On the same date that the CIBC advertised rates of 2%, 2.5%, 3%, 3.25%, and 7% in successive years of its five-year compound interest Escalating Rate GIC, it offered 2.75% compounded annually on its five-year fixed-rate GIC. How much more will a $10,000 investment be worth at maturity if the Escalating Rate GIC is chosen instead of the fixed-rate GIC?
> Payments of $850 due two years ago and $1760 due six months ago have not been made. The proposed alternative is two equal payments, three months and nine months from now, that will put the payee in an equivalent economic position allowing that money can
> Marvin was supposed to make three payments of $2000 each—the first one year ago, the second one year from now, and the third three years from now. He missed the first payment and proposes to pay $3000 today and a second amount in two years. If money can
> Patrice defaulted on payments of $1000 due one year ago and $1500 due six months ago. A small claims court judgment orders her to make three payments—$800 one month from now, $900 four months from now, and a third payment seven months from now. The third
> A two-payment stream consisting of $1750 due today and $2900 due in 18 months is to be replaced by an economically equivalent stream comprised of an undetermined payment due in 9 months and a payment of $3000 due in 19 months. Calculate the unknown repla
> Three years ago, Andrea loaned $2000 to Heather. The principal with interest at 9% compounded semiannually is to be repaid four years from the date of the loan. Eighteen months ago, Heather borrowed another $1000 for 3 1 2 years at 8% compounded semiannu
> A $15,000 loan with interest being charged at 10% compounded quarterly was made 2 1 2 years ago and is due in two years. The debtor is proposing to settle the debt by a payment of $5000 today and a second payment in one year that will place the lender in
> Herb packs fish in 500-g cans on a processing line. He is paid $8.25 per hour plus $0.18 per kilogram for production in excess of 500 kg in a 7.5-hour shift. How much will he earn per day if he packs 250 cans per hour?
> Payments of $8000 due 15 months ago and $6000 due in six months are to be replaced by a payment of $4000 today, a second payment in nine months, and a third payment, three times as large as the second, in 1 1 2 years. What should the last two payments be
> Two payments of $3000 each are due today and five years from today. The creditor has agreed to accept three equal payments due one, three, and five years from today. Assuming that money can earn 7.5% compounded monthly, what payments will the creditor ac
> Payments of $5000 due three years from today and $7000 due five years from today are to be replaced by two payments due 1 1 2 and four years from today. The first payment is to be half the amount of the second payment. What should the payments be if mone
> CompuSystems was supposed to pay a manufacturer $19,000 on a date four months ago and another $14,000 on a date two months from now. Instead, CompuSystems is proposing to pay $10,000 today and the balance in five months, when it will receive payment on a
> A lottery prize gives the winner a choice between (1) $10,000 now and another $10,000 in 5 years, or (2) four $6700 payments—now and in 5, 10, and 15 years. 1. Which alternative should the winner choose if money can earn 3% compounded annually? In curren
> Henri has decided to purchase a $25,000 car. He can either liquidate some of his investments and pay cash, or accept the dealer’s proposal that Henri pay $5000 down and $8000 at the end of each of the next three years. 1. Which choice should Henri make i
> During its January Sale, Furniture City is offering terms of 25% down with no further payments and no interest charges for six months, when the balance is due. Furniture City sells the conditional sale contracts from these credit sales to a finance compa
> The owner of a residential building lot has received two purchase offers. Mrs. A is offering a $20,000 down payment plus $40,000 payable in one year. Mr. B’s offer is $15,000 down plus two $25,000 payments due one and two years from now. Which offer has
> Scheduled payments of $3000 due today and $2000 due in 15 months are to be replaced by two payments—$1500 due in 15 months and a second payment of undetermined size due in 24 months. What must the second payment be for the two streams to be economically
> Using the information given in Problem 8, calculate the interest earned in the second year from a $1000 investment in each GIC. Data from Problem 8: Sun Life Financial offers a five-year compound interest GIC earning rates of 2.5%, 3%, 3.5%, 4.25%, and
> Mary sews for a clothing manufacturer. She is paid $7.50 per hour plus a piecework rate that depends on the type of garment in production. The current production run is men’s shirts, for which she is paid $3.00 for each unit exceeding her quota of 20 shi
> Sun Life Financial offers a five-year compound interest GIC earning rates of 2.5%, 3%, 3.5%, 4.25%, and 5% in successive years. Manulife offers a similar GIC paying rates of 2.75%, 3.25%, 3.5%, 4%, and 4.25% in successive years. For a $10,000 investment,
> How, if at all, will the future value of $1000 invested in a three-year variable-rate GIC differ if it earns 2%, 3%, and 4% in successive years instead of 4%, 3%, and 2% in successive years?
