Question: Duncan Developments Ltd. obtained a $120,000

> If the nominal rate of interest paid on a savings account is 3% compounded monthly, what is the effective rate of interest paid?

> If an invoice indicates that interest at the rate of 1.2% per month will be charged on overdue amounts, what effective rate of interest will be charged?

> Use the formula PV = FV(1 + i)–n to calculate i if PV = $5167.20, FV = $10,000, and n = 15.

> A bank offers a rate of 5.3% compounded semiannually on its four-year GICs. What monthly and annually compounded rates should it quote in order to have the same effective interest rate at all three nominal rates?

> The home the Bensons purchased 13 years ago for $85,000 is now appraised at $215,000. What has been the annual rate of appreciation of the value of their home during the 13-year period?

> A credit union’s Rate Climber GIC pays rates of 2%, 2.5%, and 3% compounded semiannually in successive years of a three-year term. 1. What will be the maturity value of $12,000 invested in this GIC? 2. How much interest will be earned in the second year?

> Accurate Accounting obtained a private loan of $25,000 for five years. No payments were required, but the loan accrued interest at the rate of 9% compounded monthly for the first 2 1 2 years and then at 8.25% compounded semiannually for the remainder of

> Jacques has just been notified that the combined principal and interest on an amount he borrowed 19 months ago at 8.4% compounded monthly is now $2297.78. How much of this amount is principal and how much is interest?

> At the same time as compound interest Government Bonds were being sold with guaranteed minimum annual rates of 5.25%, 6%, and 6.75% in the first three years of their 10-year term, a trust company offered three-year Bond Beater GICs paying 5.75%, 6.5%, an

> The population for the Region of Waterloo as recorded in the census of 2016 was 583,500. Estimates for population growth in the region are predicting increases of 1.85% per year for the next 15 years. What is the predicted population for the region in 20

> If an investor has the choice between rates of 5.5% compounded semiannually and 5.6% compounded annually for a six-year GIC, which rate should be chosen?

> Four years ago John borrowed $3000 from Arlette. The principal with interest at 10% compounded semiannually is to be repaid six years from the date of the loan. Fifteen months ago, John borrowed another $1500 for 3 1 2 years at 9% compounded quarterly. J

> If the total interest earned on an investment at 2.6% compounded monthly for 3 1 2 years was $618.55, what was the original investment?

> Use the formula FV = PV(1 + i)n to calculate i if PV = $2000, FV = $9321.91, and n = 20.

> Three equal payments were made one, two, and three years after the date on which a $10,000 loan was granted at 10.5% compounded monthly. If the balance immediately after the third payment was $5326.94, what was the amount of each payment?

> To satisfy more stringent restrictions on toxic waste discharge, a pulp mill will have to reduce toxic waste by 10% from the previous year’s level every year for the next five years. What fraction is the target level of the current discharge level?

> A five-year, compound interest GIC purchased for $1000 earns 4% compounded annually. 1. How much interest will the GIC earn in the fifth year? 2. If the rate of inflation during the five-year term is 2.2% per year, what will be the percent increase in th

> Two payments of $5000 are scheduled six months and three years from now. They are to be replaced by a payment of $3000 in two years, a second payment in 42 months, and a third payment, twice as large as the second, in five years. What should the last two

> A $1000 face value strip bond has 19 years remaining until maturity. What is its price if the market rate of return on such bonds is 5.9% compounded semiannually? At this market rate of return, what will be the increase in the value of the strip bond dur

> Payments of $2300 due 18 months ago and $3100 due in three years are to be replaced by an equivalent stream of payments consisting of $2000 today and two equal payments due two and four years from now. If money can earn 9.75% compounded semiannually, wha

> $6500 loan at 11.25% compounded monthly is to be repaid by three equal payments due 3, 6, and 12 months after the date of the loan. Calculate the size of each payment.

