Question: A money market mutual fund purchased $1

> Duane borrowed $3000 from his grandmother five years ago. The interest on the loan was to be 5% compounded semiannually for the first three years, and 6% compounded monthly thereafter. If he made a $1000 payment 2 1 2 years ago, what is the amount now ow

> Megan borrowed $1900 three and a half years ago at 7% compounded semiannually. Two years ago she made a payment of $1000. What amount is required today to pay off the remaining principal and the accrued interest?

> A debt of $7000 accumulated interest at 9.5% compounded quarterly for 15 months, after which the rate changed to 8.5% compounded semiannually for the next six months. What was the total amount owed at the end of the entire 21-month period?

> An investment of $2500 earned interest at 4.5% compounded quarterly for 1 1 2 years, and then 4.0% compounded monthly for two years. How much interest did the investment earn in the 3 1 2 years?

> To what amount would $12,100 grow after 3 1 4 years if it earned 2.5% compounded monthly?

> Alberto has just invested $60,000 in a five-year Guaranteed Investment Certificate (GIC) earning 6% compounded semiannually. When the GIC matures, he will reinvest its entire maturity value in a new five-year GIC. What will be the maturity value of the s

> Nelson borrowed $5000 for 4 1 2 years. For the first 2 1 2 years, the interest rate on the loan was 8.4% compounded monthly. Then the rate became 7.5% compounded semiannually. What total amount was required to pay off the loan if no payments were made be

> Mrs. Vanderberg has just deposited $5000 in each of three savings plans for her grandchildren. They will have access to the accumulated funds on their 19th birthdays. Their current ages are 12 years, 7 months (Donna); 10 years, 3 months (Tim); and 7 year

> Interest rates were at historical highs in the early 1980s. In August of 1981, you could earn 17.5% compounded annually on a five-year term deposit with a Canadian bank. Since then, the interest rate offered on five-year term deposits dropped to a low of

> Faisal borrowed $3000, $3500, and $4000 from his father on January 1 of three successive years at college. Faisal and his father agreed that interest would accumulate on each amount at the rate of 5% compounded semiannually. Faisal is to start repaying t

> Julio is paid on a graduated commission scale of 5% on the first $20,000 of sales in a month, 7.5% on the next $20,000, and 10% on all additional sales. 1. What is he paid for a month in which his sales are $54,880? 2. What single commission rate on all

> Bjorn defaulted on payments of $2000 due three years ago and $1000 due 1 1 2 years ago. What would a fair settlement to the payee be 1 1 2 years from now, if the money could have been invested in low-risk government bonds to earn 4.2% compounded semiannu

> Payments of $1300 due today and $1800 due in 1 3 4 years are to be replaced by a single payment four years from now. What is the amount of that payment if money is worth 2% compounded quarterly?

> What amount two years from now will be equivalent to $2300 at a date 1 1 2 years ago, if money earns 6.25% compounded semiannually during the intervening time?

> What amount today is equivalent to $10,000 four years ago, if money earned 5.5% compounded monthly over the last four years?

> What amount three years from now is equivalent to $3000 due five months from now? Assume that money can earn 7.5% compounded monthly.

> What is the future value of $8500 after 5 1 2 years if it earns 9.5% compounded quarterly?

> A $5000 payment due 1 1 2 years ago has not been paid. If money can earn 3.25% compounded annually, what amount paid 2 1 2 years from now would be the economic equivalent of the missed payment?

> Suppose an individual invests $1000 at the beginning of each year for the next 30 years. Thirty years from now, how much more will the first $1000 investment be worth than the 16th $1000 investment if both earn 8.5% compounded annually?

> A $1000 investment is made today. Calculate its maturity values for the six combinations of terms and annually compounded rates of return in the following table.

> How much more will an investment of $10,000 earning 8% compounded annually be worth after 15 years than after 10 years? Calculate the difference in dollars and as a percentage of the smaller maturity value.

> Sharon is a manufacturer’s representative selling office furniture directly to businesses. She receives a monthly salary of $2000 plus a 2.2% commission on sales exceeding her quota of $150,000 per month. 1. What are her earnings for a month in which she

> How much more will an investment of $10,000 earning 5% compounded annually be worth after 25 years than after 20 years? Calculate the difference in dollars and as a percentage of the smaller maturity value.

> How much more will an investment of $10,000 be worth after 25 years if it earns 6% compounded annually instead of 5% compounded annually? Calculate the difference in dollars and as a percentage of the smaller maturity value.

> How much more will an investment of $10,000 be worth after 25 years if it earns 5% compounded annually instead of 4% compounded annually? Calculate the difference in dollars and as a percentage of the smaller maturity value.

