# Quiz 10: Annuities: Future Value and Present Value

Business

Q 1Q 1

Sara quit smoking and saves $80 per month previously spent on cigarettes. She invests the money at 5% compounded monthly. How much will she have in 10 years?
A) $7,542.51
B) $17,919.63
C) $12,422.58
D) $11,898.88
E) $12,474.34

Free

Multiple Choice

C

Q 2Q 2

If you want to purchase an annuity providing an income of $2,000 at the end of each month for five years, how much will it cost if the purchase funds earn 18% compounded monthly?
A) $192,429.30
B) $78,760.54
C) $80,681.00
D) $4,886.44
E) $818.60

Free

Multiple Choice

B

Q 3Q 3

How much money would you have at the end of 10 years if you made deposits of $4,000 at the end of every three months into an investment that accumulated at 9% compounded quarterly?
A) $60,772
B) $168,781
C) $255,145
D) $1,351,530
E) $667,273

Free

Multiple Choice

C

Q 4Q 4

At the end of every year for 45 years Sabrina invested $500 into her retirement plan. The plan has earned 13% compounded annually over the 45 years. She made the last deposit today. How much money has she accumulated?
A) $1,783,603
B) $937,082
C) $480,583
D) $318,675
E) $157,950

Free

Multiple Choice

Q 5Q 5

How much money would you have at the end of five years if you made deposits of $450 at the end of every month into an investment that accumulated at 18% compounded monthly?
A) $116,843
B) $43,297
C) $31,860
D) $27,000
E) $17,721

Free

Multiple Choice

Q 6Q 6

Valerie has made investments of $10,000 at the end of every three months for the last 8 years. She has earned 11% compounded quarterly? What is the value of the investments today?
A) $97,427
B) $211,003
C) $320,000
D) $460.792
E) $502,699

Free

Multiple Choice

Q 7Q 7

What is the future value of a series of 15 annual payments of $750 starting in one year and earning 7% compounded annually?
A) $6,831
B) $12,038
C) $17,673
D) $18,847
E) $32,848

Free

Multiple Choice

Q 8Q 8

Terri and Larry plan to invest $5,000 at the end of each year in an individual retirement account earning a rate of return of 11% compounded annually. What will be the value of the account after 15 years?
A) $119,864
B) $172,027
C) $198,215
D) $214,739
E) $359,543

Free

Multiple Choice

Q 9Q 9

At the end of every six months for the last six years Vincent has borrowed $1,000 from Charley at an interest rate of 11% compounded semi-annually. He has not made any payments to reduce his debt. How much, including interest, does Vincent owe Charley now?
A) $19,920
B) $16,386
C) $22,714
D) $8,618
E) $15,536

Free

Multiple Choice

Q 10Q 10

Calculate the present value of an ordinary annuity consisting of payments of $5,000 each, made at the end of every three months for six years. Assume that money is worth 7.2% compounded quarterly.
A) $46,070
B) $76,295
C) $96,748
D) $105,186
E) $122,517

Free

Multiple Choice

Q 11Q 11

How much money could Louie borrow if he can afford to make monthly payments of $350 for four years at an interest rate of 9% compounded monthly?
A) $14,065
B) $13,593
C) $10,752
D) $8,915
E) $3,827

Free

Multiple Choice

Q 12Q 12

What amount could you borrow at 6.6% compounded monthly if you can afford to make monthly payments of $775 for 25 years?
A) $40,688
B) $92,867
C) $101,106
D) $113,725
E) $217,155

Free

Multiple Choice

Q 13Q 13

What amount would you have to invest now at 10% compounded semi-annually in order to make withdrawals of $3,500 every half-year for eight years? The first withdrawal is to be made in six months.
A) $52,224
B) $28,000
C) $37,932
D) $36,126
E) $8,255

Free

Multiple Choice

Q 14Q 14

What amount would you have to invest now at 7% compounded annually in order to make withdrawals of $20,000 once per year for 25 years? The first withdrawal is to be made one year from now.
A) $233,072
B) $1,264,981
C) $544,343
D) $197,226
E) $427,561

Free

Multiple Choice

Q 15Q 15

Roger spends $60 per month on beer and $60 per month on cigarettes. He is going to quit smoking and cut his beer expense in half by making his own beer at the local U-Brew. At the end of every month the money he saves is going to go into an investment plan earning 12% compounded monthly. How much money should he have after 40 years?
A) $250,560
B) $443,946
C) $892,605
D) $1,058,830
E) $1,411,772

Free

Multiple Choice

Q 16Q 16

Sparky will invest $7,500 into his RRSP at the end of each year for 30 years. How much more money will he have in 30 years if he is able to earn 13% compounded annually rather than 11% compounded annually?
A) $149,266
B) $219,899
C) $304,261
D) $589,114
E) $706,338

Free

Multiple Choice

Q 17Q 17

Jennifer already has $15,500 saved for a down payment for a house and she plans to save another $400 at the end of each month for the next three years. If she earns 8.4% compounded monthly how large will her down payment be in three years?
A) $36,123
B) $36,237
C) $37,680
D) $19,924
E) $16,312

Free

Multiple Choice

Q 18Q 18

Sam will contribute $200 to his RRSP at the end of each month for 15 years and then raise his monthly contribution to $500 at the end of each month for the subsequent 20 years. If his investments earn 11.7% compounded monthly, what will be the value of the investments after the last $500 contribution is made 35 years from now?
A) $1,186,877
B) $572,207
C) $1,471,930
D) $521,751
E) $285,054

Free

Multiple Choice

Q 19Q 19

What amount will an ordinary annuity be worth in 25 years if quarterly payments of $1,750 are made and the interest rate is 14% compounded quarterly for the first 15 years and 10% compounded quarterly for the final 10 years?
A) $384,999
B) $461,859
C) $1,509,570
D) $1,062,754
E) $1,041,360

Free

Multiple Choice

Q 20Q 20

Marvin has determined that he can save at least $6 per day by quitting smoking and cutting out one cup of coffee or one can of pop per day. Therefore, he has decided to make contributions of $175 to his Retirement Savings Plan (RSP) at the end of each month for 35 years. He anticipates that his RSP will earn 13.2% compounded monthly. He is 20 years old now and therefore he will be only 55 when this plan is completed. How much money will be in his RSP when he is 55 years of age?
A) Less than $500,000
B) Between $500,000 and $1,000,000
C) Between $1,000,000 and $1,500,000
D) Between $1,500,000 and $2,000,000
E) More than $2,000,000

Free

Multiple Choice

Q 21Q 21

Morgan has decided to make contributions of $250 to her Retirement Savings Plan (RSP) at the end of each month for 30 years. She anticipates that her RSP will earn 12.75% compounded monthly. She is 20 years old now and therefore he will be only 50 when this plan is completed. How much money will be in her RSP when she is 50 years of age?
A) $284,671
B) $641,893
C) $962,357
D) $1,033,348
E) $2,763,932

Free

Multiple Choice

Q 22Q 22

Mr. Smith has made payments of $1,250 at the end of each quarter into an RRSP for the last four years. Interest at 12% compounded quarterly was earned. He decides to leave the accumulated money in the RRSP for another two years and not make any further payments to his RRSP. How much money will he have in his RRSP two years from now if the interest rate remains the same?
A) $2,540.99
B) $40,492.10
C) $31,917.67
D) $9,531.96
E) $43,033.09

Free

Multiple Choice

Q 23Q 23

Fred made 12 end-of-month deposits of $250 into a mutual fund earning 16% compounded monthly. How much will he have in his account two years after his last deposit if the fund continues to earn 16% compounded monthly?
A) $4,438.83
B) $3,756.45
C) $19,399.58
D) $9,770.65
E) $6,014.20

