Question: Evaluate values of the variables. Calculate the

> Noel has $300,000 with which to purchase an ordinary annuity delivering monthly payments for 20 years after a 10-year period of deferral. What monthly payment will he receive, if the undistributed funds earn 5% compounded semiannually?

> What price will a finance company pay to a merchant for a conditional sale contract that requires 15 monthly payments of $231 beginning in six months? The finance company requires a rate of return of 18% compounded monthly.

> A conditional sale contract requires the debtor to make six quarterly payments of $569, with the first payment due in six months. What amount will a finance company pay to purchase the contract on the date of sale if the finance company requires a rate o

> Ronelda has accumulated $33,173.03 in her RRSP. If she makes no further contributions and her RRSP continues to earn 3.75% compounded monthly, for how long a period of deferral must she wait before her RRSP can sustain month-end withdrawals of $400 for 1

> For $30,000, Manny purchased a deferred ordinary annuity from an insurance company that will pay him quarterly payments of $1076.71 for 12 1 2 years. The payments are based upon the purchase amount earning 7% compounded quarterly. When will Manny receive

> Simplify and collect the like terms. 2 x 1.045 − 2.016 x 3 + x 2

> A deferred ordinary annuity is comprised of eight annual payments of $1500. What is the period of deferral if the present value of the payments, discounted at 7.9% compounded annually, is $6383.65?

> Using an inheritance he recently received, Sam wants to purchase a deferred annuity that will pay $5000 every three months between age 60 (when he plans to retire) and age 65 (when his permanent pension will begin). The first payment is to be three month

> The first of 10 semiannual payments of $2000 will be made 5 1 2 years from today. What is the present value of this deferred annuity using a discount rate of 7% compounded semiannually?

> Corbin wants to accumulate $1,000,000 over the next 25 years by investing the same amount at the beginning of each month. If he can expect a long-term rate of return of 8% compounded annually, how much must he invest each month?

> Liam purchases an annuity for $700,000 that provides beginning-of-month payments for 15 years. If the annuity earns 4.5% compounded monthly, what monthly payment will he receive?

> Nitesh currently has accumulated capital of $560,000 and hopes to retire this year. He wants to receive an annuity payment at the beginning of each year for the next 20 years. If the capital can earn 6.5% compounded annually, what maximum annual payment

> Gina 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 quarterly payment she can expect to receive, depending on the rate of return earned by the funds. What nominal rate of

> Mr. van der Linden has just used the funds in his RRSP to purchase a 25-year annuity earning 8% compounded semiannually and paying $3509 at the beginning of each month. Mr. van der Linden made his last regular semiannual contribution of $2500 to his RRSP

> As a result of the closure of the mine at which he had been employed, Les Orr received a $27,000 severance settlement on his 53rd birthday. He rolled the severance pay into a new RRSP and then, at age 62, used the accumulated funds to purchase an annuity

> Mr. Ng contributed $1000 to an RRSP at the beginning of each calendar quarter for the past 20 years. The plan earned 10% compounded quarterly for the first 10 years and 12% compounded quarterly for the last 10 years. He is converting the RRSP to a Regist

> Simplify and collect the like terms. 2 x + 9 4 − 1.2 ( x − 1 )

> A $500,000 life insurance policy for a 26-year-old offers four alternative premium payment plans: an annual premium of $470.00, semiannual premiums of $241.50, quarterly premiums of $123.37, or monthly premiums of $42.30. In every case, the premiums are

> The same disability insurance policy offers four alternative premium payment plans: an annual premium of $666.96, semiannual premiums of $341.32, quarterly premiums of $173.62, or monthly premiums of $58.85. In every case, the premiums are payable in adv

> Continental Life Insurance Company of Canada offered $250,000 of term life insurance to a 40-year-old female nonsmoker for an annual premium of $447.50 (in advance) or for monthly premium payments (in advance) of $38.82 by preauthorized electronic debit.

> Ichiro is checking potential outcomes for the growth of his RRSP. He plans to make contributions of $500 at the beginning 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

> A magazine offers a one-year subscription rate of $63.80 and a three-year subscription rate of $159.80, both payable at the start of the subscription period. Assuming that you intend to continue to subscribe for three years and that the one-year rate doe

> The Lifestyle Fitness and Exercise Centre charges annual membership fees of $600 (in advance) or six “easy” payments of $120 at the beginning of every two months. What effective interest rate is being charged on the installment plan?

