Question: Astrid has just opened an RESP for

> The payments required on a contractual obligation are $500 per month. The contract was purchased for $13,372 just before a regular payment date. The purchaser determined this price based on his required rate of return of 9.75% compounded monthly. How man

> Central Personnel’s accountant set up a long-term lease liability of $11,622.73 to recognize a new contract for the lease of office furniture. She used the firm’s 10.5% monthly compounded cost of borrowing as the discount rate. If the lease payment at th

> Kim wants to save half of the $30,000 purchase price of a new car by making monthly deposits of $700, beginning today, into a T-bill savings account earning 4.2% compounded monthly. How long will it take him to reach his goal?

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

> Evaluate values of the variables. Calculate the result accurate to the nearest cent. S ( 1 + i ) n for S = $850, i = 0.0075, n = 6

> The MSRP for a BMW 528i is $58,499. The monthly payment on a 48-month lease at 1.9% compounded monthly is $697. The residual value at the end of the lease is $21,000. Rounded to the nearest dollar, what down payment was used in the lease calculation?

> What interest rate is being charged if the monthly payment on a 48-month lease of a Jaguar XF (MSRP $58,125) is $799? The required down payment is $2999 and the residual value is $24,059.

> A Smart ForTwo cabriolet (MSRP $21,550) can be leased for $248 per month. This payment is based on an interest rate of 6.9% compounded monthly, a down payment of $1425, and a residual value of $14,794. What is the term of the lease?

> With a down payment of $4850, the monthly payment on a four-year lease of a Ford F150 SuperCab (MSRP $27,629) is $369.27. The interest rate on the lease is 7.99% compounded monthly. What residual value was used in the calculation?

> The $219.40 monthly payment on a 48-month lease of a Kia SOUL was based on a down payment of $1545, an interest rate of 3.9% compounded monthly, and a residual value of $6815. What is the full price (MSRP) for the car rounded to the nearest dollar?

> The MSRP on a Nissan Maxima 3.5 SV is $38,625. The interest rate on a 48-month lease is 1.9% compounded monthly. What is the monthly lease payment, assuming a down payment of $5400 and a residual value of $11,990?

> What beginning-of-month withdrawals can a $400,000 RRIF (Registered Retirement Income Fund) sustain for 20 years if the investments within the RRIF earn: 1. 3% compounded monthly? 2. 4.5% compounded monthly? 3. 6% compounded monthly? 4. 7.5% compounded m

> Island Water Taxi has decided to lease another boat for five years rather than finance the purchase of the boat at an interest rate of 7.5% compounded monthly. It has set up a long-term lease liability of $43,000. What is the lease payment at the beginni

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

> Wendy will soon turn 33. She wants to accumulate $500,000 in an RRSP by her 60th birthday. How much larger will her annual contributions have to be if they are made at the end of each year (from age 33 to age 59 inclusive) instead of at the beginning of

> Evaluate values of the variables. Calculate the result accurate to the nearest cent. 3d2 – 4d + $15 for d = $2.50

> Shane is about to have his 25th birthday. He has set a goal of retiring at age 55 with $700,000 in an RRSP. For planning purposes he is assuming that his RRSP will earn 8% compounded annually. 1. What contribution on each birthday from age 25 to 54 inclu

> Advance Leasing calculates the monthly payments on its three-year leases on the basis of recovering the capital cost of the leased equipment and earning a 13.5% compounded monthly rate of return on its capital investment. What will be the monthly lease p

> An insurance company wishes to offer customers a monthly installment alternative to the annual premium plan. All premiums are payable at the beginning of the period of coverage. The monthly payment plan is to include an interest charge of 12% compounded

> Felix has already accumulated $20,000 and plans to invest another $5000 at the beginning of each year for the next 15 years. He expects to earn a return of 7 1 4 % compounded annually on his investments. What size monthly payments can be withdrawn from t

> Triex Manufacturing wants to accumulate $500,000 for an expansion planned to begin in five years. If today Triex makes the first of equal quarterly payments into a fund earning 5.4% compounded monthly, what size should these payments be?

> What maximum annual withdrawals will a $200,000 fund earning 6% compounded annually sustain for 20 years if the withdrawals are made: 1. At the beginning of each year? 2. At the end of each year?

> To accumulate $200,000 after 20 years, what amount must be invested each year if the investment earns 9% compounded annually and the contributions are made: 1. At the beginning of each year? 2. At the end of each year?