Free

Multiple Choice

Q 24Q 24

If $1,000 per month is invested at 12% compounded monthly for the first three years and 16% compounded monthly thereafter, what will be the accumulated amount immediately after the 120

^{th}investment. The first investment will be made one month from now. A) $43,076.88 B) $1,602,487.93 C) $284,219.97 D) $230,038.69 E) $292,580.55Free

Multiple Choice

Q 25Q 25

Martina has already accumulated $32,000 in her RRSP. If she contributes $2,500 at the end of every six months for the next 12 years and $400 at the end of every month for the subsequent eight years, how much will she have at the end of the 20 years? Assume that her plan will earn 6% compounded semi-annually for the first 12 years and 6% compounded monthly for the last 8 years.
A) $293,054
B) $200,247
C) $204,132
D) $154,398
E) $217,873

Free

Multiple Choice

Q 26Q 26

Jane won a prize: the right to receive 36 payments of $100 per month with the first payment one month from today. If money is worth 6% compounded monthly, what is the economic value of these payments three years from today?
A) $3,287.10
B) $3,933.61
C) $3,489.84
D) $3,600.00
E) $2,256.29

Free

Multiple Choice

Q 27Q 27

What amount of money will Kevin need to have in 20 years when he retires? His goal is to purchase an ordinary annuity that pays $1,000 per month for 30 years after he retires? Assume that after he retires the interest rate will be 7.2% compounded monthly.
A) $226,581
B) $350,550
C) $104,728
D) $147,321
E) $360,000

Free

Multiple Choice

Q 28Q 28

Calculate the difference in the current economic values of the following two annuities: #1: Payments of $300 made at the end of every month for the next five years. #2: Payments of $200 made at the end of every month for the next 10 years. Use an interest rate of 14.4% compounded monthly for both annuities.
A) Annuity #1 is worth $398 more than Annuity #2.
B) Annuity #1 is worth $95 more than Annuity #2.
C) The current economic values are within $10 of each other.
D) Annuity #2 is worth $95 more than Annuity #1.
E) Annuity #2 is worth $398 more than Annuity #1.

Free

Multiple Choice

Q 29Q 29

Calculate the difference in the current economic values of the following two annuities: Annuity "A": Payments of $50 made at the end of each month for the next 30 years, using 9.6% compounded monthly. Annuity "B": Payments of $600 made at the end of every year for the next 50 years using 9.6% compounded annually.
A) Annuity "A" is worth $291 more than Annuity "B."
B) Annuity "A" is worth $103 more than Annuity "B."
C) The current economic values are within $50 of each other.
D) Annuity "B" is worth $103 more than Annuity "A."
E) Annuity "B" is worth $291 more than Annuity "A."

Free

Multiple Choice

Q 30Q 30

Calculate the difference in the current economic values of the following two annuities: Annuity "X": Payments of $10,000 made at the end of each year for the next 35 years.
Annuity "Y": Payments of $10,000 made at the end of each year for the next 55 years.
Use an interest rate of 13% compounded annually for both annuities.
A) Annuity "Y" is worth $70,248 more than Annuity "X."
B) Annuity "Y" is worth $26,225 more than Annuity "X."
C) Annuity "Y" is worth $8,672 more than Annuity "X."
D) Annuity "Y" is worth $975 more than Annuity "X."
E) Annuity "Y" is worth $203 more than Annuity "X."

Free

Multiple Choice

Q 31Q 31

Acme class B preferred shares pay quarterly dividends of $2.50. The shares must be redeemed at $100 by Acme 10 years from now when the last dividend is paid. At what price should the shares trade today if the rate of return required by the market on similar preferred shares is 12% compounded quarterly?
A) $57.79
B) $60.00
C) $88.44
D) $20.83
E) $83.33

Free

Multiple Choice

Q 32Q 32

What is the following prize worth today if money can earn 9% compounded monthly: $5,000 payable two years from now, and a series of eleven $100 monthly payments beginning one month from now?
A) $5,231.22
B) $7,124.26
C) $3,240.98
D) $3,265.29
E) $8,620.56

Free

Multiple Choice

Q 33Q 33

You can purchase a residential building for $100,000 cash or $20,000 down and quarterly payments $3,000 for 10 years. The first payment would be due three months after the purchase date. If money can earn 10% compounded quarterly during the next 10 years, which option should you choose?
A) Both are equally as good so choose either one.
B) $100,000 cash
C) Neither option can earn 10% compounded quarterly so do nothing.
D) Not enough information to decide.
E) $20,000 down and $3,000 per quarter for 10 years.

Free

Multiple Choice

Q 34Q 34

Fred purchased a boat for $18,000. He paid 10% down and the balance in equal monthly payments over five years at 18% compounded monthly. What does Fred pay each month?
A) $405.29
B) $457.08
C) $411.37
D) $450.33
E) $344.20

Free

Multiple Choice

Q 35Q 35

The winner of a "Ten-million dollar" lottery prize is actually entitled to payments of $33,333.33 at the end of every month for 25 years. The winner can select to receive a single lump sum payment equal to the present value of these payments calculated using a rate of 8.1% compounded monthly. What would be the amount of the single payment?
A) $9,190,000
B) $5,606,219
C) $4,282,000
D) $3,749,371
E) $1,328,950

Free

Multiple Choice

Q 36Q 36

The winner of a "Fifty-million dollar" lottery prize is actually entitled to payments of $500,000 at the end of every six months for 50 years. The winner can select to receive a single lump sum payment equal to the present value of these payments calculated using a rate of 9.8% compounded semi-annually. What would be the amount of the single payment?
A) $5,101,597
B) $10,118,727
C) $20,118,147
D) $34,079,370
E) $39,453,072

Free

Multiple Choice

Q 37Q 37

George is planning to have a retirement income of $7,000 at the end of every three months for the first 15 years that he is retired and then increase it to $10,000 every three months for the next 10 years. If his retirement funds earn 9.0% compounded quarterly, how much money must he have when he retires?
A) $491,177
B) $117,279
C) $298,170
D) $256,814
E) $820,000

Free

Multiple Choice

Q 38Q 38

The owner of a certain investment is entitled to receive $38 at the end of every six months for 11 years plus an additional single payment of $1,000 in 11 years. Mandy is thinking about purchasing this investment. If Mandy requires a rate of return of 8.4% compounded semi-annually what is the value of this investment to her?
A) $1,538.79
B) $1,240.49
C) $943.28
D) $989.22
E) $1,093.56

Free

Multiple Choice

Q 39Q 39

A guaranteed contract entitles Jon to receive $525 at the end of every six months for the next nine years plus an additional single payment of $10,000 in nine years. If Jon sells the contract to The Corleone Finance Company now, for a price that would provide Corleone with a rate of return of 7.4% compounded semi-annually, what would that price be?
A) $14,649.75
B) $16,811.17
C) $9,408.82
D) $12,010.92
E) $19,450

Free

Multiple Choice

Q 40Q 40

Jason is considering one of two options. The first option is to receive $500 per month for the first 3 years and $850 per month for the last 2 years based on an interest rate of 3.3% compounded semi-annually. The second option is to receive $35,000 now. Determine which option should be chosen to maximize benefits now.
A) First option provides benefit of $35,684.42 compared to $35,000 for second
B) First option provides benefit of $37,464.27 compared to $35,000 for second
C) First option provides benefit of $38,861.85 compared to $35,000 for second
D) Second option provides a benefit of $35,000 compared to $34,684.42
E) Second option provides a benefit of $35,000 compared to $33,464.27

