 11.30%
D) 12.83%
E) 7.12%

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Q 83Q 83

An advertisement for a new car offers 1.2% compounded monthly financing for the first 24 months of a 5-year, $35,000 loan. The payments are $650 per month for the entire 60 months. What monthly compounded nominal interest rate is being applied to the final three years?
A) 10.258%
B) 12.01%
C) 8.79%
D) 11.51%
E) 13.73%

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Q 84Q 84

We plan to have $1,500,000 in 35 years. We will make quarterly deposits of $1,000 at the end of every 3 months for 25 years and then allow the money to accumulate, without more deposits, at 8% compounded annually for the last 10 years. What compounded annual nominal rate of return will we have to earn over the 25 years that we will be making the quarterly deposits?
A) 13.482%
B) 12.774%
C) 12.641%
D) 11.722%
E) 10.939%

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Q 85Q 85

A new car promotion offers 0.9% compounded monthly interest for the first 36 months on a loan of $57,000. The payments on this loan are $1,000 per month for five years. What annually compounded interest rate is being applied to the loan for the last two years?
A) 15.13%
B) 10.800%
C) 5.331%
D) 8.124%
E) 10.662%

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Q 86Q 86

Determine the present value of $450 quarterly payments made at the start of each quarter for 7 years, assuming a rate of interest of 6.5% compounded monthly.
A) $11,542.57
B) $10,211.02
C) $9,875.46
D) $9,440.38
E) $9,009.44

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Q 87Q 87

Determine the future value of a $75,000 initial deposit and $400 withdrawals at the start of each month of five years, given an interest rate of 9.9% compounded quarterly.
A) $61,218.42
B) $65,218.42
C) $85,218.42
D) $88,218.42
E) $91,218.42

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Q 88Q 88

Roxy is about to purchase a $40,000 vehicle. She plans to pay $10,000 down and finance the rest over 4 years at a rate of 5.2% compounded annually. Determine the monthly payments that are to be made at the start of each month.
A) $589.05
B) $609.05
C) $689.05
D) $705.42
E) $729.50

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Q 89Q 89

Arish has $25,000 in an investment account and plans to contribute $1,000 at the start of each quarter into the fund for 15 years. If Arish wishes to have $200,000 at the 15

^{th}year, determine the annual rate of interest needed to fulfill this requirement. A) 5.35% B) 6.68% C) 8.18% D) 8.50% E) 9.49%Free

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Q 90Q 90

The Adamson household is considering paying off a $350,000 mortgage with either monthly payments over 25 years, or weekly payments made at the start of each week over a 25 years. If interest is 7.2% compounded semi-annually, determine how much interest would be saved with the weekly payments made at the beginning of the week.
A) $1,695.93
B) $1,840.53
C) $2,005.83
D) $2,348.72
E) $2,840.43

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Q 91Q 91

Lindsay plans to deposit $8,000 in an investment paying 4.8% interest compounded semi-annually, along with semi-annual deposits of $1,000 at the start of each period for 3 years. After the third year, Lindsay will increase her deposits to monthly payments of $250 per month at the start of each month for the next two years. Determine the future value of this investment in year 5.
A) $21,873.47
B) $23,621.40
C) $25,585.33
D) $26,108.45
E) $27,407.66

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Q 92Q 92

Shawn wishes to have $150,000 in his retirement account in 20 years' time. In the last 10 years, Shawn estimates that he will be contributing $800 per quarter at the beginning of each period. Over the first 10 years, he will be contributing $150 per month at the start of each month. If the rate of interest is 4.4% compounded quarterly over the 20 year period, determine the initial deposit that Shawn needs to make to achieve his retirement goal.
A) $27,823.81
B) $28,999.12
C) $29,153.92
D) $30,787.44
E) $31,088.73

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Q 93Q 93

Greg begins contributing to his retirement plan by making $300 per month at the start of each month for 4 years. Afterwards, he increases his payments to $500 per month for the last year. If the rate of interest throughout this time is 6% compounded semi-annually, determine how much Greg will have in his retirement at the fifth year.
A) $22,973.07
B) $23,073.07
C) $23,473.07
D) $24,404.18
E) $24,890.28

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Q 94Q 94

Gabby has $70,000 deposited in an account earning 2.5% interest annually. She plans to withdraw a certain amount from this account at the start of each semi-annual period over 5 years and still have $15,000 remaining. Determine the amount of each payment.
A) $5,994.62
B) $5,485.31
C) $5,015.68
D) $4,910.50
E) $4,288.22

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Q 95Q 95

Brenda and Tom want to save $30,000 over the next four years for a down payment on a house. What amount must they regularly save from their month-end pay if their savings can earn 5.5% compounded semi-annually?