> Payments of $1800 and $2400 were made on a $10,000 variable-rate loan 18 and 30 months after the date of the loan. The interest rate was 11.5% compounded semiannually for the first two years and 10.74% compounded monthly thereafter. What amount was owed

> A loan contract called for a payment after two years of $1500 plus interest (on this $1500 only) at 8% compounded quarterly, and a second payment after four years of $2500 plus interest (on this $2500) at 8% compounded quarterly. What would you pay to pu

> On February 1 of three successive years, Roger contributed $3000, $4000, and $3500, respectively, to his RRSP. The funds in his plan earned 9% compounded monthly for the first year, 8.5% compounded quarterly for the second year, and 7.75% compounded semi

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

> For the 10 years ended December 31, 2018, the annually compounded rate of return on the portfolio of stocks represented by the S&P/TSX Composite Index was 7.9%. For the same period, the compound annual rate of inflation (as measured by the increase in th

> A four-year $7000 promissory note bearing interest at 10.5% compounded monthly was discounted 18 months after issue to yield 9.5% compounded quarterly. What were the proceeds from the sale of the note?

> If the inflation rate for the next 10 years is 1.7% per year, what hourly rate of pay in 10 years will be equivalent to $15 per hour today?

> Jarmila borrowed $3000, $3500, and $4000 from her grandmother on December 1 in each of three successive years at college. They agreed that interest would accumulate at the rate of 4% compounded semiannually. Jarmila is to start repaying the loan on June

> Payments of $2400 originally scheduled to be paid today, $1200 due 18 months from today, and $3000 due 33 months from today are to be replaced with a single payment due six months from now. Using 6% compounded quarterly as the rate of return money can ea

> Todd agreed to pay Laurie two payments of $1500: one on May 1 and the second on October 1. Todd now wishes to settle the debt with one equivalent payment on August 1. If the money was borrowed at 4.25% compounded monthly, what single payment on August 1

> For the five-year period ended October 31, 2019, a North American Resource Fund had a compound annual return of 7.99% compared to the average annual five-year returns of –0.337% for funds in the same category. How much more would an initial $1000 investm

> Isaac borrowed $3000 at 10.5% compounded quarterly 3 1 2 years ago. One year ago he made a payment of $1200. What amount will extinguish the loan today?

> For the five-year period ended October 31, 2019, a Canadian Equity Income Fund had compound annual returns of 14.40% while a Canadian Dividend fund had returns of 4.31% compounding annually. How much more would an initial $1000 investment in the Canadian

> Donnelly Excavating has received two offers on a used backhoe that Donnelly is advertising for sale. Offer 1 is for $10,000 down, $15,000 in 6 months, and $15,000 in 18 months. Offer 2 is for $8000 down, plus two $17,500 payments one and two years from n

> Rearrange N = L(1 – d1)(1 – d2)(1 – d3), to isolate d3 on the left side.

> Maynard Appliances is holding a “Fifty-Fifty Sale.” Major appliances may be purchased for nothing down and no interest to pay if the customer pays 50% of the purchase price in six months and the remaining 50% in 12 months. Maynard then sells the conditio

> On the same date that the Alberta Treasury Branches were advertising rates of 2.25%, 3%, 3.75%, 4.5%, and 6.5% in successive years of their five-year compound interest Springboard GIC, they offered 3.5% compounded annually on their five-year fixed-rate c

> What price should be paid for a $10,000 Government of Ontario strip bond with 17 years remaining to maturity if it is to yield the buyer 2.770% compounded semiannually?

> What amount three years ago is equivalent to $4800 on a date 1.5 years from now if money earns 3% compounded semiannually during the intervening time?

> A $100,000, 168-day Government of Canada Treasury bill was purchased on its date of issue to yield 1.97%. 1. What price did the investor pay? 2. Calculate the market value of the T-bill 85 days later if the annual rate of return then required by the mark

> Suppose that the current rates on 60- and 120-day GICs are 5.50% and 5.75%, respectively. An investor is weighing the alternatives of purchasing a 120-day GIC versus purchasing a 60-day GIC and then reinvesting its maturity value in a second 60-day GIC.

