TEST BANK for Business Mathematics In Canada 10th Edition by Ernest Jerome and Tracy Worswick by ACADEMIAMILL

CHAPTER 1 1)

Evaluate 8 - 5 x 2 - 3 A) -5 B) 3 C) 5 D) -3 E) 15

Evaluate 8 - 4 x (2 - 3) A) -4 B) 12 C) 5 D) 11 E) 4

Evaluate 18 ÷ 3 + 8 - 4 x 2 - 3 A) 17 B) 25 C) 3 D) 11 E) 4

Evaluate 18 ÷ 3 + (8 - 4) x (2 - 3)

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A) -10 B) 17 C) -18 D) 2 E) 4

Evaluate 8 - 4 x (2 - 3)2 A) 25 B) -1 C) 12 D) 17 E) 4

Evaluate 6 - 2 + 3 x (2 - 3)2 A) 7 B) 12 C) -12 D) -1 E) 1

Evaluate

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A) -7.4 B) -10.4 C) -14.8 D) 10.4 E) 7.4

Evaluate 3(8 - 4)2 x (2 - 3)2 A) 400 B) -400 C) 48 D) -48 E) 93

Evaluate 3[4 + (5 + 3)2]2 A) 256 B) 38,416 C) 3600 D) 13,872 E) 576

10)

Evaluate (2 - 3 x 4)2 - 5 x (5 - 6)2 A) 11 B) 125 C) -21 D) 95 E) 395

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11)

Evaluate A) $743.75 B) $1725.00 C) $700.04 D) $1637.50 E) $1243.75

12)

Evaluate A) $1063.75 B) $1416.73 C) $1765.00 D) $1637.50 E) $1480.42

13)

Evaluate A) $749.98 B) $732.28 C) $308.20 D) $572.77 E) $767.72

14)

Evaluate

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A) $1137.39 B) $721.09 C) $578.91 D) $446.88 E) $576.06

15)

Evaluate A) $1067.16 B) $1035.95 C) $896.32 D) $1033.12 E) $1502.05

16)

Evaluate A) $25,588.46 B) $19,927.38 C) $19,072.38 D) $24,855.01 E) $24,425.08

17)

Evaluate

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A) $1414.53 B) $1843.18 C) $348.85 D) $454.56 E) $1625.58

18)

Evaluate A) $1701.95 B) $1796.85 C) $2265.35 D) $1897.86 E) $2392.70

19)

Evaluate A) $172,405.00 B) $82,207.63 C) $83,050.31 D) $41,525.16 E) $86,202.50

20)

Evaluate

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A) $2766.53 B) $1054.53 C) $19,072.06 D) $4218.14 E) $45,756.60

21)

Evaluate A) $493.46 B) $27.22 C) $900.00 D) $84.52 E) $123.36

22)

Evaluate A) $43.31 B) $38.03 C) $86.61 D) $83.98 E) $48.51

23)

Evaluate

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A) -$404.21 B) -$353.78 C) -$185.74 D) -$208.56 E) -$145.22

24)

Evaluate A) $1489.85 B) $2892.41 C) $2712.09 D) $1177.64 E) $1818.11

25)

What amount is 230% of $450? A) $103,500 B) $1.04 C) $51.11 D) $1035 E) $195.65

26)

What amount is 0.04% of $200,000?

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A) $8000 B) $800 C) $8 D) $0.80 E) $80

27)

4.9% of $2750 is what amount? A) $134.75 B) $13,475 C) $2,884.75 D) $13.48 E) $284.48

28)

What is 0.05% of $9100? A) $455.00 B) $4.55 C) $4550.00 D) $45.50 E) $0.46

29)

What is 13.5% of $5000? A) $67.50 B) $6.75 C) $675 D) $6,750.00 E) $0.68

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30)

What is 2500% of $1625? A) $4,062.50 B) $406.25 C) $40.63 D) $40,625 E) $4,062

31)

78% of $2460 is what amount? A) $151.86 B) $269.07 C) $26.91 D) $19.47 E) $1,918.80

32)

24% of $675 is what amount? A) $162 B) $16.88 C) $691.20 D) $123.12 E) $389.88

33)

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of $10,000 is what amount?