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Q 96Q 96

Henrick can buy a rural property from a family member for $700,000 with terms of $100,000 down and the balance payable over 20 years by quarterly payments including interest at 8% compounded annually. What will be the size of the payments? How much interest will Henrick pay over the life of the loan?

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Q 97Q 97

Aden is scheduled to make a lump payment of $25,000, 11 months from now, to complete a real estate transaction. What end-of-month payments for the next 11 months should the vendor be willing to accept instead of the lump payment if he can invest the funds at 5.4% compounded monthly?

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Q 98Q 98

In order to purchase another truck, Beatty Transport recently obtained a $50,000 loan for 5 years at 5.8% compounded semi-annually. The loan is structured to reduce the balance owing to $10,000 at the end of the five-year period. How much are Beatty's end-of-month loan payments?

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Q 99Q 99

Ken and Belinda have two children, aged 3 and 6. At the end of every six months for the next 12½ years, they wish to contribute equal amounts to a Registered Education Savings Plan (RESP). Six months after the last RESP contribution, the first of 12 semi-annual withdrawals of $5,000 will be made. If the RESP earns 8.5% compounded semi-annually, what must be the size of their regular RESP contributions?

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Q 100Q 100

Calculate the amounts that must be invested at the end of every six months at 4.75% compounded semi-annually in order to accumulate $500,000 after 20 years.

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Q 101Q 101

What monthly payments for 15 years will pay off a $50,000 loan at 8.25% compounded monthly?

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Q 102Q 102

Howardson Electric obtained a $90,000 loan at 9.75% compounded monthly. What size of semi-annual payments will repay the loan in 10 years?

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Q 103Q 103

What payments must be made at the end of each quarter to an RRSP earning 4.2% compounded annually so that its value 8½ years from now will be $15,000?

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Q 104Q 104

Four years from now, Tim and Justine plan to take a year's leave of absence from their jobs and travel through Asia, Europe, and Africa. They want to accumulate enough savings during the next four years so they can withdraw $3,000 at each month-end for the entire year of leave. What amount must they pay into the fund at the end of every calendar quarter for the next four years to reach their goal? The planning assumptions are that their savings will earn 6% compounded quarterly for the next four years and 4.2% compounded monthly during the fifth year.

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Q 105Q 105

You intend to accumulate $100,000 in 10 years instead of 20 years by making equal monthly investment contributions. Will the monthly contribution for a 10-year plan be: (i) Twice the monthly contribution for a 20-year plan? (ii) Less than twice the monthly contributions? or (iii) More than twice the monthly contributions? Assume the same rate of return in both cases. Give the reasoning for your choice.

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Q 106Q 106

Sofia has been approved an RBC Royal Bank four-year $25,000 car loan at 7.5% compounded monthly. What end-of-month payments will reduce the balance on the loan after four years to the expected trade-in value of $4000,

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Q 107Q 107

Noreen's RRSP is currently worth $125,000. For the next 10 years, she will make contributions at the end of every six months. How much does Noreen need to contribute at the end of every six months for the next 10 years to reach her goal of having a total of $500,000 when she retires? Her RRSP earns 8% compounded annually.

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Q 108Q 108

A conditional sale contract for a $1,450 transaction required a 10% down payment with the balance to be paid by 12 equal monthly payments. The first payment is due six months after the date of the purchase. The retailer charges an interest rate of 13% compounded semi-annually on the unpaid balance. What is the monthly payment?