> In order to accumulate $750,000 after 25 years, calculate the amounts that must be invested at the beginning of each year if the invested funds earn: 1. 3% compounded annually. 2. 6% compounded annually. 3. 8% compounded annually. 4. 9% compounded annual

> Beaudoin Haulage has signed a five-year lease with GMAC on a new dump truck. Beaudoin intends to capitalize the lease and report it as a long-term liability. Lease payments of $2700 are made at the beginning of each month. To purchase the truck, Beaudoin

> Rino has just purchased a five-year term life insurance policy. For his premium payments, Rino can choose either beginning-of-month payments of $38.50 or beginning-of-year payments of $455. In current dollars, how much will Rino save during the five year

> The assessment on a farm consists of $143,000 for the house and $467,000 for the land and buildings. A mill rate of 15.0294 applies to residences, and a rate of 4.6423 applies to agricultural land and buildings. What are the total property taxes payable

> Carmella purchased a refrigerator under a conditional sale contract that required 30 monthly payments of $60.26 with the first payment due on the purchase date. The interest rate on the outstanding balance was 18% compounded monthly. 1. What was the purc

> If money can earn 5.25% compounded monthly, what is the value of an annuity consisting of annual payments of $2500 continuing for 16 years? The first payment will be received today.

> On the date of its financial statements, a company has 4 1 2 years remaining on the lease of a truck. The lease requires payments of $3000 at the beginning of every six months. What book value is reported for the lease liability if the company pays 5% co

> Money can earn 6% compounded monthly. What is the present value of beginning-of-month payments of $100 if the payments continue for: 1. 25 years? 2. 30 years?

> What is the present value of an annuity due consisting of semiannual payments of $1000 for 25 years if money can earn: 1. 4% compounded semiannually? 2. 8% compounded semiannually?

> The lease on the premises occupied by the accounting firm of Heath and Company will soon expire. The current landlord is offering to renew the lease for seven years at $2100 per month. The developers of a new building a block away from Heath’s present of

> Two insurance companies gave the following quotations on premiums for essentially the same long-term disability insurance coverage for a 25-year-old. East Coast Insurance Co. quoted monthly premiums of $54.83 from ages 26 to 30 inclusive, and $78.17 from

> Using a discount rate of 6% compounded monthly, calculate the present value of monthly payments of $325 for 7 1 4 years if the payments are made: 1. At the end of each month. 2. At the beginning of each month. 3. By what percentage does the answer to par

> Calculate and rank the economic values of the following cash flow streams: (i) A single payment of $10,000 eight years from now. (ii) An annuity due starting today with eight annual payments of $850. (iii) An annuity due starting in eight years with eigh

> What is the current economic value of an annuity due consisting of 22 quarterly payments of $700 if money is worth 6% compounded quarterly for the first three years, and 7% compounded quarterly thereafter?

> 1. Express a property tax rate increase of 0.1 mill in terms of dollars per $100 of assessed value. 2. If the mill rate increases by 0.1 mill, what is the dollar increase in property taxes on a $200,000 home?

> Bram must choose between two alternatives for $1,000,000 of life insurance coverage for the next ten years. The premium quoted to him by Sun Life Insurance Co. is $51.75 per month. Atlantic Life will charge $44.25 per month for the first five years and $

> The lease contract for a computer workstation requires quarterly payments of $2100 at the beginning of every three-month period for five years. The lessee would otherwise have to pay an interest rate of 10% compounded quarterly to borrow funds to purchas

> What minimum amount of money earning 9% compounded semiannually will sustain withdrawals of $1200 at the beginning of every month for 15 years?

> A rental agreement requires the payment of $900 at the beginning of each month. 1. What single payment at the beginning of the rental year should the landlord accept instead of 12 monthly payments if money is worth 6% compounded monthly? 2. Show that the

> The life expectancy of the average 65-year-old Canadian male is about 16 additional years. Karsten wants to have sufficient funds in his RRIF at age 65 to be able to withdraw $40,000 at the beginning of each year for the expected survival period of 16 ye

> 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 yie

> You have received two offers on the used car you wish to sell. Mr. Lindberg is offering $8500 cash, and Rosie Senario is offering five semiannual payments of $1900, including a payment on the purchase date. Whose offer has the greater economic value at a

> Under the headline “Local Theatre Project Receives $1 Million!” a newspaper article explained that the Theatre Project had just received the first of ten annual grants of $100,000 from the Hinton Foundation. What is the current economic value of all of t

> An annuity consists of quarterly payments of $950 for 8 years and 9 months. Discounting at 4% compounded quarterly, determine the present value of the annuity if the payments are made: 1. At the end of each quarter. 2. At the beginning of each quarter. 3

> Salvatore will contribute $500 to a mutual fund at the beginning of each calendar quarter. 1. What will be the value of his mutual fund after 6 1 2 years if the fund earns 7.6% compounded annually? 2. How much of this amount represents investment earning

> What are the taxes on a property assessed at $227,000 if the mill rate is 16.8629?

