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%.
> 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%?
> A money market mutual fund purchased $1 million face value of Honda Canada Finance Inc. 90-day commercial paper 28 days after its issue. What price was paid if the paper was discounted at 2.10%?
> 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
> 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
> Payments of $500 originally scheduled to be paid today and $300 originally scheduled to be paid three months from today are to be replaced with a single payment six months from today. Calculate the combined equivalent value of the two payments six months
> Ruth-Ann has the option of paying $1936.53 today or $1975.00 100 days from today. What annual rate of return would money have to earn for the two options to be economically equivalent?
> Avril owes Value Furniture $1600, which is scheduled to be paid on August 15. Avril has surplus funds on June 15 and will settle the debt early if Value Furniture will make an adjustment reflecting the current short-term interest rate of 7.25%. What amou
> Rasheed wishes to postpone for 90 days the payment of $450 that he owes to Roxanne. If money now earns 2.75%, what amount can he reasonably expect to pay at the later date?
> What amount received on January 13 is equivalent to $1000 received on the preceding August 12 if money can earn 9.5%?
> What amount paid on September 24 is equivalent to $1000 paid on the following December 1 if money can earn 5%?
> What amount should be accepted as equivalent 60 days before an obligation of $1480 is due if money can earn 6 3 4 %?
> What payment 174 days from now is equivalent to $5230 paid today? Assume that money is worth 5.25% per annum.
> What interest rate must money earn for a payment of $1389 on August 20 to be equivalent to a payment of $1348 on the previous March 29?
> Express decimal and percent equivalent forms to five-figure accuracy. 25 1000
> Westwood Homes is beginning work on its future College Park subdivision. Westwood is now pre-selling homes that will be ready for occupancy in nine months. Westwood is offering $5000 off the $295,000 selling price to anyone making an immediate $130,000 d
> Mr. and Mrs. Chan have listed for sale a residential building lot they own in a nearby town. They are considering two offers. The offer from the Smiths is for $145,000 consisting of $45,000 down and the balance to be paid in six months. The offer from th
> During its 50/50 Sale, Marpole Furniture will sell its merchandise for 50% down, with the balance payable in six months. No interest is charged for the first six months. What 100% cash price should Marpole accept on a $1845 chesterfield and chair set if
> A $3000 payment is scheduled for six months from now. If money is worth 6.75%, calculate the payment’s equivalent values at two-month intervals beginning today and ending one year from now.
> A $5000 payment is scheduled for 120 days from now. If money can earn 7.25%, calculate the payment’s equivalent value at each of nine different dates—today and every 30 days for the next 240 days.
> Caleb has a $1215 loan payment due today but he would like to defer the payment for seven months. How much is the equivalent payment seven months from today if he is being charged interest on the loan at 8 1 2 % per annum?
> Nicholas can purchase the same furniture from Store A for $2495 cash or from Store B for $2560 with nothing down and no payments or interest for 8 months. Which option should Nicholas choose if he can pay for the furniture by cashing in Canada Savings Bo
> Jonas recently purchased a one-year membership at Gold’s Gym. He can add a second year to the membership now for $1215, or wait 11 months and pay the regular single-year price of $1280. Which is the better economic alternative if money is worth 8.5%? At
> To settle a $570 invoice, Anna can pay $560 now or the full amount 60 days later. Which alternative should she choose if money can earn 10 3 4 % ? What rate would money have to earn for Anna to be indifferent between the alternatives?
> Compare the economic values of $1480 today versus $1515 in 150 days. Assume money can earn 6.75%. At what rate would the two amounts be equivalent?
> Express decimal and percent equivalent forms to five-figure accuracy. 1 7 25
> If money can be invested at 0.6% per month, which has the greater economic value: $5230 on a specific date or $5500 exactly five months later? At what rate (per month) would the two amounts be economically equivalent?
> April missed a payment of $2740.00 on a loan with interest being charged at 4 1 2 % . The lender now wants $2755.20 as a late payment to settle up on the missed payment. How many days late was the payment?
> An early payment of $4574.73 was accepted instead of a scheduled payment of $4850.00, allowing for interest at the rate of 8 3 4 % . How many days early was the payment?
> What is the time interval (in months) separating equivalent payments of $3500.00 and $3439.80 if money is worth 5 1 4 % per annum?
> A late payment of $850.26 was considered equivalent to the originally scheduled payment of $830.00, allowing for interest at 9.9%. How many days late was the payment?
> Cyril can purchase a trip to Aruba for an early booking price of $2370.00 now or wait 190 days and pay $2508.79. What annual rate of return would money have to earn for the two options to be economically equivalent?
> Kathleen has a $560 loan payment due in five months. What amount of money should she be able to pay today if the interest on her loan is 3 3 4 % per annum?
> What was the interest rate on a $1750 loan, if the amount required to pay off the loan after five months was $1828.02?
> $7348.25 was the amount required to pay off a loan after 14 months. If the loan was at 8 1 4 % per annum simple interest, how much of the total was interest?
> The balance after 11 months, including interest, on a loan at 9.9% is $15,379.58. What are the principal and interest components of the balance?
> Express decimal and percent equivalent forms to five-figure accuracy. -35 25
> The maturity value of an investment earning 7.7% per annum for a 360-day term was $2291.01. What amount was originally invested?
> What was the principal amount of a loan at 10 1 2 % , if total amount owed after 23 days was $785.16?
> Cecile placed $17,000 in a 270-day term deposit earning 4.25%. How much will the bank pay Cecile on the maturity date?
> What will be the maturity value in 15 months of a $4500 loan at a simple interest rate of 7.9%?
> Dominion Contracting invested surplus funds in term deposits. All were chosen to mature on April 1 when the firm intends to purchase a new grader. What total amount will be available from the maturing term deposits on April 1 (of a leap year)?
> The cash balance in Amalia’s account with her stockbroker earns interest on the daily balance at an annual rate of 4%. Accrued interest is credited to her account every six months—on June 30 and December 31. As a resul
> Village Finance Co. advanced three loans to Kamiko—$2200 on June 23, $1800 on August 5, and $1300 on October 31. Simple interest at 7.25% was charged on all three loans, and all were repaid on December 31 when some bonds that she owned matured. What tota
> On what date did a corporation borrow $350,000 at 7.5% from its bank if the debt was settled by a payment of $356,041 on February 28?