Free

Multiple Choice

Q 41Q 41

Shawna is considering one of two options. The first option is to receive $1,800 per month for the first 5 years and $2,000 per month for the last 5 years based on an interest rate of 6.5% compounded monthly. The second option is to receive $145,000 now. Determine which option should be chosen to maximize benefits now.
A) First option, as it provides benefit of $165,915.26 compared to $145,000 for second
B) First option, as it provides benefit of $155,915.16 compared to $145,000 for second
C) First option, as it provides benefit of $152,915.16 compared to $145,000 for second
D) First option, as it provides benefit of $150,915.16 compared to $145,000 for second
E) First option, as it provides benefit of $145,915.16 compared to $145,000 for second

Free

Multiple Choice

Q 42Q 42

Amanda is considering one of two options. The first option is to receive $48,000 now. The second option is to receive $75,000 at the end of the fifth year. Determine which option should be chosen to maximize benefits now given an interest rate of 8.8% compounded annually.
A) Second option, as it provides benefit of $54,194.53 compared to $48,000 for second
B) Second option, as it provides benefit of $53,194.53 compared to $48,000 for second
C) Second option, as it provides benefit of $52,194.53 compared to $48,000 for second
D) Second option, as it provides benefit of $51,194.53 compared to $48,000 for second
E) Second option, as it provides benefit of $49,194.53 compared to $48,000 for second

Free

Multiple Choice

Q 43Q 43

Determine the current economic value of a 25-year annuity providing $10,000 per year for the first 10 years, $15,000 for the next 10 years and $25,000 for the last 5 years, given an interest rate of 6.3% compounded annually.
A) $159,025.85
B) $160,980.01
C) $162,432.65
D) $163,854.18
E) $167,525.89

Free

Multiple Choice

Q 44Q 44

Determine the future value in year 8 of $3,000 annual payments received in years 2, 4 and 6 given an interest rate of 7% compounded annually.
A) $11,075.16
B) $11,869.28
C) $12,428.39
D) $12,990.80
E) $13,167.25

Free

Multiple Choice

Q 45Q 45

Determine the future value in year 10 of $5,000 annual payments received in years 1, 3 and 5 and $4,000 annual payments in years 2, 4 and 6 given an interest rate of 5% compounded annually.
A) $36,250.25
B) 36,759.45
C) $37,305.78
D) $37,908.42
E) $38,818.68

Free

Multiple Choice

Q 46Q 46

Jeannette plans to contribute $4,000 per year for the first 5 years; $5,000 per year for years 6 - 10; $6,000 per year for years 11 - 15; and $7,000 per year for years 16 - 20. If the rate of return on her investment is 3.5% compounded annually, determine the future value at the end of year 20.
A) $147,052.68
B) $147,922.47
C) $148,617.33
D) $149,508.27
E) $150,207.67

Free

Multiple Choice

Q 47Q 47

Nick can purchase an annuity that in 5 years (end of 5

^{th}year) will pay him $8,500 per year for 10 years. If interest is 5.7% compounded annually, determine how much Nick will pay now to purchase the annuity. A) $52,445.51 B) $52,068.95 C) $51,991.42 D) $50,839.07 E) $50,440.68Free

Multiple Choice

Q 48Q 48

Assume two investments can earn 6.4% compounded annually. Determine how much larger an investment with consistent annual contributions of $3,000 be over 20 years, versus an investment where no payments are made for the first 5 years and annual contributions of $4,000 per year for the remaining 15 years.
A) The difference will be $18,230.64
B) The difference will be $19,230.64
C) The difference will be $20,230.64
D) The difference will be $21,230.64
E) The difference will be $22,230.64

Free

Multiple Choice

Q 49Q 49

Determine the amount of interest earned at the end of year 9 based on $3,000 annual payments received in years 1, 3 and 5 given an interest rate of 5.2% compounded annually.
A) $3,241.20
B) $3,456.99
C) $3,688.18
D) $3,939.72
E) $4,004.48

Free

Multiple Choice

Q 50Q 50

Samuel has $290,000 in his Registered Retirement Savings Plan right now. He will not be able to make any more contributions to the RRSP but he is planning to let the money accumulate until he has enough so that he can take out $3,000 per month for 25 years. How long will he have to wait until he takes out the first $3,000 withdrawal? His investments earn 7.5% compounded monthly.
A) 39 months
B) 54 months
C) 89 months
D) 95 months
E) 112 months

Free

Multiple Choice

Q 51Q 51

Juliana has $54,500 in her "World Tour Savings Plan" right now. She will not be able to make any more contributions to the Plan but she is planning to let the money accumulate until she has enough so that he can take out $2,500 per month for 3 years while she travels around the world. She will take out the first $2,500 one month after she leaves on her trip. If her investments earn 9.9% compounded monthly, how many months will it be before she leaves on her trip?
A) 29 months
B) 32 months
C) 36 months
D) 41 months
E) 43 months

Free

Multiple Choice

Q 52Q 52

At the end of every year for the next 45 years a trust fund has to pay out $250,000. The money in the fund will be earning 9% compounded annually for the first 25 years and 6% compounded annually for the last 20 years. In order to be able to make these payments, how much money would have to be in the trust fund now?
A) $2,788,180
B) $5,323,125
C) $5,601,917
D) $7,017,445
E) $11,125,000

Free

Multiple Choice

Q 53Q 53

Marge is planning to have a retirement income of $2,000 at the end of every month for the first 10 years that she is retired and then increase it to $3,000 per month for the next 20 years. If her retirement funds earn 7.8% compounded monthly, how much money must she have when she retires?
A) $960,000
B) $530,350
C) $333,598
D) $283,418
E) $64,099

Free

Multiple Choice

Q 54Q 54

Mr. Smith made 24 monthly deposits of $250 into an account that earns 8% compounded quarterly. How much will be in the account three years after his last deposit?
A) $6,522.87
B) $8,272.57
C) $7,021.41
D) $8,218.15
E) $7,014.11

Free

Multiple Choice

Q 55Q 55

Franco purchased heavy machinery costing $95,000. The terms of the purchase were for monthly payments over 6 years at an interest rate of 6.5% compounded monthly. At the end of the 4

^{th}year, Franco wanted to trade in this machinery for a newer model. Determine the balance owing on the old machinery at the end of year 4. A) $35,049.11 B) $35,849.11 C) $36,149.11 D) $36,849.11 E) $37,149.11Free

Multiple Choice

Q 56Q 56

Calculate the equivalent periodic interest rate per payment interval for the following annuity: Semi-annual payments earning 6% compounded monthly.
A) 5.00000%
B) 0.83161%
C) 3.03775%
D) 2.97233%
E) 3.08771%

Free

Multiple Choice

Q 57Q 57

Calculate the equivalent periodic interest rate per payment interval for the following annuity: Monthly payments discounted at 11% compounded annually.
A) 0.87346%
B) 1.11572%
C) 0.88793%
D) 0.91667%
E) 1.00078%

Free

Multiple Choice

Q 58Q 58

Calculate the equivalent periodic interest rate per payment interval for the following annuity: Monthly payments discounted at 8.4% compounded semi-annually.
A) 0.69444%
B) 1.35337%
C) 1.27999%
D) 0.7,0000%
E) 0.68806%

Free

Multiple Choice

Q 59Q 59

Calculate the equivalent periodic interest rate per payment interval for the following annuity: Semi-annual payments earning 11% compounded quarterly.
A) 5.48991%
B) 5.57563%
C) 5.56812%
D) 5.35654%
E) 5.42639%

Free

Multiple Choice

Q 60Q 60

If $2,000 is invested at the end of every three months, what will be the total value after 10 years? The investments earn 13% compounded annually.
A) $96,748
B) $159,643
C) $129,067
D) $154,359
E) $143,836

