Question 1

Determine the compound discount on $18 875 due in 7.75 years if interest is 9.72% compounded monthly.

Accepted Answer

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Question 2

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

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Question 3

Find the present value and the compound discount of $7500 due in five years and six months if interest is 4.8% compounded quarterly.

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Question 4

Find m for the investment of $1000.00 for 2 years at 1.8% compounded semi-annually.
A)4
B)2
C)0.9%
D)1

Accepted Answer

To find the value of m, we can use the formula for compound interest:

A=P(1+r/n)^(nt)

where:
A = the amount of money after t years
P = the principal amount (initial investment)
r = the annual interest rate (as a decimal)
n = the number of times the interest is compounded per year
t = the number of years

In this case, we have:
P = $1000.00
r = 1.8% = 0.018 (as a decimal)
n = 2 (since interest is compounded semi-annually)
t = 2

We want to solve for m, which represents the number of compounding periods per year. To do this, we can rearrange the formula:

m = (ln(A/P)) / (n * ln(1+r/n))

Plugging in the values we know, we get:

m = (ln(P(1+r/n)^(nt) / P)) / (n * ln(1+r/n))
m = (ln(1.018^4)) / (2 * ln(1.009))

Using a calculator, we find that m is approximately 2. Therefore, the answer is B.

Question 5

A $17 200 debt will accumulate for six years at 11.6% compounded semi-annually.For how much will the debt sell four years after it was incurred if the buyer of the debt charges 9% compounded quarterly?

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Question 6

A note dated July 1,2000,promises to pay $9000 with interest at 12.4% compounded quarterly on January 1,2007.Find the proceeds from the sale of the note on July 1,2002,if money is then worth 8.64% compounded semi-annually.

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Question 7

Find the proceeds of a non-interest-bearing promissory note for $175 500 discounted 54 months before maturity at 9.75% compounded semi-annually.

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Question 8

An obligation of $5150.00 due in 2.5 years is to be settled by four equal payments due today,nine months from now,21 months from now,and 27 months from now,respectively.What is the size of the equal payment at 8.88% p.a.compounded quarterly?

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Question 9

A loan of $8000.00 taken out two years ago is to be repaid by three equal installments due now,three years from now,and six years from now respectively.What is the size of the equal installments if interest on the debt is 7.32% p.a.compounded monthly?

Accepted Answer

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Question 10

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

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Question 11

Debt payments of $1400.00 due today,$5100.00 due in twenty-one months,and $1900.00 due in 4.5 years are to be combined into a single payment due three years from now.What is the size of the single payment if interest is 8.04% p.a.compounded quarterly?

Accepted Answer

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Question 12

Find m for the investment of $1000.00 for 2 years at 1.8% compounded semi-annually.
A)4
B)2
C)0.9%
D)1
E)1.8%

Accepted Answer

The answer of Find m for the investment of $1000.00...

Question 13

Payments of $10 200.00 due one year ago and $13 000.00 due nine months ago are to be replaced by a payment of $5800.00 now,a second payment of $10 000.00 fifteen months from now,and a final payment twenty-four months from now.What is the size of the final payment if interest is 9.2% compounded quarterly?

Accepted Answer

The answer of Payments of $10 200.00 due one year...

Question 14

You invest $10 000 in a savings account that pays interest of 8% compounded monthly.What is the value of your account after 14 months?
A)$10 970.88
B)$10 904.88
C)$10 074.88
D)$10 004.88
E)$10 974.88

Accepted Answer

The value of the investment after 14 months can be calculated using the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount ($10,000), r is the annual interest rate (8% or 0.08), n is the number of times that interest is compounded per year (monthly compounding means n=12), and t is the time the money is invested for in years (14 months is approximately 1.1667 years). Plugging in the values: A = 10000(1 + 0.08/12)^(12*1.1667) ≈ $10,974.88.

Question 15

Karen started a registered retirement savings plan on February 1,2000,with a deposit of $2210.She added $2000 on February 1,2001,and $1475 on February 1,2004.What is the accumulated value of her RRSP account on August 1,2005,if interest is 10.44% compounded quarterly?

Accepted Answer

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Question 16

A debt of $4000 due today is to be settled by two equal payments due three months from now,and 9 months from now respectively.What is the size of the equal payments at 8% compounded quarterly?

Accepted Answer

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Question 17

A loan of $2500.00 made today is to be repaid in three equal installments due in one year,two years,and four years respectively.What is the size of the equal installments if money is worth 8.4% compounded monthly?

Accepted Answer

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Question 18

Find i if an amount is invested at 6.00% compounded every 3 months.
A)3.00%
B)2.00%
C)6.00%
D)1.50%
E)0.02

Accepted Answer

The interest rate needs to be converted to a quarterly basis (since it is compounded every 3 months). To do this, we can use the formula (1 + r/n)^n - 1, where r is the annual interest rate and n is the number of times compounded per year. Plugging in r = 6% and n = 4 (since there are 4 quarters in a year), we get an effective quarterly interest rate of approximately 1.50%. Therefore, the answer is D.

Question 19

An obligation of $17 320 is due two years from now with interest at 9.2% compounded semi-annually.The obligation is to be settled by a payment of $8000 in seven months and a final payment in sixteen months.What is the size of the second payment if interest is now 10.8% compounded monthly?

Accepted Answer

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Question 20

Jenni started a registered retirement savings plan on January 1,2008,with a deposit of $2000.She added $3000 on January 1,2009,and $2000 on January 1,2010.What is the accumulated value of her RRSP account on July 1,2010,if interest is 12% compounded quarterly?

Accepted Answer

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Quiz 9: Compound Interestfuture Value and Present Value