A) $87.50 B) $8.75 C) $87,500 D) $8,750 E) $875

34)

of $6000 is what amount? A) $0.45 B) $45.00 C) $4.50 D) $450.00 E) $4,500.00

35) Nitin earns $48,000 per year. Determine his gross earnings for each pay period if he is paid biweekly. Assume there are 52 weeks in the year. A) $2000 B) $4000 C) $923.08 D) $1846.15 E) $1923.08

36) Nitin earns $48,000 per year for a forty-hour work week. Determine his hourly rate of pay if he is paid biweekly. Assume there are 52 weeks in the year.

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A) $250.00 B) $24.04 C) $46.50 D) $50.00 E) $23.08

37) Nitin is paid a base salary of $200 per week and commission at the rate of 3% for sales over $5000, 4% if his sales are over $8000, and 5% if sales are over $15,000. How much will Nitin earn in a week in which his sales are $20,000? A) $1200 B) $1000 C) $800 D) $600 E) $200

38) Nitin is paid a base salary of $300 per week and commission at the rate of 2.5% for sales over $5000, 4% if his sales are over $10,000, and 4.5% if sales are over $25,000. How much will Nitin earn in a week in which his sales are $20,000? A) $800 B) $825 C) $900 D) $1200 E) $1125

39) Nitin is paid on a graduated commission scale. His base salary is $250 per week and he receives commission at the rate of 2.5% for the first $5000 of sales in a week, 4% on the next $10,000, and 4.5% on all further sales. How much will Nitin earn in a week in which his sales are $30,000?

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A) $1200 B) $1350 C) $1450 D) $1600 E) $1000

40) Nitin is paid on a graduated commission scale. His base salary is $1500 per month and he receives commission at the rate of 2% for the first $10,000 of sales in a month, 3% on the next $20,000, and 4.5% on all further sales. How much will Nitin earn in a month in which his sales are $60,000? A) $2150 B) $2250 C) $3750 D) $3650 E) $2500

41) A sales representative is paid the greater of $950 or 8% of sales. At what volume of sales will he start to earn more from the commission-based compensation? A) $9500 B) $1026 C) $1875 D) $1187.50 E) $11,875

42) A sales representative is paid the greater of $1275 per week or 9% of sales. At what volume of sales will she start to earn more from the commission-based compensation?

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A) $14,166.67 B) $1389.75 C) $2295 D) $2422.50 E) $12,750

43) Nitin is paid on a graduated commission scale. He receives commission at the rate of 2.5% for the first $5000 of sales in a week, 4% on the next $10,000, and 4.5% on all further sales. What is Nitin's average rate of commission in a week in which his sales are $30,000? A) 3.67% B) 4% C) 3.33% D) 3.75% E) 4.25%

44) Nitin is paid on a graduated commission scale. He receives commission at the rate of 2% for the first $10,000 of sales in a month, 3% on the next $20,000, and 4.5% on all further sales. What is Nitin's average rate of commission in a month in which his sales are $60,000? A) 3.167% B) 3.417% C) 3.583% D) 4.122% E) 3.83%

45) Safa is paid a base salary of $1500 per month and a commission of 6% on all sales over $75,000. Last month, Safa's gross salary was $4440. What were her sales for the month?

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A) $49,000 B) $75,266.40 C) $149,000 D) $124,000 E) $100,000

46) Isaac earns a base salary of $1250 per month and a graduated commission of 0.4% on the first $100,000 of sales, and 0.5% on sales over $100,000. Last month, Isaac's gross salary was $2025. What were his sales for the month? A) $75,000 B) $200,000 C) $312,500 D) $250,000 E) $175,000

47)

Elita took six courses last semester. Her grades and course credits are as follows: Course

Grade

Credits

Accounting

B+

Business Mathematics

Human Resources

Economics

C+

Computer Applications

Marketing

Use the Letter Grade to Grade Point Value conversion table below to calculate her grade point average for the semester.