Free

Multiple Choice

Q 61Q 61

How much money could be borrowed at 7% compounded semi-annually if the borrower can make monthly payments of $875 for 25 years?
A) $124,926
B) $69,770
C) $24,999
D) $116,782
E) $123,801

Free

Multiple Choice

Q 62Q 62

If Kelly can make monthly payments of $725 for 20 years, how much money could she borrow at 6.9% compounded semi-annually?
A) $117,324
B) $94,241
C) $118,197
D) $87,497
E) $94,956

Free

Multiple Choice

Q 63Q 63

James already has $13,000 in his Home Ownership Savings Plan (HOSP) and he is going to invest $700 more at the end of every three months for five more years. In total, how much will he have in five years if his HOSP earns 11% compounded annually?
A) $31,911
B) $40,047
C) $40,704
D) $38,880
E) $23,766

Free

Multiple Choice

Q 64Q 64

If $500 is deposited into an investment at the end of every month for five years and the money is then left to accumulate without any more deposits for another five years, what will be the total value of the investment if it earns a rate of 8% compounded quarterly?
A) $187,103
B) $104,519
C) $91,201
D) $57,026
E) $54,516

Free

Multiple Choice

Q 65Q 65

Fred and Ethel are going to take out a business loan on which they will make annual payments of $7,500 for six years. At that point in time they will also pay off the remaining balance which will be $37,155. Their interest rate is 7.6% compounded semi-annually. What is the amount that Fred and Ethel borrowed?
A) $82,155
B) $58,691
C) $54,666
D) $69,278
E) $91,821

Free

Multiple Choice

Q 66Q 66

Kerry's mortgage loan will require payments of $855 at the end of every month for four years and at that time her loan balance outstanding will be $78,591. The interest rate is 7.7% compounded semi-annually. How much did she borrow?
A) $93,400
B) $93,040
C) $92,078
D) $109,996
E) $112,702

Free

Multiple Choice

Q 67Q 67

J. Spaulding Wilson's mortgage loan will require payments of $1,132 at the end of every month for six years and at that time his loan balance outstanding will be $133,040. The interest rate is 6.2% compounded semi-annually. How much did J. Spaulding Wilson borrow?
A) $201,100
B) $159,700
C) $147,200
D) $160,300
E) $148,700

Free

Multiple Choice

Q 68Q 68

What amount would you have after 10 years by investing $500 at the end of every month if your investment earns 14% compounded quarterly?
A) $129,534
B) $74,407
C) $128,294
D) $116,024
E) $87,398

Free

Multiple Choice

Q 69Q 69

What amount would you borrow at 15% compounded annually if your loan payments are $3,800 per month for 10 years?
A) $235,535
B) $244,193
C) $318,782
D) $327,896
E) $378,625

Free

Multiple Choice

Q 70Q 70

Determine the future value of $150 made at the end of every quarter for 15 years, given an interest rate of 4.5% compounded monthly.
A) $12,772.78
B) $12,904.12
C) $13,401.86
D) $13,915.68
E) $14,202.22

Free

Multiple Choice

Q 71Q 71

Derek contributed $200 per month for twenty years at an interest rate of 3.9% compounded semi-annually. Determine how much interest was earned over the twenty year period.
A) $24,282.30
B) $25,282.30
C) $26,282.30
D) $27,282.30
E) $28,282.30

Free

Multiple Choice

Q 72Q 72

Max invested $9,000 per year in his RRSP each year for 20 years. If interest is 4% compounded quarterly, determine how much interest was earned at the end of this period.
A) $98,111.50
B) $95,682.45
C) $91,505.44
D) $89,688.56
E) $87,207.68

Free

Multiple Choice

Q 73Q 73

How much more interest will be earned by $1,000 monthly deposits over 10 years if interest was at 6% compounded monthly versus 6.2% compounded quarterly.
A) $1,504.90 more with quarterly compounding
B) $2,000.00 more with quarterly compounding
C) $1,504.90 more with monthly compounding
D) $2,000.00 more with monthly compounding
E) $805.67 more with monthly compounding

Free

Multiple Choice

Q 74Q 74

Nicola invested a lump sum of $75,000 now along with $150 per month for 15 years. Determine the future value if the rate of interest is 8% compounded semi-annually.
A) $294,566.12
B) $306,045.85
C) $311,205.68
D) $313,616.88
E) $325,089.01

Free

Multiple Choice

Q 75Q 75

Dario invested a lump sum of $20,000 and began to invest $75 per quarter for 5 years. If interest is 7% compounded monthly, determine the total amount of interest earned over a 5 year period.
A) $7,067.66
B) $7,659.12
C) $7,908.45
D) $8,161.08
E) $8,631.93

Free

Multiple Choice

Q 76Q 76

Sharon wishes to have $30,000 in 4 years' time. If she deposits a lump sum of $3,500 now, then what monthly deposits need to be made if interest is at 2.7% compounded annually?
A) $495.16
B) $505.45
C) $515.99
D) $520.67
E) $565.20

Free

Multiple Choice

Q 77Q 77

Peter makes a $25,000 lump sum amount in an account earning 4.5% compounded quarterly. He plans to withdraw $250 per month over three years. Determine the future value of the account at the end of this period.
A) $22,674.15
B) $21,081.08
C) $19,528.82
D) $18,977.74
E) $17,602.45

Free

Multiple Choice

Q 78Q 78

Ladner has a $8,000 loan earning 3.9% compounded annually. He plans to repay $450 per quarter over four years. Determine the loan amount remaining at the end of this period.
A) $1,105.56
B) $1,424.66
C) $1,579.93
D) $1,845.62
E) $1,968.22

Free

Multiple Choice

Q 79Q 79

A lump sum amount of $8,000 is deposited in an account along with monthly contributions of $400 for 5 years in an investment earning 6.6% compounded quarterly. At the end of this time, the investor begins to withdraw $5,000 semi-annually for 3 years with interest at 7.2% compounded semi-annually. Determine the amount remaining at the end of this time.
A) $13,180.18
B) $13,682.27
C) $14,118.25
D) $15,898.44
E) $16,605.13

Free

Multiple Choice

Q 80Q 80

Juan has two investment accounts. The first had Juan make monthly deposits of $375 per month over 5 years at a rate of 4.4% compounded semi-annually. The second investment required Juan make an initial $5,000 deposit along with $125 quarterly deposits over a 5-year period at a rate of 3.5% compounded monthly. Determine the combined future value of both investments at the end of five years.
A) $35,186.27
B) $34,764.53
C) $34,011.67
D) $33,764.53
E) $33,011.67

Free

Multiple Choice

Q 81Q 81

Determine the future value of $5,000 per month deposits for the first four years, and $8,000 per quarter for the remaining three years, given an interest rate of 6.5% compounded semi-annually.
A) $435,460.18
B) $436,550.21
C) $440,145.85
D) $450,689.92
E) $453,878.14

Free

Multiple Choice

Q 82Q 82

Determine the future value of $2,800 deposited semi-annually for the first 6 years at 2.4% compounded monthly, and $550 per quarter for the remaining 4 years at 3.5% compounded annually.
A) $48,928.55
B) $50,613.64
C) $51,067.66
D) $51,581.08
E) $52,352.94

Free

Multiple Choice

Q 83Q 83

Determine the future value of an initial deposit of $4,000 and semi-annual contributions of $250 for the 3 years at a 6.3% rate of interest compounded monthly and then another lump sum deposit of $10,000 at the end of year 3 along with $375 quarterly deposits for 2 years at a rate of 5.4% interest compounded semi-annually.
A) $20,321.09
B) $20,935.64
C) $21,449.71
D) $22,051.87
E) $22,684.35