> The annual membership dues in the Rolling Meadows Golf and Country Club can be paid by four payments of $898.80 at the beginning of each calendar quarter, instead of by a single payment of $3428 at the beginning of the year. What effective rate of intere

> Jamshid borrowed $350 from his mother at the beginning of every month for 2 1 2 years while he attended Seneca College. 1. If the interest rate on the accumulating debt was 6% compounded semiannually, what amount did he owe his mother at the end of the 2

> Quantum Research Ltd. has arranged debt financing from its parent company to complete the development of a new product. Quantum “draws down” $12,000 at the beginning of each month. If interest accumulates on the debt at 8.2% compounded quarterly, how lon

> If you contribute $1000 to an RRSP at the beginning of every three months for 25 years and then use the accumulated funds to purchase an annuity paying $3000 at the beginning of each month, what will be the term of the annuity? Assume that the RRSP earns

> Simplify and collect the like terms. x 2 − x 2 + 4 5 − 0.2 x 2 − 4 5 x + 1 2

> Mrs. McPherson wants to use $10,000 from her late husband’s estate to assist her grandson when he enters college in seven years. Assume the $10,000 is invested immediately at 4% compounded monthly, and the grandson will make beginning-of-month withdrawal

> RRSP contributions of $5000 are made at the beginning of every six months. How many more contributions will it take to reach $750,000 if the RRSP earns 8% compounded semiannually than if it earns 10% compounded semiannually?

> Ambleside Golf Club’s board of directors has set next year’s membership fee at $1900, payable at the beginning of the year. The board has instructed its accountant to calculate beginning-of-quarter and beginning-of-month payment plans that provide a 6% s

> Mr. and Mrs. Friedrich have just opened an RESP for their daughter. They want the plan to pay $3000 at the beginning of each half-year for four years, starting nine years from now when their daughter will enter college or university. What semiannual cont

> For how long will a $100,000 fund sustain beginning-of-month withdrawals of $700 if the fund earns: 1. 4% compounded monthly? 2. 5% compounded monthly? 3. 6% compounded monthly? 4. 7% compounded monthly?

> Advantage Leasing Ltd. is in the business of purchasing equipment, which it then leases to other companies. Advantage calculates the payments on its five-year leases so that it recovers the original cost of the equipment plus a return on investment of 15

> For the past 13 years, Ms. Perrault has contributed $2000 at the beginning of every six months to a mutual fund. If the mutual fund statement at the end of the 13 years reports that her fund units are worth a total of $91,477, what has been the semiannua

> If a furniture store offers to sell a refrigerator priced at $1195 on a conditional sale contract requiring 12 monthly payments of $110 (including a payment on the date of sale), what effective rate of interest is being charged to the customer?

> As of the date of Victory Machine Shop’s most recent financial statements, three years remained in the term of a capital lease reported as a long-term liability of $13,824. If the beginning-of-month lease payments are $450, what monthly compounded annual

> If contributions of $1500 at the beginning of every three months resulted in an RRSP worth $327,685 after 20 years, what quarterly compounded nominal rate and effective rate of return did the RRSP earn?

> Evaluate values of the variables. Calculate the result accurate to the nearest cent. P(1 + i)n for P = $1280, i = 0.025, n = 3

> Pembroke Golf Club’s initiation fee is $5500. It offers an installment payment alternative of $1000 down and $1000 at the end of each year for five years. What effective rate of interest is being charged on the installment plan?

> An RRSP is now worth $223,000 after contributions of $2500 at the beginning of every six months for 16 years. What effective rate of return has the plan earned?

> If a furniture retailer offers a financing plan on a $1500 purchase requiring four equal quarterly payments of $400 including the first payment on the purchase date, what effective rate of interest is being charged on the unpaid balance?

> How many fewer deposits will it take to accumulate savings of $100,000 with beginning-of-month deposits of $220 than with beginning-of-month deposits of $200? The savings earn 5.4% compounded monthly.

> How much longer will a $100,000 fund earning 9% compounded monthly sustain beginning-of-month withdrawals of $900 than beginning-of-month withdrawals of $1000?

> How long will it take an RRSP to grow to $600,000 if it receives a contribution of $2500 at the beginning of each quarter and it earns: 1. 3% compounded quarterly? 2. 6% compounded quarterly? 3. 8% compounded quarterly? 4. 9% compounded quarterly?

> 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?

> 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?

> Astrid has just opened an RESP for her children with her first quarterly deposit of $1700. What will the RESP be worth 11 1 2 years from now if the investments within the plan earn 7.5% compounded semiannually?

> 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