> Today Gus is making his first annual contribution of $2500 to a TFSA. How much will the plan be worth 16 years from now if it earns 5.25% compounded monthly?

> Phil has systematically contributed $3000 to his RRSP at the beginning of every three months for the past 17 years. If the RRSP has earned 8.8% compounded quarterly, what is the value of Phil’s RRSP today?

> Tanysha plans to invest $10,000 at the beginning of each year for the next 14 years. If her invested funds earn 5.1% compounded annually, what will be the total accumulated value of her investment after 14 years?

> Svetlana intends to invest $1000 at the beginning of every six months. If the investments earn 7% compounded semiannually, what will her investments be worth (rounded to the nearest dollar) after: 1. 25 years? 2. 30 years?

> What is the future value of $100 invested at the beginning of every month for 25 years if the investments earn: 1. 4% compounded monthly? 2. 8% compounded monthly?

> Quarterly contributions of $1000 will be made to an RESP for 15 years. Assuming that the investments within the plan grow at 8% compounded quarterly, how much will the RESP be worth after 15 years if the contributions are made: 1. At the end of each quar

> Fay contributed $3000 per year to her RRSP on every birthday from age 21 to 30 inclusive. She then ceased employment to raise a family and made no further contributions. Her husband Fred contributed $3000 per year to his RRSP on every birthday from age 3

> What will be the amount in an RRSP after 25 years if contributions of $2000 are made at the beginning of each year for the first 10 years, and contributions of $4000 are made at the beginning of each year for the subsequent 15 years? Assume that the RRSP

> Johan recently received his annual performance bonus from his employer. He has set up an investment savings plan to which he will contribute $2000 each year from his bonus and $400 per month from his regular salary. Johan will make his initial contributi

> To attract shoppers, retailers occasionally advertise something like “Pay no HST!” Needless to say, neither the federal nor the provincial government is willing to forgo its sales tax. In this situation, the retailer must calculate and remit the HST as t

> At what price would Arrowsmith Lumber be willing to purchase the timber rights described in Problem 4 if it requires a return on investment of 9%? Data from Problem 4: The timber rights to a tract of forest can be purchased for $250,000. The harvesting

> Keiko has already accumulated $150,000 in her RRSP. She intends to continue to grow her RRSP by making contributions of $500 at the beginning of every month. How much will her RRSP be worth 15 years from now if the RRSP earns 8% compounded annually?

> For the past 25 years, Giorgio has contributed $2000 to his RRSP at the beginning of every six months. The plan earned 8% compounded annually for the first 11 years and 7% compounded semiannually for the subsequent 14 years. What is the value of his RRSP

> Many people make their annual RRSP contribution for a taxation year close to the end of the year. Financial advisers encourage clients to contribute as early in the year as possible. How much more will there be in an RRSP at the end of 25 years if annual

> If Hans contributes $1500 to his RRSP on February 1, 1998, and every six months thereafter up to and including February 1, 2025, what amount will he accumulate in the RRSP by August 1, 2025? Assume that the RRSP will earn 8.5% compounded semiannually. Ho

> Monarch Distributing Ltd. plans to accumulate funds for the purchase of a larger warehouse seven years from now. If Monarch contributes $10,000 at the beginning of each month to an investment account earning 4.5% compounded semiannually, what amount (rou

> Annual contributions of $1000 will be made to a TFSA for 25 years. The contributor expects investments within the plan to earn 7% compounded annually. What will the TFSA be worth after 25 years if the contributions are made: 1. At the end of each year? 2

> After 10 1 2 years of contributions of $2000 at the end of every six months to an RRSP, the accumulated amount stood at $65,727.82. What semiannually compounded nominal rate of return and effective annual rate of return were earned by the funds in the RR

> If regular month-end deposits of $200 in an investment account amounted to $7727.62 after three years, what monthly compounded nominal rate and effective rate of interest were earned on the account?

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

> Morgan has $500,000 accumulated in her RRSP and intends to use the amount to purchase a 20-year annuity. She is investigating the size of annuity payment she can expect to receive, depending on the rate of return earned by the undistributed funds. What n

> Angie’s Flower Shop charges 13% HST on all purchases. 1. How much HST will she report for a plant priced at $39.45? 2. As of February 4, 2013, if a consumer pays cash and cannot give the exact change, the total amount of the transaction must be rounded u

> Monty is checking potential outcomes for the growth of his RRSP. He plans to make contributions of $500 at the end of each month. What nominal rate of return must his RRSP earn for its future value after 25 years to be: 1. $400,000? 2. $500,000? 3. $600,

> With end-of-month contributions of $251.33, a TFSA is expected to pass $100,000 in value after 15 years and 5 months. Determine the nominal and effective rates of return used in the projection.