Free

Multiple Choice

Q 84Q 84

The sale of a $30,000 vehicle is to be financed through monthly payments over a 5-year period at an interest of 4.4% compounded monthly. Determine how much will be saved if payments were made at the beginning of each month compared to the end of the month over this time period.
A) $240.60
B) $215.35
C) $185.65
D) $140.80
E) $110.40

Free

Multiple Choice

Q 85Q 85

Jacqueline is considering investing a lump sum of $100,000 along with monthly payments of $1,600 per month over a 15-year period at an interest rate of 5.4% compounded semi-annually. Determine how much larger will the investment be in the 15

^{th}year if payments were at the beginning of the month compared to the end of the month. A) $1,908.13 B) $1,958.23 C) $2,040.44 D) $2,182.67 E) $2,389.83Free

Multiple Choice

Q 86Q 86

Quarterly contributions of $700 are made to an RRSP that earns 6% compounded monthly. How much will be in the plan immediately after the twentieth deposit?
A) $14,685.38
B) $16,198.55
C) $12,190.19
D) $16,442.74
E) $12,009.15

Free

Multiple Choice

Q 87Q 87

The Johnston family wish to purchase a $350,000 condo. The borrowing rate is set at 3.95% compounded quarterly based on a 25-year period. Determine how much money will be saved if their monthly payments are at the start of each month instead of at the end of the month.
A) $1,650.50
B) $1,750.00
C) $1,800.50
D) $1,950.50
E) $2,005.00

Free

Multiple Choice

Q 88Q 88

Hank Toms is going to start his Retirement Savings Plan (RSP) by depositing $2,500 at the end of every six months for 20 years. Also, seven years from now, he is going to receive the $45,000 proceeds from a trust fund that will go directly into the RSP at that time. If his Plan earns 12% compounded monthly, how much money will Hank Toms have in the RSP in 20 years?
A) $389,215
B) $447,005
C) $614,499
D) $892,170
E) $937,331

Free

Multiple Choice

Q 89Q 89

If you make 30 semi-annual deposits of $2,000 into a fund that earns 10% compounded quarterly, how much money will be in the fund two years after the last deposit?
A) $172,275.22
B) $171,931.59
C) $209,481.94
D) $199,387.93
E) $163,646.96

Free

Multiple Choice

Q 90Q 90

Equipment with a fair value of $625,000 and zero residual value is to be leased through annual lease payments made at the start of each year over 10 years. If interest is 6% compounded quarterly, determine the value of the annual lease payments.
A) $53,385.45
B) $58,478.56
C) $62,500.00
D) $80,000.06
E) $80,525.57

Free

Multiple Choice

Q 91Q 91

Nathan leased a vehicle with monthly payments of $350 paid at the start of each month for 4 years. The lease agreement also stated that the vehicle had a $4,000 residual value. If the lease interest is at 7.5% compounded quarterly, determine the fair value of the leased vehicle.
A) $16,149.91
B) $16,949.91
C) $17,549.91
D) $18,208.91
E) $18,888.91

Free

Multiple Choice

Q 92Q 92

Amanda purchased $25,000 vehicle through Mazda's Graduate Program. She would pay monthly payments over 5 years, at a rate of 2.8% compounded monthly. At the end of the third year, Amanda wished to pay off her loan outright. Determine the Balance on the loan at the end of year 3.
A) $10,421.30
B) $10,830.60
C) $11,054.60
D) $11,265.50
E) $11,480.60

Free

Multiple Choice

Q 93Q 93

$500 is contributed at the beginning of each period on a semi-annual basis for 5 years. If the rate of interest is 5% compounded semi-annually, determine how much interest was earned over this time.
A) $500.00
B) $462.36
C) $402.00
D) $741.73
E) $302.00

Free

Multiple Choice

Free

Essay

Q 95Q 95

A student loan is to be repaid with 30 payments at the end of each quarter. What is the term of the loan?

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Q 106Q 106

Determine the present value of payments of $100 at the end of each month for 20 years. Use a discount rate (interest rate) of 6% compounded monthly.

Free

Short Answer

Q 107Q 107

What is the present value of end-of-quarter payments of $2,500 for seven years? Use a discount rate of 6% compounded quarterly.

Free

Short Answer

Q 108Q 108

Markus spends $160 per month on cigarettes. Suppose he quits smoking and invests the same amount at the end of each month for 20 years. If the invested money earns 7.5% compounded monthly, how much will Markus accumulate after 20 years?

Free

Short Answer

Q 109Q 109

The rate of return offered by Reliance Insurance Co. on its 20-year annuities is 4.8% compounded monthly. Thom wishes to purchase an annuity from Reliance that will provide him with month-end payments of $1000 for the next 20 years. How much will Reliance charge Thom for this annuity?

Free

Short Answer

Q 110Q 110

Kent sold his car to Carolynn for $2,000 down and monthly payments of $295.88 for 3½ years, including interest at 7.5% compounded monthly. What was the selling price of the car?

Free

Short Answer

Q 111Q 111

Dr. Krawchuk made deposits of $2,000 to his RRSP at the end of each calendar quarter for 6 years. He then left general practice for specialist training and did not make further contributions for 2½ years. What amount was in his RRSP at the end of this period if the plan earned 5% compounded quarterly over the entire 8½ years?

Free

Short Answer

Q 112Q 112

Dakota intends to save for occasional major travel holidays by contributing $275 at the end of each month to an investment plan. At the end of every three years, she will withdraw $10,000 for a major trip abroad. If the plan earns 6% compounded monthly, what will be the plan's balance after seven years?

Free

Short Answer

Q 113Q 113

Sebastin has made contributions of $2,000 to his RRSP at the end of every six months for the past eight years. The plan has earned 5.5% compounded semi-annually. He has just moved the funds to another plan, paying 4% compounded quarterly. He will now contribute $1,500 at the end of every three months. What total amount will he have in the plan seven years from now?

Free

Short Answer

Q 114Q 114

Annuity G has the same i and PMT as Annuity H. G has twice as many payments as H. Will G's future value be (pick one): (i) double, (ii) more than double, or (iii) less than double the amount of H's future value? Give the reason for your choice.

Free

Essay

Q 115Q 115

Charlene has made contributions of $3,000 to her RRSP at the end of every half year for the past seven years. The plan has earned 9% compounded semi-annually. She has just moved the funds to another plan earning 7.5% compounded quarterly, and will now contribute $2,000 at the end of every three months. What total amount will she have in the plan five years from now?

Free

Short Answer

Q 116Q 116

What is the appropriate price to pay for a contract guaranteeing payments of $1,500 at the end of each quarter for the next 12 years? You require a rate of return of 6% compounded quarterly for the first five years and 7% compounded quarterly for the next seven years.

Free

Short Answer

Q 117Q 117

A conditional sale contract between Classic Furniture and the purchaser of a dining room set requires month-end payments of $250 for 15 months. Classic Furniture sold the contract to Household Finance Co. at a discount to yield 19.5% compounded monthly. What price did Household pay Classic Furniture?

Free

Short Answer

Q 118Q 118

The Ottawa Senators fired their coach two years into his five-year contract, which paid him $90,000 at the end of each month. If the team owners buy out the remaining term of the coach's contract for its economic value at the time of firing, what will be the settlement amount? Use 7.5% compounded monthly as the time value of money.

Free

Short Answer

Q 119Q 119

The Montreal Canadiens have just announced the signing of Finnish hockey sensation Gunnar Skoroften to a 10-year contract at $3 million per year. The media are reporting the deal as being worth $30 million to the young Finn. Rounded to the dollar, what current economic value would you place on the contract if Skoroften will be paid $250,000 at the end of each month and money can earn 6% compounded monthly?