> If an investor has the choice between rates of 5.4% compounded quarterly and 5.5% compounded annually for a six-year GIC, which rate should she choose?
> A trust company offers three-year compound interest GICs earning 4.8% compounded monthly or 4.9% compounded semiannually. Which rate should an investor choose?
> Mrs. Sandhu placed $11,500 in a four-year compound interest GIC earning 6.75% compounded monthly. What is the GIC’s maturity value?
> A $5000 loan at 10% compounded annually is to be repaid by two payments three and five years from the date of the loan. The first payment of $3000 will be applied to the balance owed after conversion of interest to principal at the end of the first three
> The contract for a $4000 loan at 9% compounded quarterly requires two payments. The first payment of $2000 is required two years after the date of the loan. (It is applied to the balance owed after conversion of interest to principal.) A second payment i
> An eight-year note for $3800 with interest at 11% compounded semiannually was sold after three years and three months to yield the buyer 14% compounded quarterly. What price did the buyer pay?
> A four-year $8000 promissory note bearing interest at 13.5% compounded monthly was discounted 21 months after issue to yield 12% compounded quarterly. What were the proceeds from the sale of the note?
> Wojtek purchased a $10,000 face value strip bond on a date when it had 14 years left until maturity. The purchase price was based on a market yield of 6.2% compounded semiannually. He sold the bond 4 1 2 years later when the market yield was 5.2% compoun
> Sam is paid $34.50 per hour as a power plant engineer. He is paid 1.5 times the regular rate for all time exceeding 8 hours in a day or 40 hours in a week. Statutory holidays worked are paid at double time (in addition to holiday pay). What are his gross
> A pharmaceutical company had sales of $28,600,000 in the year just completed. Sales are expected to decline by 4% per year for the next three years until new drugs, now under development, receive regulatory approval. Then sales should grow at 8% per year
> The late 1970s and early 1980s were years of historically high rates of inflation in Canada. For the years 1978, 1979, 1980, 1981, and 1982 the rates of inflation were 8.8%, 9.2%, 10.9%, 12.6%, and 10.0%, respectively. 1. Suppose your hourly wage at the
> For a given term of a compound interest GIC, the nominal interest rate with annual compounding is typically 0.125% higher than the rate with semiannual compounding and 0.25% higher than the rate with monthly compounding. Suppose that the rates for five-y
> If the current discount rate on 15-year strip bonds is 4.75% compounded semiannually, how many $1000 face value strips can be purchased with $10,000?
> Mr. Dickson purchased a seven-year, $30,000 compound interest GIC with funds in his RRSP. If the interest rate on the GIC is 2.25% compounded semiannually, what is the GIC’s maturity value?
> Mrs. Janzen wishes to purchase some 13-year-maturity strip bonds with the $12,830 in cash she now has in her RRSP. If these strip bonds are currently priced to yield 5.25% compounded semiannually, how many $1000 denomination bonds can she purchase?
> Consider a $5000 face value Province of Saskatchewan strip bond that matures on March 5, 2029. If the yield does not change as years go by, what will be the bond’s value on: 1. March 5, 2019? 2. March 5, 2021? 3. March 5, 2023?