> Paul has $20,000 to invest for six months. For this amount, his bank pays 3.3% on a 90-day GIC and 3.5% on a 180-day GIC. If the interest rate on a 90-day GIC is the same three months from now, how much more interest will Paul earn by purchasing the 180-

> An agreement stipulates payments of $4500, $3000, and $5500 in 4, 8, and 12 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 10.5%?

> An Investment Savings account offered by a trust company pays the following rates: What interest will be paid for the month of January if the opening balance was $3678, $2800 was withdrawn on the 14th of the month, and $950 was deposited on the 25th of t

> A chartered bank offers a rate of 5.50% on investments of $25,000 to $59,999 and a rate of 5.75% on investments of $60,000 to $99,999 in 90- to 365-day GICs. How much more will an investor earn from a single $80,000, 180-day GIC than from two $40,000, 18

> Rearrange N = L(1 – d1)(1 – d2)(1 – d3), to isolate d1 on the left side.

> A $100,000, 90-day commercial paper certificate issued by Bell Canada Enterprises was sold on its issue date for $98,950. What annual rate of return (to the nearest 0.001%) will it yield to the buyer?

> A $100,000, 182-day Province of New Brunswick Treasury bill was issued 66 days ago. What will it sell at today to yield the purchaser 4.48%?

> Mayfair Fashions has a $90,000 line of credit from the Bank of Montreal. Interest at prime plus 2% is deducted from Mayfair’s chequing account on the 24th of each month. Mayfair initially drew down $40,000 on March 8 and another $15,000 on April 2. On Ju

> Ms. Wadeson obtained a $15,000 demand loan from TD Canada Trust on May 23 to purchase a car. The interest rate on the loan was prime plus 2%. The loan required payments of $700 on the 15th of each month, beginning June 15. The prime rate was 4.5% at the

> George borrowed $4000 on demand from CIBC on January 28 for an RRSP contribution. Because he used the loan proceeds to purchase CIBC’s mutual funds for his RRSP, the interest rate on the loan was set at the bank’s prime rate. George agreed to make monthl

> Ruxandra’s Canada Student Loans totalled $7200 by the time she finished Conestoga College in April. The accrued interest at prime plus 2.5% for the grace period was converted to principal on October 31. She chose the floating interest rate option and beg

> An assignable loan contract executed 3 months ago requires two payments of $3200 plus interest at 9% from the date of the contract, to be paid 4 and 8 months after the contract date. The payee is offering to sell the contract to a finance company in orde

> A conditional sale contract requires two payments three and six months after the date of the contract. Each payment consists of $1900 principal plus interest at 12.5% on $1900 from the date of the contract. One month into the contract, what price would a

> A $25,000, 91-day Province of Newfoundland Treasury bill was originally purchased at a price that would yield the investor a 5.438% rate of return if the T-bill is held until maturity. Thirty four days later, the investor sold the T-bill through his brok

> Rearrange S = P(1 + rt), to isolate t on the left side.

> Calculate the price of a $50,000, 91-day Province of Nova Scotia Treasury bill on its issue date when the market rate of return was 1.273%.

> What amount on January 23 is equivalent to $1000 on the preceding August 18 if money can earn 6 1 2 %?

> Peter and Reesa can book their Horizon Holiday package at the early-booking price of $3900, or wait four months and pay the full price of $3995. 1. Which option should they select if money can earn a 5.25% rate of return? 2. At what interest rate would t

> Sheldrick Contracting owes Western Equipment $60,000 payable on June 14. In late April, Sheldrick has surplus cash and wants to settle its debt to Western Equipment, if Western will agree to a fair reduction reflecting the current 3.6% interest rate that

> Jacques received the proceeds from an inheritance on March 15. He wants to set aside, in a term deposit on March 16, an amount sufficient to provide a $45,000 down payment for the purchase of a home on November 1. If the current interest rate on 181-day

> Petra has forgotten the rate of simple interest she earned on a 120-day term deposit at Scotiabank. At the end of the 120 days, she received interest of $327.95 on her $21,000 deposit. What rate of simple interest was her deposit earning?