Free

Short Answer

Q 120Q 120

A Province of Ontario bond has 14½ years remaining until it matures. The bond pays $231.25 interest at the end of every six months. At maturity, the bond repays its $5,000 face value in addition to the final interest payment. What is the fair market value of the bond if similar provincial bonds are currently providing investors with a return of 3.8% compounded semi-annually?

Free

Short Answer

Q 121Q 121

You can purchase a residential building lot for $60,000 cash or for $10,000 down and month-end payments of $1,000 for five years. If money is worth 7.5% compounded monthly, which option should you choose?

Free

Essay

Q 122Q 122

You have received two offers on the used car you wish to sell. Mr. Lindberg is offering $9500 cash, and Mrs. Martel's offer is five semi-annual payments of $2,000 including one on the purchase date. Which offer has the greater economic value using a discount rate of 5% compounded semi-annually? What is the economic advantage in current dollars of the preferred alternative?

Free

Essay

Q 123Q 123

Annuity G has the same i and PMT as Annuity H. G has twice as many payments as H. Is G's present value (pick one): (i) double, (ii) more than double, or (iii) less than double the amount of H's present value? Give the reason for your choice.

Free

Essay

Q 124Q 124

A mortgage broker offers to sell you a loan contract that would provide you with end-of-month payments of $900 for the next

Free

Essay

Q 125Q 125

A Government of Canada bond will pay $50 at the end of every six months for the next 15 years and an additional $1,000 lump payment at the end of the 15 years. What is the appropriate price to pay if you require a rate of return of 6.5% compounded semi-annually?

Free

Short Answer

Q 126Q 126

What is the maximum price you should pay for a contract guaranteeing month-end payments of $500 for the next 12 years if you require a minimum rate of return of at least 8% compounded monthly for the first five years and at least 9% compounded monthly for the next seven years?

Free

Short Answer

Q 127Q 127

A court-ordered award for family support calls for payments of $800 per month for five years, followed by payments of $1,000 per month for 10 more years. If money is worth 6% compounded monthly, what is the economic value of the award one month before the first payment?

Free

Short Answer

Q 128Q 128

Calculate the future value of an ordinary annuity consisting of monthly payments of $300 for five years. The rate of interest was 3% compounded monthly for the first two years and will be 4.5% compounded monthly for the last three years.

Free

Short Answer

Q 129Q 129

An income annuity with quarterly payments earns 6% compounded monthly. What is the value of c? What is the approximate value of the periodic rate of return for one payment interval? Will the correct value be larger or smaller than your estimate? Explain.

Free

Essay

Q 130Q 130

A loan at 6% compounded semi-annually requires equal monthly payments. What is the value of c? What is the approximate value of the periodic interest rate for one payment interval? Will the correct value be larger or smaller than your estimate? Explain.

Free

Essay

Q 131Q 131

Calculate the periodic interest rate that matches the payment interval for each annuity (to the nearest 0.001%):

Free

Short Answer

Free

Short Answer

Free

Short Answer

Q 134Q 134

Mr. and Mrs. Krenz are contributing to a Registered Education Savings Plan
(RESP) they have set up for their children. What amount will they have in the RESP after eight years of contributing $500 at the end of every calendar quarter if the plan earns 6% compounded monthly? How much of the total amount is interest?

Free

Short Answer

Q 135Q 135

What amount will be required to purchase a 20-year annuity paying $2,500 at the end of each month if the annuity provides a return of 6.75% compounded annually?

Free

Short Answer

Q 136Q 136

Kent sold his car to Carolynn for $2,000 down and monthly payments of $295.88 for 3½ years, including interest at 7.5% compounded annually. What was the selling price of the car?

Free

Short Answer

Q 137Q 137

LeVero's end-of-month payments of $1167.89 will pay off his mortgage loan in 4 years and 7 months. The interest rate on his mortgage is 6.6% compounded semi-annually. What is the current balance on the loan?

Free

Short Answer

Q 138Q 138

How much larger will the value of an RRSP be at the end of 25 years if the contributor makes month-end contributions of $300 instead of year-end contributions of $3600? In both cases the RRSP earns 6.5% compounded semi-annually.

Free

Short Answer

Q 139Q 139

Gloria has just made her ninth annual $2,000 contribution to her Tax-Free Savings Account (TFSA). She now plans to make semi-annual contributions of $2,000. The first contribution will be made six months from now. How much will she have in her TFSA 15 years from now if the plan has earned and will continue to earn 5% compounded quarterly?

Free

Short Answer

Q 140Q 140

Micheline wishes to purchase a 25-year annuity providing payments of $1,000 per month for the first 15 years and $1,500 per month for the remaining 10 years. Sovereign Insurance Co. has quoted her a rate of return of 5% compounded annually for such an annuity. How much will it cost Micheline to purchase the annuity from Sovereign?

Free

Short Answer

Q 141Q 141

How much larger will the value of an RRSP be at the end of 20 years if the contributor makes month-end contributions of $500 instead of year-end contributions of $6,000? In both cases the RRSP earns 4.5% compounded semi-annually.

Free

Short Answer

Q 142Q 142

Suppose Evan contributes $2,000 to his RRSP at the end of every quarter for the next 15 years and then contributes $1,000 at each month's end for the subsequent 10 years. How much will he have in his RRSP at the end of the 25 years? Assume that the RRSP earns 6% compounded semi-annually.

Free

Essay

Q 143Q 143

Calculate the future value of investments consisting of payments of $800 at the end of each calendar quarter for seven years. The rate of interest earned will be 7% compounded quarterly for the first 30 months and 6% compounded semi-annually for the remainder of the annuity's term.

Free

Short Answer

Q 144Q 144

Kingston Engineering Services (KES) acquired a backhoe machine under a capital lease agreement. KES pays the lessor $2700.00 at the beginning of every three months for 7 years. If KES can obtain seven-year financing at 6% compounded quarterly, what long term liability will initially be recorded?

Free

Short Answer

Q 145Q 145

Classify the type of annuity described in the following scenario.
An investor deposits $600 at the beginning of every month into an investment earning 7% compounded quarterly.

Free

Short Answer

Q 146Q 146

Classify the type of annuity described in the following scenario.
A mortgage carrying an interest rate of 3.75% compounded semiannually will be repaid over 25 years with payments of $1575.00 at the end of every month.

Free

Short Answer

Q 147Q 147

Classify the type of annuity described in the following scenario.
A student loan carrying interest of 2.5%, compounded quarterly is repaid with payments of $1000 at the end of every three months.

Free

Short Answer

Q 148Q 148

An annuity consists of payments of $450 made at the beginning of every month for 5 years. If the annuity earns 6% compounded semiannually, calculate present value.

Free

Short Answer

Q 149Q 149

An annuity consists of payments of $700 made at the beginning of every quarter for 5 years. If the annuity earns 8% compounded semiannually, calculate present value.

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Q 156Q 156

Assume that your client invests $1,000 at the end of each of the next three years. The investments earn 8% compounded annually. What is the future value at the end of the three years? (Taken from CIFP course materials.)

Free

Short Answer

Q 157Q 157

Your client plans to invest $2,000 at the end of each year. The rate of return on the investment is 7.5% compounded annually. What will be the value of the investment at the end of 12 years? (Taken from CIFP course materials.)

Free

Short Answer

Q 158Q 158

Your client has systematically invested $1,000 at the end of each half-year for the past 17 years. The invested funds have earned 6.4% compounded semi-annually. What is the value of your client's investments today? (Taken from CIFP course materials.)

Free

Short Answer

Q 159Q 159

Dave Bidini has saved $20,000 for a down payment on a home and plans to save another $5,000 at the end of each year for the next five years. He expects to earn 7.25% compounded annually on his savings. How much will he have in five years' time? (Taken from CIFP course materials.)