> What total interest will be earned by $5000 invested at 5.4% compounded monthly for 3 1 2 years?

> What is the maturity value of a $12,000 loan for 18 months at 7.2% compounded quarterly? How much interest is charged on the loan?

> By calculating the maturity value of $100 invested for one year at each rate, determine which rate of return an investor would prefer. 1. 12.0% compounded monthly 2. 12.1% compounded quarterly 3. 12.2% compounded semiannually 4. 12.3% compounded annually

> What is the maturity value of $5000 invested at 3.0% compounded semiannually for seven years?

> Calculate the compounding frequency for a nominal rate of 6.6% if the periodic rate of interest is: 1. 1.65%. 2. 3.3%. 3. 0.55%.

> What is the nominal rate of interest if the periodic rate is: 1. 0.58 3 ¯ % per month? 2. 5.8% per year?

> Determine the nominal interest rate if the periodic rate is: 1. 1.25% per quarter. 2. 0.491 6 ¯ % per month.

> Tom sells mutual funds on a graduated commission structure. He receives 3.3% on the first $50,000 of sales in a month, 4.4% on the next $50,000, and 5.5% on all further sales. What are his gross earnings for a month in which he sells $140,000 worth of mu

> Determine the nominal rate of interest if the periodic rate is: 1. 1.5% per month. 2. 1.5% per quarter. 3. 1.5% per half-year.

> Calculate the nominal interest rate if the periodic rate is: 1. 3.6% per half-year. 2. 1.8% per quarter. 3. 0.6% per month.

> Determine the periodic interest rate for a nominal interest rate of: 1. 8% compounded semiannually. 2. 8% compounded monthly

> What is the periodic rate of interest corresponding to: 1. 5.4% compounded quarterly? 2. 5.4% compounded monthly?

> Determine the periodic interest rate for a nominal interest rate of 4.8% compounded: 1. semiannually. 2. quarterly. 3. monthly.

> For a nominal rate of 6.75%, determine the compounding frequency if the periodic interest rate is: 1. 0.5625%. 2. 1.6875%.

> What is the compounding frequency for a nominal rate of 4.7% if the periodic interest rate is: 1. 1.175%? 2. 0.391 6 ¯ % ?

> For a nominal rate of 5.9%, determine the compounding frequency if the periodic interest rate is: 1. 2.95%. 2. 0.491 6 ¯ %. 3. 1.475%.

> Calculate the periodic rate of interest if the nominal interest rate is 6% compounded: 1. monthly. 2. quarterly. 3. semiannually

> Debra paid $99,615 for a $100,000 T-bill with 30 days remaining until maturity. What (annual) rate of interest will she earn?

> A shoe salesperson is paid the greater of $600 per week or 11% of sales. 1. What are his earnings for a week in which sales are $5636? 2. At what volume of sales per week will he start to earn more from the commission-based compensation?

> A $100,000, 90-day commercial paper certificate issued by Wells Fargo Financial Canada was sold on its issue date for $99,250. What rate of return will it yield to the buyer?

> Jake purchased a $100,000 182-day T-bill discounted to yield 1.85%. When he sold it 30 days later, yields had dropped to 1.79%. How much did Jake earn?

> Calculate and compare the market values of a $100,000 face value Government of Canada Treasury bill on dates that are 91 days, 61 days, 31 days, and one day before maturity. Assume that the rate of return required in the market stays constant at 3% over

> Calculate and compare the issue-date prices of $100,000 face value commercial paper investments with 30-, 60-, and 90-day maturities, all priced to yield 1.5%.

> A $100,000, 91-day Province of Ontario Treasury bill was issued 37 days ago. What will be its purchase price today in order to yield the purchaser 1.55%?

> Calculate the price on its issue date of $100,000 face value, 90-day commercial paper issued by GE Capital Canada if the prevailing market rate of return is 1.932%.

> An investor purchased a 182-day, $25,000 Province of Alberta Treasury bill on its date of issue for $24,610 and sold it 60 days later for $24,750. 1. What rate of return was implied in the original price? 2. What rate of return did the market require on

> A $100,000, 168-day Government of Canada Treasury bill was purchased on its date of issue to yield 2.1%. 1. What price did the investor pay? 2. Calculate the market value of the T-bill 85 days later if the rate of return then required by the market has:

> Lydia purchased a $100,000 150-day T-bill when the prevailing yield on T-bills was 4.5%. She sold the T-bill 60 days later when the prevailing yield was 4.2%. What interest rate did Lydia earn during the 60-day period?