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Q 109Q 109

By the time he turns 60, Justin (just turned age 31) wants the amount in his RRSP to have the purchasing power of $250,000 in current dollars. What annual contributions on his 32

^{nd}through 60^{th}birthdays inclusive are required to meet this goal if the RRSP earns 4% compounded annually?Free

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Q 115Q 115

Rounded to the next higher month, how long will it take end-of-month deposits of $500 to accumulate $100,000 in a savings account that pays interest of 5.25% compounded monthly?

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Q 116Q 116

How long will $500,000, in an investment account that earns 5.25% compounded monthly, sustain month-end withdrawals of $3,000?

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Q 117Q 117

Farah has $600,000 in her RRSP and wishes to retire. She is considering using the funds to purchase an annuity that earns 5% compounded annually and pays her $3500 at the end of each month. If she buys the annuity, for how long will she receive payments?

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Q 118Q 118

If $300,000 is used to purchase an annuity earning 4.5% compounded monthly and paying $2,500 at the end of each month, what will be the term of the annuity? Include the final, smaller annuity payment in the total.

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Q 119Q 119

Rashid wants to use $500,000 from his RRSP to purchase an annuity that pays him $2,000 at the end of each month for the first 10 years and $3,000 per month thereafter. Global Insurance Co. will sell Rashid an annuity of this sort with a rate of return of 4.8% compounded monthly. For how long will the annuity run?

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Q 120Q 120

How much longer will it take month-end RRSP contributions of $500 to accumulate $500,000 than month-end contributions of $550? Assume that the RRSP earns 3.75% compounded monthly. Round the time required in each case to the next higher month.

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Q 121Q 121

Suppose that you contribute $425 per month to your RRSP. Rounding up to the nearest month, how much longer will it take for the RRSP's value to reach $500,000 if it earns 4.2% compounded annually than if it earns 4.2% compounded monthly?

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Q 122Q 122

How much longer will it take monthly payments of $1,000 to pay off a $100,000 loan if the monthly compounded rate of interest on the loan is 5.25% instead of 4.875%?

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Q 123Q 123

What duration of annuity paying $5,000 at the end of every quarter can be purchased with $200,000 if the invested funds earn 5.5% compounded semi-annually?

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Q 124Q 124

Bonnie and Clyde want to take a six-month leave of absence from their jobs to travel extensively in South America. Rounded to the next higher month, how long will it take them to save $40,000 for the leave if they make month-end contributions of $700 to their employer's salary deferral plan? The salary deferral plan earns 5.5% compounded semi-annually.

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Q 125Q 125

Ernie's Electronics sells an LED HD television priced at $2395 for $100 down and payments of $100 per month, including interest at 9.6% compounded monthly. How long after the date of purchase will the final payment be made?

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Q 126Q 126

If $400,000 accumulated in an RRSP is used to purchase an annuity earning 3.9% compounded monthly and paying $3,500 at the end of each month, what will be the term of the annuity?

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Q 127Q 127

The interest rate on a $100,000 loan is 9% compounded monthly. How much longer will it take to pay off the loan with monthly payments of $1,000 than with monthly payments of $1,050?

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Q 128Q 128

An annuity purchased for $175,000 pays $4,000 at the end of every quarter. How long will the payments continue if the funds earn 7% compounded semi-annually?

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Q 129Q 129

How much sooner will a $65,000 loan at 7.2% compounded monthly be paid off if the monthly payments are $625 instead of $600? What will be the approximate saving in total interest costs over the life of the loan?

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Q 130Q 130

If you double the size of the monthly payment you make on a loan, will you pay it off in (pick one): (i) Half the time? (ii) Less than half the time? (iii) More than half the time? Give the reason for your choice.

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Q 131Q 131

A 65-year-old male can purchase either of the following annuities from a life insurance company for $50,000. A 25-year term annuity will pay $307 at the end of each month. A life annuity will pay $408 at the end of every month until the death of the annuitant. To what age must the man survive for the life annuity to have the greater economic value? Assume that money can earn 6% compounded monthly.

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Q 132Q 132

Twelve years ago, Mr. Lawton rolled a $17,000 retiring allowance into an RRSP that subsequently earned 7% compounded semi-annually. Three years ago he transferred the funds to an RRIF. Since then, he has been withdrawing $1,000 at the end of each quarter. If the RRIF earns 4.2% compounded quarterly, how much longer can the withdrawals continue?