Free

Short Answer

Q 160Q 160

Your client is scheduled to receive $2,000 at the end of each year for the next 10 years. If money is currently worth 7% compounded annually, what is the present value of the annuity? (Taken from CIFP course materials.).

Free

Short Answer

Q 161Q 161

Imperial Life Inc. is quoting a rate of return of 5.2% compounded quarterly on 15-year annuities. How much will you have to pay for a 15-year annuity that pays $5,000 (at the end of) every three months?

Free

Short Answer

Q 162Q 162

If money can earn 6% compounded monthly, how much more money is required to fund an ordinary annuity paying $200 per month for 30 years than to fund the same monthly payment for 20 years?

Free

Short Answer

Q 163Q 163

Harold and Patricia Abernathy made a loan to their son, Jason. To repay the loan, Jason will make payments of $2,000 at the end of each of the next 10 years. If the interest rate on the loan is 7% compounded annually, what was the amount of the original loan? (Taken from CIFP course materials.)

Free

Short Answer

Q 164Q 164

A victim of a car accident won a judgment for wages lost over a two-year period ended nine months before the date of the judgment. In addition, the court awarded interest at 6% compounded monthly on the lost wages from the date they would have otherwise been received to the date of the judgment. If the monthly salary was been $5,500, what was the total amount of the award (on the date of the judgment)?

Free

Short Answer

Q 165Q 165

What is the future value of deposits of $1,000 per year for 10 years earning 5.75% compounded annually?

Free

Short Answer

Q 166Q 166

What is the cash price of a dining set if monthly payments of $200 are made for three years at an interest rate of 8.5% compounded monthly?

Free

Short Answer

Q 167Q 167

A 20-year mortgage requires payments of $1194.85 per month at an interest rate of 7.8% compounded monthly? What was the amount of the mortgage?

Free

Short Answer

Q 168Q 168

What is the present value of monthly loan payments of $250 for five years, if interest is 7.5% compounded monthly?

Free

Short Answer

Q 169Q 169

Marika is paying $325 per month for a car over four years. If interest is 3.8% compounded monthly, what was the purchase price of the car? How much interest will Marika pay overall?

Free

Short Answer

Q 170Q 170

What percentage more funds will you have in your RRSP 20 years from now by making fixed contributions of $3,000 at the end of every six months for the next 20 years, instead of waiting 10 years and making semi-annual contributions that are twice as large for half as many years? Assume that the RRSP earns 8% compounded semi-annually.

Free

Short Answer

Q 171Q 171

Gabriela's monthly payments of $567.89 will pay off her mortgage loan in 7 years and 5 months. The interest rate on her mortgage is 6.6% compounded monthly. What is the current balance on the loan?

Free

Short Answer

Q 172Q 172

Osgood Appliance Centre is advertising refrigerators for six monthly payments of $199, including a payment on the date of purchase. What cash price should Osgood accept if it would otherwise sell the conditional sale agreement to a finance company to yield 18% compounded monthly?

Free

Short Answer

Q 173Q 173

A mortgage broker offers to sell you a mortgage loan contract that will pay $800 at the end of each month for the next 3½ years, at which time the principal balance of $45,572 is due and payable. What is the highest price you should pay for the contract if you require a return of at least 7.5% compounded monthly?

Free

Short Answer

Q 174Q 174

C&D Stereo sold a stereo system on a plan that required no down payment and nothing to pay until January 1 (four months away). Then the first of 12 monthly payments of $226.51 must be made. The payments were calculated to provide C&D Stereo with a return on the account receivable of 16.5% compounded monthly. What was the selling price of the stereo system?

Free

Short Answer

Q 175Q 175

Calculate the future value of an ordinary annuity consisting of quarterly payments of $1,200 for five years, if the rate of interest is 10% compounded quarterly for the first two years and 9% compounded quarterly for the last three years.

Free

Short Answer

Q 176Q 176

Rajeev's new financial plan calls for end-of-quarter contributions of $2,000 to his RRSP. In addition, at each year-end, he intends to contribute another $5,000 out of the annual bonus he receives from his employer. What will be the amount in his RRSP after four years if it earns 7% compounded quarterly?

Free

Short Answer

Q 177Q 177

Marika has already accumulated $18,000 in her RRSP. If she contributes $2,000 at the end of every six months for the next 10 years, and $300 per month for the subsequent five years, what amount will she have in her plan at the end of the 15 years? Assume that her plan will earn 9% compounded semi-annually for the first 10 years and 9% compounded monthly for the next five years.

Free

Short Answer

Q 178Q 178

How much more will you have in your RRSP at age 65 if you begin annual $1,000 contributions to your plan on your 26

^{th}birthday instead of on your 27^{th}birthday? Assume that the RRSP earns 8% compounded annually and that the last contribution is on your 65^{th}birthday.Free

Short Answer

Q 179Q 179

If money can earn 6% compounded monthly, how much more money is required to fund an ordinary annuity paying $200 per month for 30 years than to fund the same monthly payment for 20 years?

Free

Short Answer

Q 180Q 180

How much more will you have in your RRSP 30 years from now if you make fixed contributions of $3,000 at the end of each of the next 30 years, instead of waiting 15 years and making annual contributions that are twice as large for half as many years? Assume that the RRSP earns 8% compounded annually.

Free

Short Answer

Q 181Q 181

Leona contributed $3,000 per year to her RRSP on every birthday from age 21 to age 30 inclusive. She stopped employment to raise a family and made no further contributions. Her husband, John, started to make annual contributions of $3,000 to his RRSP on his 31

^{st}birthday and plans to continue up to and including his 65^{th}birthday. Assuming that both of their plans earn 8% compounded annually over the years, calculate and compare the amounts in their RRSPs at age 65.Free

Essay

Q 182Q 182

Isaac wishes to purchase a 25-year annuity providing payments of $1000 at the end of each month for the first 15 years and $1500 at the end of each month for the remaining 10 years. If Isaac requires a minimum rate of return of 4.8% compounded monthly, what is the maximum price Isaac will be willing to pay for the annuity?

Free

Short Answer

Q 183Q 183

An annuity contract pays $2,000 semi-annually for 15 years. What is the present value of the annuity six months before the first payment if money can earn 6% compounded semi-annually for the first six years and 10% compounded semi-annually for the next nine years?

Free

Short Answer

Q 184Q 184

Larissa plans to deposit $1,500 per year into a savings account paying 4.75% yearly for 10 years. She will leave the accumulated amount in the account for another 10 years at 5.25% compounded semi-annually. How much will Larissa have in the account after 20 years?

Free

Short Answer

Q 185Q 185

François and Pat wish to structure the payments from a 20-year annuity so that the end-of-quarter payments increase by $500 every five years. Maritime Insurance Co. will pay 5% compounded quarterly on funds received to purchase such an annuity. How much must François and Pat pay for an annuity in which the quarterly payments increase from $2,000 to $2,500 to $3,000 to $3,500 in successive five-year periods?

Free

Short Answer

Q 186Q 186

Liam is investing $2,000 per year into his RRSP for five years at 3.5% compounded annually. Then he will add $1,500 every six months for the next five years at 3.75% compounded semi-annually. How much will Liam have in his account in total after 10 years?

Free

Short Answer

Q 187Q 187

Kristina is deciding whether to deposit $1,000 per year for 10 years into an RRSP, or to wait five years, and then deposit $2,000 per year. If interest is 4.25% compounded yearly, which option should Kristina choose? What is the economic advantage of her choice?