> If RRSP contributions of $3030.02 at the end of every six months are projected to generate a plan worth $500,000 in 25 years, what nominal and effective rates of return were assumed in the forecast?

> The present value of an ordinary annuity of $500 per month for 8 3 4 years is $35,820. Calculate the nominal and effective values for the discount rate.

> A Ford advertisement offered “$1250 cash back or 1.9% factory financing over 48 months” to purchasers of new Ford vans. A customer financed $20,000 at the low interest rate instead of paying $18,750 cash (after the $1250 rebate). What was the effective r

> An advertisement for Hyundai cars offered “2.9% 12-month financing or $1000 cash back.” A car buyer financed $17,000 at the low interest rate instead of paying $16,000 cash (after the $1000 rebate). What was the effective rate of interest on the loan if

> Another type of sales promotion for vehicles is to advertise the choice between a “Cash Purchase Price” or “0% Purchase Financing.” The tiny print at the bottom of a GM Canada full-page advertisement included the statement: “The GMAC purchase finance rat

> Vijay purchased a Province of Nova Scotia bond for $1050. The bond will pay $35 interest to Vijay at the end of every six months until it matures in seven years. On the maturity date the bond will pay back its $1000 face value (as well as the interest pa

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

> In an insurance settlement for bodily injury, a court awarded Mr. Goodman $103,600 for two years’ loss of wages of $4000 per month plus interest on the lost wages to the end of the two years. What effective rate of interest has the court allowed on the l

> How much more will a consumer pay for an item listed at $1000 (pretax) in Prince Edward Island than in Manitoba?

> For $150,000, Continental Life Insurance Co. will sell a 20-year annuity paying $1200 at the end of each month. What effective rate of return does the annuitant earn?

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

> If TFSA contributions of $10,000 at the end of every year are projected to generate a plan worth $1,000,000 in 25 years, what effective rate of return was assumed in the forecast?

> What quarterly compounded nominal rate and effective rate of interest are being charged on a $5000 loan if quarterly payments of $302.07 will repay the loan in 5 1 2 years?

> An annuity purchased for $50,000 sustained quarterly withdrawals of $1941.01 for 7 years and 9 months. What nominal rate of return and effective rate of return were the retained funds earning?

> How long will it take an RRSP to grow to $700,000 if it takes in month-end contributions of $1000 and it earns: 1. 4% compounded monthly? 2. 6% compounded monthly? 3. 8% compounded monthly? 4. 9% compounded monthly?

> Monthly payments of $315.49 are required on a $20,000 loan at 5.5% compounded quarterly. What is the term of the loan?

> For how long has William been making end-of-quarter contributions of $1200 to his RRSP if the RRSP has earned 4.75% compounded annually and is currently worth $74,385?

> Rounding up the number of contributions to the next integer, how long will it take an RRSP to surpass $100,000 if it takes in end-of-quarter contributions of $3000 and earns 6% compounded quarterly?

> An endowment fund is set up with a donation of $100,000. If it earns 4% compounded monthly, for how long will it sustain end-of-month withdrawals of $1000? (Include the final smaller withdrawal.)

> Calculate the total amount, including both GST and PST, that an individual will pay for a car priced at $39,500 in 1. Alberta. 2. Saskatchewan. 3. Quebec.

> If money in a new TFSA earns 8.25% compounded monthly, how long will it take for the plan to reach $30,000 in value based on end-of-month contributions of $209.59?

> Harold’s RRSP is already worth $56,000. Rounding n to the next higher integer, how long will it take the RRSP to reach $250,000 if additional contributions of $2000 are made at the end of every six months? Assume the RRSP earns 9.75% compounded monthly.

> Bernice is about to retire with $139,000 in her RRSP. She will make no further contributions to the plan, but will allow it to accumulate earnings for another six years. Then she will purchase an annuity providing payments of $5000 at the end of each qua

> A property development company obtained a $2.5-million loan to construct a commercial building. The interest rate on the loan is 10% compounded semiannually. The lender granted a period of deferral, meaning that the first quarterly payment of $100,000 is

> Helen and Morley borrowed $20,000 from Helen’s father to make a down payment on a house. The interest rate on the loan is 8% compounded annually, but no payments are required for two years. The first monthly payment of $300 is due on the second anniversa

> Novell Electronics recently bought a patent that will allow it to bring a new product to market in 2 1 2 years. Sales forecasts indicate that the product will increase the quarterly profits by $28,000. If the patent cost $150,000, how long after the date

> Twelve years ago, Mr. Lawton rolled a $17,000 retiring allowance into an RRSP that subsequently earned 10% compounded semiannually. Three years ago he transferred the funds to an RRIF. Since then, he has been withdrawing $1000 at the end of each quarter.