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Letter Grade

Grade Points

A+

4.0

B+

3.5

3.0

C+

2.5

2.0

1.0

0.0

A) 2.8 B) 2.7 C) 3.3 D) 3.0 E) 3.5

48)

Jayelle took six courses last semester. Her grades and course credits are as follows: Course

Grade

Credits

Finance

B+

Statistics

General Education

B+

Macro Economics

Cost Accounting

Computer Applications

A+

Use the Letter Grade to Grade Point Value conversion table below to calculate her grade point average for the semester.

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Letter Grade

Grade Points

A+

4.0

B+

3.5

3.0

C+

2.5

2.0

1.0

0.0

A) 3.75 B) 3.2 C) 3.0 D) 2.6 E) 2.8

49) Kuldip invested $5000 at 6%, $10,000 at 5.5%, and $20,000 at 4%. What is the average rate of interest earned by her investments? A) 5.2% B) 5% C) 4.7% D) 5.25% E) 4.75%

50) Carlos invested $10,000 at 7%, $20,000 at 6.5%, and $50,000 at 5%. What is the average rate of interest earned by his investments? A) 6.2% B) 5.5% C) 5.8% D) 5.6% E) 6.3%

51) A customer has a first mortgage of $100,000 at 5.5% and a second mortgage of $50,000 at 7.8%. What is the average rate of mortgage that the customer pays?

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A) 6.7% B) 7% C) 5.9% D) 6.5% E) 6.3%

52) A client has a first mortgage of $175,000 at 5.8% and a second mortgage of $25,000 at 6.7%. What is the average rate of mortgage that the client pays? A) 5.9% B) 6.3% C) 6.5% D) 6% E) 6.2%

53) Sonal bought a coat for $198.88, which included 8% PST and 5% GST. What was the selling price of the coat? A) $175.38 B) $176.00 C) $173.03 D) $182.97 E) $179.99

54) Sonal bought a new sound system for her car costing $604. Sonal lives in Calgary, and so the price included 5% GST. What was the selling price of the new sound system?

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A) $573.17 B) $574.58 C) $575.24 D) $616.31 E) $570.66

55) Province

GST rate (%)

HST rate (%)

PST rate (%)

Alberta

British Columbia

Manitoba

New Brunswick

Newfoundland and Labrador

Nova Scotia

Ontario

Prince Edward Island

Quebec

9.975

Saskatchewan

Calculate the PST on a sweater costing $595 in Manitoba, Alberta, and Quebec. A) $4.77; $0.00; $5.98 B) $44.80; $44.77; $45.50 C) $44.80; $44.50; $45.77 D) $41.65; $0.00; $59.35 E) $47.77; $0.00; $42.20

56) Province Alberta

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GST rate (%)

HST rate (%)

PST rate (%)

British Columbia

Manitoba

New Brunswick

Newfoundland and Labrador

Nova Scotia

Ontario

Prince Edward Island

Quebec

975

Saskatchewan

Calculate the PST on a jacket costing $850 in Alberta, Manitoba, and Saskatchewan. A) $0.00; $5.71; $6.27 B) $6.27; $6.27; $4.48 C) $5.37; $7.16; $5.27 D) $6.27; $6.27; $5.37 E) $0.00; $68.00; $42.50

57) M Studios (Calgary) had retail sales of $166,425, including GST, for the last quarter. In the same period M Studios purchased $45,000 worth of supplies and paid $75,000 for store renovations, plus the GST on these goods and services. What GST must be remitted by M Studios for the last quarter? (Assume GST = 5%) A) $1925 B) $2321.25 C) $14,323.26 D) $6071.25 E) $4573.26

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58) M Studios (Ontario) had retail sales of $288,528.55, including HST, for the last quarter. In the same period M Studios purchased $250,000 worth of supplies and paid the GST on these goods. What GST must be remitted by M Studios for the last quarter? (Assume 8% PST and 5% GST) A) $50.99 B) $266.75 C) $1926.43 D) $426.80 E) $5008.71

59)

A homeowner's tax statement lists the following mill rates for various municipal services: Service

Mill Rate

Schools

6.75

City

7.21

Water

0.92

Sewers

0.87

What is the property tax on a house assessed at $300,000? A) $4464 B) $4449 C) $4725 D) $2562 E) $2700

60)

A homeowner's tax statement lists the following mill rates for various municipal services: Service