Free

Short Answer

Q 188Q 188

Your client has the following choices for an insurance benefit: She can receive $2,000 at the end of each year for the next five years or one "lump" sum today. If the current interest rate is 4.5% compounded annually, what lump payment today is equivalent to the five payments? (Taken from CIFP course materials.)

Free

Short Answer

Q 189Q 189

A lottery offers the winner the choice between a $150,000 cash prize or month-end payments of $1,000 for 12½ years, increasing to $1,500 per month for the next 12½ years. Which alternative would you choose if money can earn 8.25% compounded monthly over the 25-year period?

Free

Essay

Q 190Q 190

For its "No Interest for One Year Sale," Flemming's Furniture advertises that customers pay only a 10% down payment. The balance may be paid by 12 equal monthly payments with no interest charges. Flemming's has an operating loan on which it pays interest at 8.4% compounded monthly. If Flemming's sells furniture in a cash transaction rather than on the 10%-down-and-no-interest promotion, Flemming's can use the extra cash proceeds to reduce the balance on its loan, and thereby save on interest costs. What percentage discount for cash could Flemming's give and still be no worse off than receiving full price under the terms of the sale?

Free

Short Answer

Q 191Q 191

You can purchase a residential building lot for $90,000 cash or for $20,000 down and quarterly payments of $5,000 for four years. The first payment would be due three months after the purchase date. If the money you would use for a cash purchase can earn 8% compounded quarterly during the next four years, which option should you choose? What is the economic advantage in current dollars of the preferred alternative?

Free

Essay

Q 192Q 192

Sam has two offers to buy his is motorcycle. The first offer is a cash price of $15,000. The second offer is a down payment of $5,000, and quarterly payments of $725 for four years. If his money can earn 5.5% compounded quarterly, which option should Sam choose? What is the economic advantage?

Free

Short Answer

Q 193Q 193

A 20-year mortgage requires payments of $1,409.88 per month at an interest rate of 5.8% compounded monthly? What was the amount of the mortgage? What is the outstanding balance of the mortgage after 12 years?

Free

Short Answer

Q 194Q 194

Calculate the periodic interest rate that matches the payment interval for each annuity (to the nearest 0.001%):

Free

Short Answer

Q 195Q 195

Calculate the periodic interest rate that matches the payment interval for each annuity (to the nearest 0.001%):

Free

Short Answer

Q 196Q 196Calculate the periodic interest rate that matches the payment interval for each annuity (to the nearest 0.001%):

Free

Short Answer

Q 197Q 197Calculate the periodic interest rate that matches the payment interval for each annuity (to the nearest 0.001%):

Free

Short Answer

Q 198Q 198Calculate the periodic interest rate that matches the payment interval for each annuity (to the nearest 0.001%):

Free

Short Answer

Q 199Q 199Calculate the periodic interest rate that matches the payment interval for each annuity (to the nearest 0.001%):

Free

Short Answer

Q 200Q 200Calculate the periodic interest rate that matches the payment interval for each annuity (to the nearest 0.001%):

Free

Short Answer

Q 201Q 201Calculate the periodic interest rate that matches the payment interval for each annuity (to the nearest 0.001%):

Free

Short Answer

Q 202Q 202Calculate the periodic interest rate that matches the payment interval for each annuity (to the nearest 0.001%):

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Free

Short Answer

Q 213Q 213

What price will a finance company pay for a conditional sale contract requiring 15 monthly payments of $180.50 if the company requires a rate of return of 21% compounded semi-annually? The first payment is due one month from now.

Free

Short Answer

Q 214Q 214

What minimum amount of money earning 7% compounded semi-annually will sustain withdrawals of $1,000 at the end of every month for 12 years?

Free

Short Answer

Q 215Q 215

Calculate the periodic interest rate of quarterly payments earning 4.5% compounded annually correct to five decimal places.

Free

Short Answer

Q 216Q 216

How much larger will the value of an RRSP be at the end of 25 years if the RRSP earns 9% compounded monthly instead of 9% compounded annually?
In both cases a contribution of $1,000 is made at the end of every three months.

Free

Short Answer

Q 217Q 217

What is the present value of $300 monthly loan payments for two years if money earns 7.5% compounded quarterly?

Free

Short Answer

Q 218Q 218

What is the future value of deposits of $250 monthly for five years into an account that pays 3.75% compounded quarterly?

Free

Short Answer

Q 219Q 219

Mr. Eusanio contributed $1,500 to his RRSP on March 1 and on September 1 of each year for 25 years. The funds earned 6% compounded monthly for the first 10 years and 7% compounded annually for the next 15 years. What was the value of his RRSP after his contribution on September 1 of the 25

^{th}year?Free

Short Answer

Q 220Q 220

A savings plan requires end-of-month contributions of $100 for 25 years. What will be the future value of the plan if it earns 7% compounded quarterly for the first half of the annuity's term and 8% compounded semi-annually for the last half of the term?

Free

Short Answer

Q 221Q 221

An investment plan requires year-end contributions of $1,000 for 25 years.
What will be the future value of the plan if it earns 7½% compounded monthly for the first 10 years and 8% compounded semi-annually thereafter?

Free

Short Answer

Q 222Q 222

Monty expects to contribute $300 at the end of every month to his RRSP for the next five years. For the subsequent 10 years, he plans to contribute $2,000 at the end of each calendar quarter. How much will be in his RRSP at the end of the 15 years if the funds earn 8% compounded semi-annually?

Free

Short Answer

Q 223Q 223

Joshua wants to structure a 20-year annuity so that its end-of-quarter payments are $2,000 for the first 10 years and $2,500 for the next 10 years. Pacific Life Insurance Co. offers to sell this annuity with a 4.8% compounded monthly rate of return to the annuitant. What amount must Joshua pay to Pacific for the annuity?

Free

Short Answer

Q 224Q 224

What is the value of a contract that will pay $500 at the end of each month for 2 years and $2,000 at the end of each quarter for the subsequent 3 years? Use a discount rate of 6% compounded semi-annually.

Free

Short Answer

Q 225Q 225

What will be the amount in an RRSP after 25 years if contributions of $3,000 are made at each year-end for the first seven years and month-end contributions of $500 are made for the subsequent 18 years? Assume that the plan earns 8% compounded quarterly for the first 12 years and 7% compounded semi-annually for the next subsequent years.

Free

Short Answer

Q 226Q 226

Sam is saving $100 per month. How much will he have in his account at the end of five years if his account earns 3.8% compounded quarterly?

Free

Short Answer

Q 227Q 227

Jane is making monthly payments of $450 for four years for a car at an interest rate of 5.5% compounded semi-annually. What was the purchase price of the car?

Free

Short Answer

Q 228Q 228

Kristina is saving $150 every two weeks into an account that earns 3.75% compounded quarterly. How much will she have in the account after five years? What amount of interest will Kristina earn from this account?

Free

Short Answer

Q 229Q 229

Cliff has a business bank loan in which he makes quarterly payments of $2821.40. The loan is for five years, at 4.75% compounded semi-annually. What was the amount of the loan? What amount of interest will Cliff pay on his loan?

Free

Short Answer

Q 230Q 230

Jane is paying $506 per month for a car over five years. She had a down payment of $6,000, and is paying interest at 4.8% compounded quarterly. What was the purchase price of the car? How much interest will Jane pay overall?

Free

Short Answer

Q 231Q 231

An investment consists of deposits of $500 per quarter for 10 years. How much will be in the account after 10 years if interest is 5.5% compounded semi-annually?

Free

Short Answer

Q 232Q 232

A preferred share pays a dividend of $3.25 per quarter until it is redeemed, at which time the value of the share is $60. What is the fair market value of the share if the redemption date is in 10 years, and shares of this type are currently generating a rate of return of 8% compounded semi-annually?

Free

Short Answer