> Marta borrowed $1750 from Jasper on November 15, 2019, and agreed to repay the debt with simple interest at the rate of 7.4% on June 3, 2020. How much interest was owed on June 3?

> A loan of $3300 at 6 1 4 % simple interest was made on March 27. On what date was it repaid if the interest cost was $138.44?

> If $3702.40 earned $212.45 interest from September 17, 2018, to March 11, 2019, what rate of interest was earned?

> Nine months ago, Muriel agreed to pay Aisha $1200 and $800 on dates 6 and 12 months, respectively, from the date of the agreement. With each payment Muriel agreed to pay interest at the rate of 8 1 2 % from the date of the agreement. Muriel failed to mak

> Use P V = P M T i , to calculate i if PMT = $900 and PV = $150,000. (There are several instances in our formulas where a two- or three-letter symbol is used for a variable. This is usually done to make the symbol more suggestive of the quantity it repres

> A $9000 loan is to be repaid in three equal payments occurring 60, 180, and 300 days, respectively, after the date of the loan. Calculate the size of these payments if the interest rate on the loan is 7 1 4 % . Use the loan date as the focal date.

> Mr. and Mrs. Parson are considering two offers to purchase their summer cottage. Offer A is for $200,000 consisting of an immediate $40,000 down payment with the $160,000 balance payable one year later. Offer B is for $196,500 made up of a $30,000 down p

> If money earns 7.5%, calculate and compare the economic value today of the following payment streams: Stream 1: Payments of $1800 made 150 days ago and $2800 made 90 days ago. Stream 2: Payments of $1600 due 30 days from now, $1200 due 75 days from now,

> Payments of $1000 scheduled to be paid five months ago and $7500 to be paid four months from now are to be replaced with a single payment two months from now. What payment two months from now is equivalent to the scheduled payments if money can earn 2 1

> Umberto borrowed $7500 from Delores on November 7, 2020. When Umberto repaid the loan, Delores charged him $190.02 interest. If the rate of simple interest on the loan was 6 3 4 % , on what date did Umberto repay the loan?

> Evelyn put $15,000 into a 90-day term deposit at Laurentian Bank that paid a simple interest rate of 3.2%. When the term deposit matured, she invested the entire amount of the principal and interest from the first term deposit into a new 90-day term depo

> Thad is planning to buy a rototiller next spring at an expected price of $579. In the current sale flyer from Evergreen Lawn and Garden, the model he wants is advertised at $499.95 in a Fall Clearance Special. 1. If money can earn 4%, what is the economi

> Two payments of $5000 each are to be received four and eight months from now. 1. What is the combined equivalent value of the two payments today if money can earn 6%? 2. If the rate of interest money can earn is 4%, what is the payments’ combined equival

> Three payments are scheduled as follows: $1200 is due today, $900 is due in five months, and $1500 is due in eight months. The three payments are to be replaced by a single equivalent payment due 10 months from now. What should the payment be if money is

> What amount invested at 4 1 2 % on November 19, 2019, had a maturity value of $10,000 on March 3, 2020?

> Rearrange S = P(1 + rt), to isolate r on the left side.