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Q 133Q 133

A 70-year-old male can purchase either of the following annuities for the same price from a life insurance company. A 20-year-term annuity will pay $394 at each month-end. A life annuity will pay $440 at the end of each month until the death of the annuitant. Beyond what age must the man survive for the life annuity to have the greater economic value? Assume that money can earn 3.3% compounded monthly.

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Q 134Q 134

Georgina is about to retire with $188,000 in her RRSP. She will use the funds to purchase an annuity providing payments of $6000 at the end of each quarter. What will be the annuity's term if the funds invested in the annuity earn 4.8% compounded monthly?

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Q 135Q 135

Harold's RRSP is already worth $56,000. Rounded to the next highest month, how long will it take the RRSP to reach $250,000 if additional contributions of $2,000 are made at the end of every six months? Assume the RRSP earns 3.9% compounded monthly.

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Q 136Q 136

Calculate the nominal and effective rate of interest for the following ordinary annuity. Determine the nominal interest rate whose compounding interval equals the payment interval.

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Q 137Q 137

Calculate the nominal and effective rate of interest for the following ordinary annuity. Determine the nominal interest rate whose compounding interval equals the payment interval.

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Q 138Q 138

Calculate the nominal and effective rate of interest for the following ordinary annuity. Determine the nominal interest rate whose compounding interval equals the payment interval.

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Q 139Q 139Calculate the nominal and effective rate of interest for the following ordinary annuity. Determine the nominal interest rate whose compounding interval equals the payment interval.

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Q 140Q 140

If $100,000 will purchase a 20-year annuity paying $830 at the end of each month, what monthly compounded nominal rate and effective rate of interest will the invested funds in the annuity earn?

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Q 141Q 141

If $100,000 will purchase a 20-year annuity paying $739 at each month's end, what monthly compounded nominal rate and effective rate of interest are earned by the funds?

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Q 142Q 142

After 10½ years of contributions of $2,000 at the end of every six months to an RRSP, the accumulated amount stood at $65,727.82. What semi-annually compounded nominal rate and effective annual rate of return were earned by the funds in the RRSP?

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Q 143Q 143

What quarterly compounded nominal rate and effective rate of interest are being charged on a $5,000 loan if quarterly payments of $302.07 will repay the loan in 5½ years?

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Q 144Q 144

A $9,000, four-year term loan requires monthly payments of $220.77. What are the monthly compounded nominal rate and the effective rate of interest on the loan?

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Q 145Q 145

In an insurance settlement for bodily injury, a court awarded Mr. Goodman $103,600 for two years' loss of wages of $4,000 per month plus interest on the lost wages to the end of the two years. What effective rate of interest has the court allowed on the lost wages?

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Q 146Q 146

A major daily newspaper charges $260 (paid in advance) for an annual subscription, or $26 per month payable at the end of each month to the carrier. What is the effective interest rate being charged to the monthly payment subscribers?

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Q 147Q 147

For $100,000, Royal Life Insurance Co. will sell a 20-year annuity paying $802.76 at the end of each month. What monthly compounded nominal rate and effective rate of return does the annuitant (the buyer of the annuity) earn on the invested funds?

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Q 148Q 148

After contributing $2,000 at the end of each quarter for 13¾ years, Foster has accumulated $205,064 in his RRSP. What effective annual rate of return was earned by the RRSP over the entire period?

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Q 149Q 149

What semi-annually compounded rate and effective rate of interest are being charged on a $12,000 loan if semi-annual payments of $1204.55 will repay the loan in seven years?

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Q 150Q 150

A finance company paid a furniture retailer $1934 for a conditional sale contract requiring 12 end-of-month payments of $175. What effective rate of return does the finance company earn on the purchase?

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Q 151Q 151

$2,000 will be contributed to an RRSP at the end of every six months for 20 years. What effective rate of return must the funds in the plan earn if it is to be worth $250,000 at the end of the 20 years?