Mill Rate

Schools

6.75

City

7.21

Water

0.92

Sewers

0.87

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The homeowner paid $3937.50 in property taxes last year. What is the assessed value of his property? A) $264,617 B) $265,509 C) $461,066 D) $250,000 E) $437,500

61)

Evaluate (8 - 5 ÷ 2) ÷ (12 x 3 - 6) A) 5.4545 B) 0.05 C) -0.1528 D) 6.5454 E) 0.1833

62)

Evaluate 0.5 x 0.001 A) 0.0005 B) 0.005 C) D) E) 5000

63)

Evaluate

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A) 24.89 B) 3.556 C) 4.190 D) 6.429 E) 5.071

64)

Evaluate (8 ÷ 5 - 2) ÷ (12 - 2 - 4) A) 2.4 B) -0.067 C) -2.4 D) 0.444 E) -1.0

65)

Evaluate -14(2) + 16 ÷ 32 + 4 A) -22 B) -24.5 C) -28.4 D) -24.4 E) -23.5

66)

Evaluate (25 - 9) ÷ (6 - 2)2 A) 256 B) 1 C) 8 D) 4 E) 0.5

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67)

Evaluate A) 0.1267 B) 0.052 C) 0.0867 D) 0.076 E) -0.07667

68)

Evaluate A) 6.621 B) 17.379 C) 13.793 D) 10.207 E) 12.803

69)

Express as a percent: A) 50.375% B) 0.0050375% C) 0.50375% D) 5.0375% E) 503.75%

70) A piece of property valued at $2,000,000 is assessed for property tax purposes at 70% of its value. If the property tax is $20.00 on each $1000.00 of assessed value, what is the amount of tax? Version 1

A) $23,700.00 B) $4000.00 C) $28,000.00 D) $12,000.00 E) $40,000.00

71) Calculate the price, including both GST and PST, that an individual will pay for a car sold for $26,995.00 in Manitoba. (Assume GST = 5% and PST = 8%) A) $28,334.75 B) $30,504.35 C) $29,154.60 D) $30,234.40 E) $26,995.00

72) If the mill rate increases by 0.25 mills, what will be the dollar increase in property taxes on a house assessed at $380,000? A) $950.00 B) $0.95 C) $9500 D) $95.00 E) $9.50

73) Fred has an annual salary of $40,000.00. He is paid semi-monthly and his regular workweek is 40 hours. What is his regular salary per pay period?

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A) $1538.46 B) $1458.33 C) $3076.92 D) $1666.67 E) $3333.33

74)

A class of 25 students wrote a term test. The results out of 30 marks are as follows:

Score

Number of Students

What was the average score on the test? A) 20 B) 25 C) 22 D) 21.4 E) 17.5

75) An investor purchased shares of Acme Company as follows: 500 shares @ $10 per share, 10,000 shares @ $6.00 per share, and 1000 shares at $4.00 per share. What is the investor's average cost per share? A) $7.00 B) $6.00 C) $6.67 D) $23,000 E) $6.50

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76) A municipality requires an extra $3,000,000 for its operating budget next year. The current mill rate is 8.3573 and the assessed values of properties in the municipality remains constant at $8.58 billion. Calculate next year's mill rate. A) 8.3497 B) 8.3923 C) 11.8538 D) 9.7684 E) 8.7070

77) A municipality requires an extra $3,000,000 for its operating budget next year. The current mill rate is 8.3573 and the assessed values of properties in the municipality remains constant at $8.58 billion. If the total of all assessed values rises by 5% over the current assessment, at what value must next year's mill rate be set? A) 8.6903 B) 8.2923 C) 7.9923 D) 9.7684 E) 8.3906

78) Fred is paid an annual salary of $45,800 on a biweekly schedule for a 40-hour work week. Assume there are 52 weeks in the year. What is his gross salary per pay period?

