Reference no: EM133068560

Questions -

Q1. Since the birth of her granddaughter, 18 years ago, Tara has deposited 200 at the beginning of every month into a Registered Education Savings Plan (RESP). The interest rate on the plan was 4.75% compounded monthly for the first 8 years and 5.00% compounded monthly for the next 10 years.

a. What was the accumulated value of the RESP at the end of 8 years?

b. What was the accumulated value of the RESP at the end of 18 years?

c. What was the amount of interest earned over the 18-year period?

Q2. You plan to save money for a down payment of $44,000 to purchase an apartment. You can only afford to save $6,000 at the end of every 6 months into an account that earns interest at 6.50% compounded monthly. How long will it take you to save the planned amount?

Express the answers in years and months, rounded to the next payment period.

Q3. Christine received a loan of $9,500 at 4.52% compounded semi-annually from a credit union to use as working capital for her business. She had to make semi-annual payments for a period of 5 years to settle the loan.

a. Calculate the size of her payments.

b. What was the total interest paid during the period?

c. What was the interest portion of payment number 3?

Q4. Evan purchased a house for $375,000. She made a down payment of 25% of the value of the house and received a mortgage for the rest of the amount at 5.50% compounded semi-annually for 25 years. The interest rate was fixed for a 5-year term.

a. Calculate the size of the monthly payments.

b. Calculate the principal balance at the end of the 5-year term.

c. Calculate the size of the monthly payments if after the first 5-year term the mortgage was renewed for another 5-year term at 5.25% compounded semi-annually?