Questions from Business Mathematics

Q: A trust company pays 5.375% compounded annually on its

A trust company pays 5.375% compounded annually on its five-year GICs. What semiannually compounded interest rate would produce the same maturity value?

Q: Maritime Investments pays 4.625% compounded semiannually on its three

Maritime Investments pays 4.625% compounded semiannually on its three-year GICs. What quarterly compounded rate of interest will produce the same maturity value?

Q: To the nearest month, how long will it take an investment

To the nearest month, how long will it take an investment to increase in value by 200% if it earns 7.5% compounded semiannually?

Q: Rounded to the nearest month, how long will it take money

Rounded to the nearest month, how long will it take money to lose one-third of its purchasing power if the annual inflation rate is 3%?

Q: If the Consumer Price Index rose from 109.6 to 133

If the Consumer Price Index rose from 109.6 to 133.8 over an 8 1 2 -year period, what was the equivalent compound annual inflation rate during the period?

Q: A new machine that will lead to savings in labour costs of

A new machine that will lead to savings in labour costs of $16,000 per year can be purchased for $72,000. However, it will cost $1500 per year for the first four years and $2500 per year for the next...

Q: Rearrange the formula FV = PV(1 + i)n

Rearrange the formula FV = PV(1 + i)n to isolate i on the left side.

Q: An investor paid $4271.17 to purchase a $10

An investor paid $4271.17 to purchase a $10,000 face value strip bond for her RRSP. At this price the investment will provide a return of 6.47% compounded semiannually. How long (to the nearest day) a...

Q: An investor’s portfolio increased in value by 53% over a five

An investor’s portfolio increased in value by 53% over a five-year period while the Consumer Price Index rose from 121.6 to 135.3. What was the annually compounded real rate of return on the portfolio...

Q: Terry was supposed to pay $800 to Becky on March 1

Terry was supposed to pay $800 to Becky on March 1. At a later date, Terry paid Becky an equivalent payment in the amount of $895.67. If they provided for a time value of money of 8% compounded monthl...