> The monthly fixed costs of operating a 30-unit motel are $28,000. The price per unit per night for next year is set at $110. Costs arising from rentals on a per-unit per-day basis are $12 for maid service, $6 for supplies and laundry, and $6 for heat and

> To raise funds for its community activities, a Lions Club chapter is negotiating with International Carnivals to bring its midway rides and games to town for a three-day opening. The event will be held on part of the parking lot of a local shopping centr

> Cambridge Manufacturing is evaluating the introduction of a new product that would have a unit selling price of $100. The total annual fixed costs are estimated to be $200,000, and the unit variable costs are projected at $60. Forecast sales volume for t

> Norwood Industries has annual fixed costs of $1.8 million. Unit variable costs are currently 55% of the unit selling price. 1. What annual revenue is required to break even? 2. What revenue would result in a loss of $100,000 in a year? 3. What annual rev

> During an economic slowdown, an automobile plant lost $12,000,000 on the production and sale of 9000 cars. Total revenue for the year was $270,000,000. If the break-even volume for the plant is 10,000 cars per year, calculate: 1. The plant’s total fixed

> Durable Toys Inc. wants to calculate from recent production data the monthly fixed costs and unit variable costs on its Mountain Trike product line. In the most recent month, it produced 530 trikes at a total cost of $24,190. In the previous month, it pr

> Fisher Publishing Inc. is doing a financial feasibility analysis for a new book. Editing and preproduction costs are estimated at $45,000. The printing costs are a flat $7000 for setup plus $8.00 per book. The author’s royalty is 8% of the publisher’s se

> The Armour Company had the following revenue and costs in the most recently completed fiscal year: Total revenue ………………………. $10,000,000 Total fixed costs .…………………. $2,000,000 Total variable costs ……………… $6,000,000 Total units produced and sold .. 1,000,0

> Memex Corp. manufactures memory expansion boards for microcomputers. The average selling price of its finished product is $180 per unit. The average variable cost per unit is $110. Memex incurs fixed costs of $1,260,000 per year. 1. What is the break-eve

> An invoice shows a net price of $199.16 after trade discounts of 22%, 7%, and 5% are deducted. 1. What was the list price of the goods? 2. What single trade discount would be equivalent to the discount series?

> Rearrange NI = (CM)X – FC, to isolate X on the left side.

> At its current price of $1.10 per share, the price of Apex Resources stock is down 78% from its price one year ago. What was that price?

> A merchant pays a 2.9% fee to the RBC Royal Bank on all Visa sales. 1. What amount will he pay on sales of $28,476 for a month? 2. What were his gross sales for a month in which the bank charged fees totalling $981.71?

> Chicken Little Farms gives convenience stores a trade discount of 25% on eggs listed at $43.00 per case. What trade discount will Sunnyside Farms have to give on its list price of $44.50 per case to match Chicken Little’s price to convenience stores?

> Mr. and Mrs. Ogrodnik want to list their house at a price that will net them a minimum of $320,000 after a real estate commission of 5.5% of the selling price. Rounded to the nearest $100, what is the lowest offer they could accept on their home?

> The net price of an item after a discount of 22% is $155.61. What is the amount of the discount?

> A 28% trade discount on a game console represents a discount of $136.92 from the suggested retail price. What is the net price to the buyer?

> A snow blower retails for $489. The dealer’s overhead is 20% of cost, and normal operating profit is 16 2 3 % of cost. 1. What is the largest amount of markdown that will allow the dealer to break even? 2. What rate of markdown will price the snow blower

> A pharmacy marked up its sunscreen to provide for overhead expenses of 40% of cost and a profit of 45% of cost. At the end of the summer, what rate of markdown can the pharmacy apply to the remaining inventory of sunscreen and still break even on sales a

> Ski ’n Cycle purchased Elan 200 skis for $492 per pair and priced them to give a 40% rate of markup on selling price. When this model was discontinued, the store marked down its remaining stock by 30%. What was the sale price after the markdown?

> Nelson Hardware ordered a shipment of gas barbecues at a suggested retail price of $459 less trade discounts of 25% and 10%. The manager intends to sell the barbecues at the suggested retail price. If overhead expenses are 20% of the selling price: 1. Wh