> Consider a $10,000 face value Government of Canada strip bond from the issue in Table 9.2 that matures on December 1, 2033. Assume the yield does not change as years go by. 1. What will be the bond’s value on June 1, 2022? 2. What will be the bond’s valu
> What price should be paid for a $5000 face value strip bond with 19.5 years remaining to maturity if it is to yield the buyer 6.1% compounded semiannually?
> A $1000 face value strip bond has 22 years remaining until maturity. What is its price if the market rate of return on such bonds is 2.5% compounded semiannually?
> Allison’s regular hourly rate of pay is $17.70. She is paid time and a half for all work on weekends and for any time over 7.5 hours on weekdays. Calculate her gross earnings for a week in which she works 4.5, 0, 7.5, 8.5, 6, 6, and 9 hours on Saturday t
> According to the 2016 census Warman, Saskatchewan, was the fastest growing municipality in Canada, with a population of 11,020 in 2016. If the population grew 9.17% per year from 2011 to 2016, what was the population in 2011?
> Mr. and Mrs. Rasuli would like to retire in 15 years at an annual income level that would be equivalent to $35,000 today. What is their retirement income goal if, in the meantime, the annual rate of inflation is: 1. 2%? 2. 3%? 3. 5%?
> Venezuela’s political crisis during the late 2010s resulted in hyperinflation. By November of 2018, the annual inflation rate stood at 1,300,000%! Prices were doubling every 19 days on average. The government had to issue new currency that chopped five z
> If the inflation rate for the next 10 years is 3.5% per year, what hourly rate of pay in 10 years will be equivalent to $15/hour today?
> How much money was needed 15 years ago to have the purchasing power of $1000 today if the (compound annual) rate of inflation has been: 1. 2%? 2. 4%?
> Eric invested $22,000 in a five-year regular-interest GIC earning 4.5% payable monthly. What is each monthly interest payment?
> How much will you need 20 years from now to have the purchasing power of $100 today if the (compound annual) rate of inflation during the period is: 1. 2%? 2. 3%? 3. 4%?
> Using the information given in Problem 16, how much would have to be initially invested in each GIC to have a maturity value of $20,000? Data from Problem 16: On the same date that the CIBC advertised rates of 2%, 2.5%, 3%, 3.25%, and 7% in successive y
> Using the information given in Problem 16, calculate the interest earned in the fourth year from a $10,000 investment in each GIC. Data from Problem 16: On the same date that the CIBC advertised rates of 2%, 2.5%, 3%, 3.25%, and 7% in successive years o
> Ross’s compensation is to be changed from an hourly rate of $31.50 for a 40-hour workweek to a salary paid semimonthly. What should he be paid semimonthly in order for his annual earnings to remain the same?
> The BMO Bank of Montreal advertised rates of 1.8%, 2.25%, 2.6%, 3%, and 3.25% for the five successive years of its five-year compound interest RateOptimizer GIC. At the same time, the bank was offering fixed-rate five-year compound interest GICs yielding
> Western Life’s “Move-Up” compound interest GIC earns 4.125%, 4.25%, 4.5%, 4.875%, and 5% in successive years. What will be the maturity value of $7500 invested in this GIC?
> $8000 is invested in a five-year compound interest GIC earning interest rates of 2%, 2.5%, 3%, 3.5%, and 5% in successive years. What amount will the investor receive at maturity?
> A compound interest GIC will earn 5% compounded annually for the first two years and 6% compounded annually for the last three years of its five-year term. What will be the maturity value of $3000 invested in this GIC?
> Calculate the maturity value of $2000 invested in a five-year compound interest GIC earning 2.1% compounded annually.
> Using the information given in Problem 8, calculate the interest earned in the third year from a $10,000 investment in each GIC. Data from Problem 8: Sun Life Financial offers a five-year compound interest GIC earning rates of 2.5%, 3%, 3.5%, 4.25%, and
> Krista invested $18,000 in a three-year regular-interest GIC earning 4.2% payable semiannually. What is each semiannual interest payment?