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Q 152Q 152

Vijay purchased a Government of Nova Scotia bond for $1,050. The bond will pay $35 interest to Vijay at the end of every six months until it matures in seven years. On the maturity date the bond will pay back its $1,000 face value (as well as the interest payment due on that date.) What semi-annually compounded rate of return will Vijay earn during the seven years?

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Q 153Q 153

Another type of sales promotion for vehicles is to advertise the choice between a "Cash Purchase Price" or "0% Purchase Financing." The tiny print at the bottom of a GM Canada full-page advertisement included the statement: "The GMAC purchase finance rates are not available with and are not calculated on the 'Cash Purchase Price' shown. The difference between the price for the GMAC purchase finance offer and the 'Cash Purchase Price' offer is deemed under provincial laws to be a cost of financing." In other words, there are two prices for a vehicle-a lower price if you pay cash and a higher price if you want to take advantage of the "0% financing." An additional disconcerting aspect of this type of promotion is that the higher price for the 0% financing is usually not quoted in the advertisement. Rather, it must be negotiated with the dealer.
Suppose the Cash Purchase Price of a car is $23,498, and the price that qualifies for full 0% financing (with 48 monthly payments) turns out to be $26,198. What effective interest rate will you be paying for the "0% financing?"

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Q 154Q 154

An advertisement for new vehicles offered "1.9% 12-month financing or $2,000 cash back." A truck buyer financed $17,000 at the low interest rate instead of paying $15,000 cash (after the $2,000 rebate). What was the effective rate of interest on the loan if the foregone cash rebate was treated as part of the cost of financing? (The 1.9% interest rate was a monthly compounded nominal annual rate.)

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Q 155Q 155

An advertisement for Ford trucks offered "2.9% financing (for 48 months) or $2,000 cash back." A truck buyer financed $20,000 at the low interest rate instead of paying $18,000 cash (after the $2,000 rebate). What was the effective rate of interest on the loan if the foregone cash rebate is treated as part of the cost of financing? (The 2.9% interest rate is a monthly compounded nominal annual rate.)

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Q 156Q 156

How much must be invested at the beginning of each year in order to accumulate $750,000 after 25 years? The invested funds earn 6% compounded annually.

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Q 157Q 157

What beginning-of-month withdrawals can a $400,000 RRIF (Registered Retirement Income Fund) sustain for 20 years if the investments within the RRIF earn 3.6% compounded monthly?

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Q 158Q 158

Rounding up to the nearest month, for how long will a $100,000 fund sustain beginning-of-the-month withdrawals of $700 if the fund earns 6% compounded monthly?

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Q 159Q 159

Advance Leasing calculates the monthly payments on its three-year leases on the basis of recovering the capital cost of the leased equipment and earning a 9.3% compounded monthly rate of return on its capital investment. What will be the monthly lease payment on equipment that costs $8500?

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Q 160Q 160

A lease that has 4 years to run is recorded on a company's books as a liability of $54,500. If the company's cost of borrowing was 6.2% compounded monthly when the lease was signed, what is the amount of the lease payment at the beginning of each month?

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Q 161Q 161

CompuLease leases computers and peripheral equipment to businesses. What lease payments must CompuLease charge at the beginning of each quarter of a five-year lease if it is to recover the $20,000 capital cost of a system and earn 12% compounded quarterly on its investment?

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Q 162Q 162

Rentown advertised a computer system at a cash price of $1699 and at a rent-to-own rate of $129 at the beginning of each month for 24 months. What effective rate of interest is a customer paying to acquire the computer in a rent-to-own transaction?

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Q 163Q 163

An RRSP is now worth $223,000 after contributions of $2500 at the beginning of every six months for 16 years. What effective rate of return has the plan earned?

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Q 164Q 164

What monthly payment is required to accumulate to a future value amount of $5,000 in four years if money earns 3.75% compounded monthly?

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Q 165Q 165

What quarterly payment is required to accumulate to a future value amount of $10,000 in eight years if money earns 4.5% compounded quarterly?

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Q 166Q 166

What semi-annual payment would be required to pay off a loan of $5,000 at 8.5% compounded semi-annually over five years?

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Q 176Q 176

Calculate the periodic payment for the following ordinary annuity, using the financial calculator.

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Q 178Q 178

Calculate the periodic payment for the following ordinary annuity, using the financial calculator.