> Manfred is considering job offers of the same type of sales position from two retailers with similar product lines: - Supreme Audio & Video is offering a base salary of $2000 per month plus a 4% commission rate on sales. - Buy-Right Electronics will pay

> A 168-day, $100,000 T-bill was initially issued at a price that would yield the buyer 3.19%. If the yield required by the market remains at 3.19%, how many days before its maturity date will the T-bill’s market price first exceed $99,000?

> Over the past 35 years, the prevailing market yield or discount rate on 90-day T-bills has ranged from a low of 0.17% in February 2010 to a high of 20.82% in August 1981. (The period from 1979 to 1990 was a time of historically high inflation rates and i

> Calculate the price of a $25,000, 91-day Province of British Columbia Treasury bill on its issue date if the current market rate of return is 1.672%.

> Nadir bought a new home theatre system with 7.1 surround sound, 3D TV, and leather theatre seating for $10,000 from Best Future Electronics on March 20. He paid $2000 in cash and signed a conditional sale contract requiring a payment on July 1 of $3000 p

> An assignable loan contract executed three months ago requires two payments to be paid five and ten months after the contract date. Each payment consists of a principal portion of $1800 plus interest at 10% on $1800 from the date of the contract. The pay

> An agreement stipulates payments of $4000, $2500, and $5000 in three, six, and nine months, respectively, from today. What is the highest price an investor will offer today to purchase the agreement if he requires a minimum rate of return of 3.25%?

> A contract requires payments of $1500, $2000, and $1000 in 100, 150, and 200 days, respectively, from today. What is the value of the contract today if the payments are discounted to yield a 10.5% rate of return?

> Certificate A pays $1000 in four months and another $1000 in eight months. Certificate B pays $1000 in five months and another $1000 in nine months. If the current rate of return required on this type of investment certificate is 5.75%, determine the cur

> An investment promises two payments of $1000, on dates 60 and 90 days from today. What price will an investor pay today: 1. If her required rate of return is 10%? 2. If her required rate of return is 11%? 3. Give an explanation for the lower price at the

> An investment promises two payments of $500, on dates three and six months from today. If the required rate of return on the investment is 4%: 1. What is the value of the investment today? 2. What will its value be in one month if the required rate of re

> Hillary sells cosmetics from her part-time home-based business. She receives a straight commission of 21% from her supplier. At the year-end, she also receives a 7% bonus on sales exceeding her annual quota of $100,000. What will her gross annual earning

> A high-rate savings account pays interest of 3.05%. Interest is calculated on the daily closing balance and paid at the close of business on the last day of the month. A depositor had a $7255 opening balance on November 1, withdrew $520 on November 17, a

> A Super Saver savings account pays interest of 2.15%. Interest is calculated on the daily closing balance and paid at the close of business on the last day of the month. How much interest will be lost for the month of May if $6000 is withdrawn from the a

> Danica wants to deposit a cheque for $5000 into her premium-rate savings account that pays interest of 2.25%. Interest is calculated on the daily closing balance and paid at the close of business on the last day of the month. If Danica already has $12,50

> Liam wants to deposit a $2300 bonus cheque into his high-rate savings account that pays interest of 3.15%. Interest is calculated on the daily closing balance and paid at the close of business on the last day of the month. If Liam’s current balance is $9

> Your local credit union offers the rates shown in the following table for short-term non-redeemable, non-registered GICs. How much more interest will an investor earn by placing $15,000 in a 180-day GIC than by purchasing two consecutive 90-day GICs? (As

> The rates offered by a bank on deposits between $10,000 and $24,999 are shown in the following table: How much more will an investor earn from a $10,000 investment in a 364-day GIC than from two consecutive 182-day GICs? (Assume that the interest rate on

> Using the rate table from Question #2, how much more will an investor earn from a single $60,000, 270-day GIC than from two $30,000, 270-day GICs?

> The rates offered by a credit union for its non-redeemable 90- to 365-day GICs are shown in the following table: Early redemption is permitted but will result in the rate being reduced to 1.75%. How much more interest will a 91-day $20,000 term deposit e

> For principal amounts of $5000 to $49,999, a bank pays an interest rate of 2.95% on 180- to 269-day non-redeemable GICs, and 3.00% on 270- to 364-day non-redeemable GICs. Ranjit has $10,000 to invest for 364 days. Because he thinks interest rates will be

> The Super Savings account offered by a trust company calculates interest daily based on the lesser of each day’s opening or closing balance as follows: September’s opening balance was $8572. The transactions in the acc

> Aletta’s annual salary of $58,800 is paid weekly. She is paid at time and a half for any overtime beyond her regular workweek of 35 hours. What is her gross pay for a week in which she works 39 hours?