> If your client’s objective is to have $10,000 in four years, how much should he invest today in a product earning 5.5% compounded annually?
> What amount today is economically equivalent to $8000 paid 18 months from now, if money is worth 5% compounded monthly?
> The maturity value of an investment after 42 months is $9704.61. What was the original investment, if it earned 3.5% compounded semiannually?
> Hasad is paid an annual salary of $54,600 based on a 40-hour workweek. What is his gross pay for a biweekly pay period if he works 43 hours in the first week and 46.5 hours in the second week? Overtime is paid at time and a half.
> What principal amount will have a maturity value of $5437.52 after 27 months if it earns 8.5% compounded quarterly?
> What is the present value of $10,000 discounted at 4.5% compounded annually over 10 years?
> Peggy has never made any payments on a five-year-old loan from her mother at 6% compounded annually. The total interest owed is now $845.56. How much did she borrow from her mother?
> If the total interest earned on an investment at 8.2% compounded semiannually for 8 1 2 years was $1175.98, what was the original investment?
> Repeat Problem 32 with the change that each obligation accrues interest at the rate of 9% compounded monthly from a date nine months ago when the obligations were incurred. Data from Problem 32: Teresita has three financial obligations to the same perso
> If money is worth 6% compounded annually, what amount today is equivalent to $10,000 paid: 1. 12 years from now? 2. 24 years from now? 3. 36 years from now?
> Repeat Problem 31 with the change that each contract accrues interest from today at the rate of 12% compounded monthly. Data from Problem 31: Commercial Finance Co. buys conditional sale contracts from furniture retailers at discounts that provide a 16.
> Three equal payments were made two, four, and six years after the date on which a $9000 loan was granted at 10% compounded quarterly. If the balance immediately after the third payment was $5169.81, what was the amount of each payment?
> A $7500 loan at 4% compounded monthly requires three payments at five-month intervals after the date of the loan. The second payment is to be twice the size of the first payment, and the third payment is to be double the amount of the second payment. Cal
> A $6000 loan at 9% compounded quarterly is to be settled by two payments. The first payment is due after nine months and the second payment, half the amount of the first payment, is due after 1 1 2 years. Determine the size of each payment.
> Lucille receives an annual salary of $37,500 based on a 37.5-hour workweek. What are her gross earnings for a 2-week pay period in which she works 9 hours of overtime at 1.5 times her regular rate of pay?
> A $10,000 loan at 4% compounded semiannually is to be repaid by three equal payments due 2 1 2 , 4, and 7 years after the date of the loan. What is the size of each payment?
> A $4000 loan at 10% compounded monthly is to be repaid by three equal payments due 5, 10, and 15 months from the date of the loan. What is the size of the payments?
> A $15,000 loan at 5.5% compounded semiannually is advanced today. Two payments of $4000 are to be made one year and three years from now. The balance is to be paid in five years. What will the third payment be?
> Teresita has three financial obligations to the same person: $2700 due in 1 year, $1900 due in 1 1 2 years, and $1100 due in 3 years. She wishes to settle the obligations with a single payment in 2 1 4 years, when her inheritance will be released from he
> Commercial Finance Co. buys conditional sale contracts from furniture retailers at discounts that provide a 16.5% compounded monthly rate of return on the purchase price. What total price should Commercial Finance pay for the following three contracts: $
> Daniel makes annual payments of $2000 to the former owner of a residential lot that he purchased a few years ago. At the time of the fourth-from-last payment, Daniel asks for a payout figure that would immediately settle the debt. What amount should the
> What amount invested today would grow to $10,000 after 25 years, if the investment earns: 1. 4% compounded annually? 2. 4% compounded semiannually? 3. 4% compounded quarterly? 4. 4% compounded monthly?