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Q 179Q 179

The interest rate on a four-year $10,000 loan to purchase a car is 7.2% compounded monthly. What is the amount of the monthly payment? Reference: CIFP course on Personal Financial Planning.

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Q 180Q 180

Your client will retire this year. Currently she has $560,000 in accumulated capital. She wants to invest this capital to provide equal payments at the end of each year for 20 years, at which time the capital will be fully depleted. If her capital earns 7.5% compounded annually, what annual payment will she receive? Taken from CIFP course materials.

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Q 181Q 181

Karen obtained a $20,000 loan at 8% compounded semi-annually. What monthly payment will repay the loan in 7½ years? How much interest will Karen pay over the life of the loan?

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Q 182Q 182

Seth is supposed to pay $10,000 to Megan today. What payments at the end of each quarter for the next two years would be economically equivalent to the scheduled payment if money can earn 7.5% compounded quarterly?

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Q 183Q 183

Mr. Bean wants to borrow $7,500 for three years. The interest rate is 9 % compounded monthly. What end-of-quarter payments are required to fully repay the loan over the three year period?

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Q 184Q 184

What monthly payment would be required to pay off a loan of $3,000 at 7.25% compounded monthly over three years?

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Q 185Q 185

As of Betty's fifty-sixth birthday, she has accumulated $195,000 in her RRSP. She has ceased contributions but will allow the RRSP to grow at an expected 8.4% compounded monthly until she reaches age 65. Then she will use the funds in the RRSP to purchase a 20-year annuity. What will her end-of-month annuity payments be if the money used to purchase the annuity earns 7.2% compounded monthly?

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Q 186Q 186

On the date of his granddaughter's birth, Mr. Parry deposited $5,000 in a trust fund earning 6.2% compounded annually. After the granddaughter's 19

^{th}birthday, the trust account is to make end-of-month payments to her for four years to assist her with the costs of post-secondary education. If the trust account earns 4.8% compounded monthly during these four years, what will be the size of the monthly payments?Free

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Q 187Q 187

Elizabeth has been able to transfer a $25,000 retiring allowance into an RRSP. She plans to let the RRSP accumulate earnings at the rate of 7% compounded annually for 10 years and then purchase a 15-year annuity making payments at the end of each quarter. What size of payment can she expect if the funds in the annuity earn 5.2% compounded quarterly?

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Q 188Q 188

After selling their Vancouver home and buying another in Saskatoon, the Martels have $120,000 cash on hand. If the funds are used to purchase a deferred annuity providing a rate of return of 7.25% compounded annually, what payments will they receive at the end of every six months for a 25-year term starting 8 years from now?

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Q 189Q 189

Mr. Sandstrom's will directed that $20,000 be placed in each of two investment trusts for his grandchildren, Lena and Axel. On each grandchild's 18

^{th}birthday, he or she is to receive the first of a series of equal quarterly payments running for 15 years. Lena has just turned 13, and Axel's age is 8 years, 6 months. If the funds earn 9.25% compounded semi-annually, what size of payment will each grandchild receive?Free

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Q 190Q 190

A car loan of $20,000 is to be repaid over five years at 6.8% compounded quarterly. What is the amount of the monthly payment?

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Q 191Q 191

A personal loan of $15,000 is to be repaid over four years at 7.75% compounded semi-annually. What is the amount of the monthly payment?

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Q 192Q 192

Jane wants to save $25,000 in five years. If money earns 3.75% compounded quarterly, how much should she deposit monthly to reach her goal?

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Q 193Q 193

Larissa is saving each month to accumulate $10,000 in six years. Her account pays 4.25% compounded quarterly. What amount should Larissa deposit monthly to reach her goal? How much interest does Larissa earn?

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Q 194Q 194

Cliff has $25,000 in his savings account now. He wants to accumulate another $25,000 within the next five years, so that he has a total of $50,000 for a down payment on a house. If his account pays 4.75% compounded quarterly, how much should Cliff deposit to his account monthly to reach his goal?

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Q 195Q 195

Jane and Julian borrowed $25,000 for home renovations from their bank at 6.5% compounded semi-annually. What monthly payment will reduce their loan to $10,000 after five years?