> The Moneybuilder account offered by a chartered bank calculates interest daily based on the daily closing balance as follows: The balance at the beginning of March was $1678. On March 5, $700 was withdrawn. Then $2500 was deposited on March 15, and $900

> An Investment Savings account offered by a trust company calculates interest daily based on the daily closing balances as follows: What interest will be paid for the month of April if the opening balance was $2439, $950 was deposited on April 10, and $50

> Suppose that the current rates on 90- and 180-day GICs are 3.25% and 3.50%, respectively. An investor is weighing the alternatives of purchasing a 180-day GIC versus purchasing a 90-day GIC and then reinvesting its maturity value in a second 90-day GIC.

> Joan has savings of $12,000 on June 1. Since she may need some of the money during the next three months, she is considering two options at her bank. (1) An Investment Builder account earns a 2.25% rate of interest. The interest is calculated on the dail

> A savings account pays interest of 1.5%. Interest is calculated on the daily closing balance and paid at the close of business on the last day of the month. A depositor had a $2239 opening balance on September 1, deposited $734 on September 7 and $327 on

> 1. What will be the maturity value of $15,000 placed in a 120-day term deposit paying an interest rate of 2.25%? 2. If, on the maturity date, the combined principal and interest are “rolled over” into a 90-day term deposit paying 2.15%, what amount will

> A payment of $850 scheduled to be paid today and a second payment of $1140 to be paid nine months from today are to be replaced by a single equivalent payment. What total payment made today would place the payee in the same financial position as the sche

> Two payments of $3000 each are due in 50 and 100 days. What is their combined economic value today if money can earn: 1. 9%? 2. 11%? 3. Explain why the answer in part (b) is smaller.

> Two payments of $2000 each are to be received 6 and 12 months from now. If money is worth 5%, what is the total equivalent value of the payments: 1. Today? 2. Six months from today? 3. Explain why the answer in part (b) is larger.

> What single payment, made 45 days from now, is economically equivalent to the combination of three equal payments of $1750 each: one due 75 days ago, the second due today, and the third due 75 days from today? Money is worth 9.9% per annum.

> Express decimal and percent equivalent forms to five-figure accuracy. 2 2 100

> A payment stream consists of three payments: $1000 due today, $1500 due 70 days from today, and $2000 due 210 days from today. What single payment, 60 days from today, is economically equivalent to the payment stream if money can be invested at a rate of

> What is the equivalent value, 30 days from now, of a payment stream comprised of $2500 due 70 days from now and $4000 due 200 days from now? Assume money can earn 6 1 4%.

> Payments of $900 due 30 days from now and $1000 due 210 days from now are to be replaced with a single equivalent payment 90 days from now. If money can be invested at 4%, what single payment made 90 days from now is equivalent to the payment stream?

> A payment stream consists of $1000 payable now and $1500 payable five months from now. What is the equivalent value of the payment stream two months from now if money is worth 5.5%?

> Three payments of $2000 each (originally due six months ago, today, and six months from now) have been renegotiated to two payments: $3000 due one month from now and a second payment due in four months. What must the second payment be for the replacement

> Payments of $2600, due 50 days ago, and $3100, due in 40 days, are to be replaced by payments of $3000 due today and the balance due in 30 days. What must the second payment be if the payee is to end up in an equivalent financial position? Money now earn

> Ninety days ago Stella signed an agreement with Manon requiring her to make three payments of $400 plus interest 90, 150, and 210 days, respectively, from the date of the agreement. Each payment was to include interest on the $400 principal at the rate o

> Eight months ago, Louise agreed to pay Thelma $750 and $950, 6 and 12 months, respectively, from the date of the agreement. With each payment, Louise agreed to pay interest on the respective principal amounts at the rate of 6.5% from the date of the agre

> What is the economic value today of each of the following payment streams if money can earn 7.5%? (Note that the two streams have the same total nominal value.) 1. $1000, $3000, and $2000 due in one, three, and five months, respectively. 2. Two $3000 pay

> If money earns 3.5%, calculate and compare the economic value today of the following payment streams: Stream 1: Payments of $900 due 150 days ago and $1400 due 80 days ago. Stream 2: Payments of $800 due in 30 days, $600 due in 75 days, and $1000 due in

> Express decimal and percent equivalent forms to five-figure accuracy. 1000 25

> A college can purchase a telephone system for $35,000 or lease a system for five years for a front-end charge of $3000 and regular payments of $1500 at the beginning of every quarter (including the first quarter). The system can be purchased at the end o

> Payments of $1300 due five months ago and $1800 due three months from now are to be replaced by a single payment at a focal date one month from now. What is the size of the replacement payment that would be equivalent to the two scheduled payments if mon