> Michelle has just received an inheritance from her grandfather’s estate. She will be entering college in 3 1 2 years, and wants to immediately purchase three compound interest investment certificates having the following maturity values and dates: $4000
> To motivate individuals to start saving at an early age, financial planners will sometimes present the results of the following type of calculation. How much must a 25-year-old individual invest five years from now to have the same maturity value at age
> Pete Pylon has just signed a “four-year, $68-million deal” with the Ottawa Senators. The terms of the contract include a signing bonus of $4.8 million and salaries of $10 million, $17.2 million, $17.5 million, and $18.5 million in successive years of the
> Trevor earns a base monthly salary of $2000 plus a commission of 3% on sales exceeding his monthly quota of $25,000. He receives a further 3% bonus on sales in excess of $50,000. What must his sales be in order to gross $4000 per month?
> A bond pays $1000 interest at the end of every year for the next 30 years. What is the current economic value of each of the 15th and 30th payments if we discount the payments at: 1. 5% compounded semiannually? 2. 8% compounded semiannually?
> Alicia is considering two offers-to-purchase that she has received on a residential building lot she wishes to sell. One is a cash offer of $145,000. The other offer consists of three payments of $49,000—one now, one in six months, and one in twelve mont
> A debtor owing payments of $750 due today, $1000 due in 2 years, and $1250 due in 4 years requests a payout figure to settle all three obligations by means of a single economically equivalent payment 18 months from now. What is that amount if the payee c
> A scheduled payment stream consisted of three payments: $2100 due (but not paid) 1 1 2 years ago, $1300 due today, and $800 due in two years. What single payment six months from now would be economically equivalent to the payment stream? Money can earn 4
> What single payment one year from now would be equivalent to $2500 due in three months, and another $2500 due in two years? Money is worth 7% compounded quarterly.
> What single payment six months from now would be economically equivalent to payments of $500 due (but not paid) four months ago and $800 due in 12 months? Assume money can earn 2.5% compounded monthly.
> What payment 2 1 4 years from now would be a fair substitute for the combination of $1500 due (but not paid) nine months ago and $2500 due in 4 1 2 years if money can earn 9% compounded quarterly?
> What amount would have to be invested today for the future value to be $10,000 after 20 years if the rate of return is: 1. 5% compounded quarterly? 2. 7% compounded quarterly? 3. 9% compounded quarterly?
> Mohinder has financial obligations of $1000 due in 3 1 2 years and $2000 due in 5 1 2 years. He wishes to settle the obligations sooner with a single payment one year from now. If money is worth 2.75% compounded semiannually, what amount should the payee
> Ramon wishes to replace payments of $900 due today and $500 due in 22 months by a single equivalent payment 18 months from now. If money is worth 5% compounded monthly, what should that payment be?
> Daniella’s gross monthly earnings are based on commission rates of 4% on the first $40,000 of sales, 5% on the next $50,000, and 6% on all additional sales for the month. What is her sales total for a month in which she earns $5350?
> What single amount, paid three years from now, would be economically equivalent to the combination of $1400 due today and $1800 due in five years if funds can be invested to earn 3% compounded quarterly?
> Mustafa can receive a $77 discount if he pays his property taxes early. Alternatively, he can pay the full amount of $2250 when payment is due in nine months. Which alternative is to his advantage if he can earn 6% compounded monthly on short-term invest
> What amount 15 months ago is equivalent to $2600 one and a half years from now? Assume money can earn 5.4% compounded monthly.
> A payment of $1300 is scheduled for a date 3 1 2 years from now. What would be an equivalent payment nine months from now if money is worth 5.5% compounded quarterly?
> What amount 1 1 2 years from now is equivalent to $7000 due in 8 years if money can earn 6.2% compounded semiannually?
> You owe $6000 payable three years from now. What alternative amount should your creditor be willing to accept today if she can earn 4.2% compounded monthly on a low-risk investment?