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Q 196Q 196

Susan bought a car for $25,000 and is making monthly payments at 7.25% compounded quarterly over four years. At the end of four years, Susan will owe $8,000. What is the amount of Susan's monthly payment?

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Q 197Q 197

Marcie bought a car for $32,000, put $5,000 down, and is making monthly payments at 3.8% compounded semi-annually for five years. What is the amount of Marcie's monthly payment? How much interest will Marcie pay overall?

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Q 198Q 198

Jack Groman's financial plan is designed to accumulate sufficient funds in his RRSP over the next 28 years to purchase an annuity paying $6,000 at the end of each month for 25 years. He will be able to contribute $7,000 to his RRSP at the end of each year for the next 10 years. What year-end contribution must he make for the subsequent 18 years to achieve his objective? For these projections, assume that Jack's RRSP will earn 7.5% compounded annually and that the annuity payments are based on a return of 7.5% compounded monthly.

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Q 199Q 199

Jinny is buying new windows for her house. The contractor is offering "no money down, and no payments for six months." The total cost of the windows is $12,500 and Jinny will be making monthly payments starting in six months at 9.5% compounded annually for four years. What is Jinny's monthly payment?

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Q 200Q 200

Kristina has saved $3,500 so far, but wants to have $8,000 in three years. If her account pays 4.5% compounded semi-annually, how much should Kristina save each month to reach her goal?

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Q 201Q 201

Calculate the term, expressed in years and months, of the following ordinary annuity, using the financial calculator.

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Q 202Q 202

Calculate the term, expressed in years and months, of the following ordinary annuity, using the financial calculator.

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Q 203Q 203

Calculate the term, expressed in years and months, of the following ordinary annuity, using the financial calculator.

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Q 206Q 206

Jacob is depositing $125 per month into his RRSP at an interest rate of 4.5% compounded monthly. How long will it take for his RRSP to accumulate to $10,000?

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Q 209Q 209

Silas is about to begin regular month-end contributions of $500 to a bond fund. The fund's long-term rate of return is expected to be 6% compounded semi-annually. Rounded to the next higher month, how long will it take Silas to accumulate $300,000?

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Q 210Q 210

How much longer will it take to pay off a $100,000 loan with monthly payments of $1,000 than with monthly payments of $1,100? The interest rate on the loan is 10.5% compounded monthly.

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Q 211Q 211

A 60-year-old woman can purchase either of the following annuities from a life insurance company for $50,000. A 30-year term annuity will pay $367 at the end of each month. A life annuity will pay $405 at the end of every month until the death of the annuitant. To what age must the woman survive for the life annuity to have the greater economic value? Assume that money can earn 8% compounded monthly.

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Q 212Q 212

Novell Electronics recently bought a patent that will allow it to bring a new product to market in 2½ years. Sales forecasts indicate that the product will increase the quarterly profits by $28,000. If the patent cost $150,000, how long after the date of the patent purchase will it take for the additional profits to repay the original investment along with a return on investment of 15% compounded quarterly? Assume that the additional profits are received at the end of each quarter.

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Q 213Q 213

Helen and Morley borrowed $20,000 from Helen's father to make a down payment on a house. The interest rate on the loan is 8% compounded annually, but no payments are required for two years. The first monthly payment of $300 is due on the second anniversary of the loan. How long after the date of the original loan will the last payment be made?

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Q 214Q 214

Bernice is about to retire with $139,000 in her RRSP. She will make no further contributions to the plan, but will allow it to accumulate earnings for another six years. Then she will purchase an annuity providing payments of $5,000 at the end of each quarter. Assume that the RRSP will earn 8.5% compounded annually and the funds invested in the annuity will earn 7.5% compounded monthly. How long after the purchase of the annuity will its payments continue?

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Q 215Q 215

James is making payments of $275 per month for his car. The purchase price of the car was $15,000 and James paid a down payment of $4,000. How long will James take to repay the car loan if interest is 7.5% compounded quarterly?

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Q 216Q 216

Matthew wants to buy a motorcycle. He feels he will need $20,000 and is saving $500 monthly. If his account earns 5.5% compounded semi-annually, how long will it take for Matthew to have $20,000 saved?

