Reference no: EM132813717
1) Ian paid off his student loan in 4 years by making payments of $550 at the beginning of every month. The interest rate on his loan was 7.40% compounded monthly.
a. Calculate the size of the original loan.
b. Calculate the amount of interest paid on the loan.
2) Samuel secured a lease on a machine by paying $1,550 as a down payment and then $300 at the beginning of every quarter for 4 years. Assume that the cost of financing is 4.23% compounded quarterly.
a. What was the principal amount of the loan?
b. What was the cost of the machine?
3) Since the birth of his daughter, 19 years ago, Hui has deposited $125 at the beginning of every month into a Registered Education Savings Plan (RESP). The interest rate on the plan was 3.90% compounded monthly for the first 12 years and 4.50% compounded monthly for the next 7 years.
a. What would be the accumulated value of the RESP at the end of 12 years?
b. What would be the accumulated value of the RESP at the end of 19 years?
4) How much should Aaron's dad invest in a savings account today, to be able to pay for Aaron's rent for the next three years, if the rent is $600, payable at the beginning of each month? The savings account earns 3.78% compounded monthly.
5) Shelby deposited $16,000 into a fund at the beginning of every quarter for 16 years. He then stopped making deposits into the fund and allowed the investment to grow for 4 more years. The fund was growing at 3.35% compounded monthly.
a. What was the accumulated value of the fund at the end of year 16?
b. What was the accumulated value of the fund at the end of year 20?
6) What should be the amount in an RRSP that is earning 6.50% compounded semi-annually if it can be converted to an RRIF that will provide $350 at the beginning of each quarter for 7 years?
7) A contract requires lease payments of $500 at the beginning of every month for 7 years.
a. What is the present value of the contract if the lease rate is 5.67% compounded annually?
b. What is the present value of the contract if the lease rate is 5.67% compounded daily?
8) Patricia set up a savings fund for his son's education so that he would be able to withdraw $1,525 at the beginning of every month for the next 5 years. The fund earns 5.07% compounded quarterly.
a. What amount should he deposit today to allow for the $1,525 periodic withdrawals?
b. How much interest would he earn in this investment?
9) Julia's retirement fund has an accumulated amount of $45,000. If it has been earning interest at 5.65% compounded monthly for the past 18 years, calculate the size of the equal payments that he deposited at the beginning of every 3 months.
10) Nathan contributed equal deposits at the end of every month for 4 years into an investment fund. He then decided to stop making payments and left the money in the fund to grow for another 5 years. The fund was earning 3.13% compounded monthly for the entire period and the accumulated amount at the end of the term was $90,000.
a. Calculate the amount in the fund at the end of 4 years.
b. Calculate the size of the periodic deposits into the fund.
11) Cody wants to accumulate at least $55,000 by depositing $2,000 at the end of every month into a fund that earns interest at 6.50% compounded monthly.
a. How many deposits does he need to make to reach his goal?
b. How long will it take Cody to reach his goal? in years and months
12) Your RRSP savings of $52,500 are converted to a RRIF at 5.32% compounded monthly that pays $5,398 at the beginning of every month. After how many payments will the fund be depleted?
13) Nathan withdraws $5,304.00 at the beginning of every month from a $27,500.00 fund which is growing at 6.12% compounded monthly.
a. Calculate the number of monthly withdrawals that he can make, rounded down to include only whole $5,304.00 withdrawals.
b. For how long can these withdrawals be made? Express your answer in years and months, rounding to the nearest month.
14) The value of a 7 year lease that requires payments of $600 made at the beginning of every month is $47,800. What is the nominal interest rate compounded monthly?
15) Month-end payments of $1,430 are made to settle a loan of $139,140 in 9 years. What is the effective interest rate?