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Q 217Q 217

A mortgage of $200,000 requires payments of $1395.40 per month at 5.7% compounded quarterly. How long will it take to repay the loan? What amount of interest does the purchase pay?

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Q 218Q 218

A series of $500 contributions were made at three-month intervals to a fund earning 7.5% compounded quarterly. The accumulated amount continued to earn 7.5% compounded quarterly for three years after the last contribution, ending the period at $13,232.56. How many $500 contributions were made?

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Q 219Q 219

Weston Holdings Ltd. loaned $3.5 million to a subsidiary to build a plant in Winnipeg. No payments are required for two years, to allow the operations of the plant to become well established. The first monthly payment of $40,000 is due two years after the date the loan was received. If the interest rate charged on the intercompany loan is 9% compounded monthly, how long (measured from the date of the first payment) will it take the subsidiary to pay off the loan?

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Q 220Q 220

A mortgage of $250,000 requires payments of $1,681.42 per month at 5.25% compounded quarterly. If the purchaser paid an extra $300 per month towards the mortgage, how much sooner would the mortgage be paid off? What amount of interest would the purchaser save?

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Q 221Q 221Calculate the nominal and effective rate of interest for the following ordinary annuity. Determine the nominal interest rate whose compounding interval equals the payment interval.

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Q 222Q 222Calculate the nominal and effective rate of interest for the following ordinary annuity. Determine the nominal interest rate whose compounding interval equals the payment interval.

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Q 223Q 223

Find the nominal and effective rate of interest for the following ordinary annuity. Determine the nominal interest rate whose compounding interval equals the payment interval.

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Q 224Q 224Calculate the nominal and effective rate of interest for the following ordinary annuity. Determine the nominal interest rate whose compounding interval equals the payment interval.

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Q 225Q 225Calculate the nominal and effective rate of interest for the following ordinary annuity. Determine the nominal interest rate whose compounding interval equals the payment interval.

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Q 226Q 226Calculate the nominal and effective rate of interest for the following ordinary annuity. Determine the nominal interest rate whose compounding interval equals the payment interval.

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Q 227Q 227

If regular month-end deposits of $200 in a savings account amounted to $7,727.62 after three years, what monthly compounded nominal rate and effective rate of interest were paid on the account?

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Q 228Q 228

A finance company paid a furniture retailer $1050 for a conditional sale contract requiring 12 end-of-month payments of $100. What effective rate of return will the finance company realize on the purchase?

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Q 229Q 229

For $150,000, Continental Life Insurance Co. will sell a 20-year annuity paying $1,200 at the end of each month. What effective rate of return does the annuitant earn?

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Q 230Q 230

Marion is receiving payments of $500 per month for 20 years. In order to receive these payments, she deposited $90,000 in to an account with monthly compounding. What rate of interest did the account pay?

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Q 231Q 231

Matthew borrowed $27,000 for his car. He is making payments of $525 per month for five years. If interest is compounded quarterly, what rate of interest is Matthew paying?

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Q 232Q 232

Ray bought living room furniture at a local department store. The cost of the furniture was $4,000 including taxes. Ray is making monthly payments of $155 per month for three years. What rate of interest compounded monthly is Ray paying? What amount of interest will Ray pay over the three years?

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Q 233Q 233

Brian has a mortgage of 150,000 on which he is making monthly payments of $1,200 for 20 years. What rate of interest compounded quarterly is Brian paying?

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Q 234Q 234

Marilyn is receiving $3,000 per quarter for 30 years. In order to receive these payments, she deposited $305,000 into an account with semi-annual compounding. What rate of interest did the account pay? How much interest did the account earn?

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Q 235Q 235

A Chrysler advertisement offered "$1250 cash back or 1.9% factory financing over 48 months" to purchasers of new models Dodge and Plymouth vans. A customer financed $20,000 at the low interest rate instead of paying $18,750 cash (after the $1250 rebate). What was the effective rate of interest on the loan if the foregone cash rebate was treated as part of the cost of financing? (The 1.9% interest rate was a monthly compounded nominal annual rate.)

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