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A) $1908.33 B) $1815.93 C) $1616.18 D) $1755.51 E) $1761.54

79) Fred is paid an annual salary of $45,800 on a biweekly schedule for a 40-hour work week. Assume there are 52 weeks in the year. What is his hourly pay rate? A) $44.44 B) $43.89 C) $47.71 D) $22.02 E) $38.76

80) Fred is paid an annual salary of $45,800 on a biweekly schedule for a 40-hour work week. Assume there are 52 weeks in the year. What is his total remuneration for a two-week period in which he worked 4.5 hours overtime at time-and-a-half? A) $1910.18 B) $2230.36 C) $1858.23 D) $1953.02 E) $2051.75

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81) Store A sold 30 units at $1.25 per unit. Store B sold 60 units at $1.95 per unit. Store C sold 9 units at $1.50 per unit. Ignoring the quantities sold, what was the average unit selling price for the three stores? A) $0.33 B) $1.57 C) $155.10 D) $51.70 E) $1.70

82) Store A sold 30 units at $1.25 per unit. Store B sold 60 units at $1.95 per unit. Store C sold 9 units at $1.50 per unit. Recognizing the quantities sold, what was the average selling price per unit? A) $0.33 B) $1.57 C) $155.10 D) $51.70 E) $1.70

83) In the three-month quarter ending in March, your store had sales of $98,200, not including taxes, from its clothing and shoes. If clothing accounted for 62% of sales and you collected 5% GST on these sales, how much GST was collected on sales from clothing? A) $3,044.20 B) $3,088.20 C) $3,022.20 D) $3,048.20 E) $3,084.20

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84) In the three-month quarter ending in March, your store had sales of $98,200, not including taxes, from its clothing and shoes. If clothing accounted for 62% of sales and you collected 13% HST on these sales, how much HST was collected on sales from clothing? A) $7,928.92 B) $7,914.92 C) $7,214.92 D) $7,514.92 E) $7,714.92

85) At a fundraising event, the local charity raised 32% of their sales in chocolate chip cookies, 40% of their sales in oatmeal raisin cookies and the balance in white macadamia cookies. If the charity sold 120 chocolate chip cookies, how many white macadamia cookies did they sell? A) 95 white macadamia cookies B) 110 white macadamia cookies C) 105 white macadamia cookies D) 125 white macadamia cookies E) 80 white macadamia cookies

86) Your company is switching you from an employee to working on a contract basis. Your current compensation is an hourly rate of $42.50 for a 37.5-hour workweek and will switch to an amount to be paid monthly. What should you be paid every month in order for your annual earnings to remain the same? Assume the same dollar amount per month, regardless of the number of days in a month.

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A) $7,006.25 B) $6,706.25 C) $6,806.25 D) $6,096.25 E) $6,906.25

87) Your regular hourly rate of pay is $15.86, and you are paid double time for all work on weekends and for any time over forty hours per week (Monday to Friday). Calculate your gross earnings for a week in which you work 4.5 hours (Saturday), 0 hours (Sunday) and forty-three hours Monday through Friday. A) $872.30 B) $898.30 C) $854.30 D) $827.30 E) $843.30

88) A new immigrant to Canada is offered a job working in a meat factory preparing chickens for packaging. The job offer is to be paid $15.50 per hour plus a piecework rate that depends on the number of chickens processed. A flat fee of $0.25 per chicken is paid plus an additional $0.25 for any chickens processed over fifty per hour in an eight-hour shift. (Assume five days per week) What is their total pay for a regular workweek in which their output on successive days is 48, 54, 46, 56, and 43 chickens? A) $648.25 B) $684.25 C) $644.25 D) $644.25 E) $864.25

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89) In your TFSA account, you purchased 10,000 shares of ATH at a cost of $1.75. As the price dropped, you purchased another 10,000 shares at $1.22 each. You purchased another 5,000 shares when the price dropped again, to $.80. By averaging down, what is your average cost per share? A) $1.55 B) $1.66 C) $1.35 D) $1.53 E) $1.72

90) A car salesperson's sales for the month are as follows: four days with no sales, ten days with one sale, twelve days with two sales, three days with three sales and two days with four sales. Calculate the average daily sales? A) 1.51 B) 1.24 C) 1.98 D) 1.65 E) 1.82

91) A salesperson will receive a graduated commission that pays them 2.4% on the first $100,000 in sales, 3.2% on the next $200,000, and 4.7% on all additional sales in a month. What is the average commission rate on sales for a month totaling $600,000? A) 2.82% B) 1.82% C) 3.52% D) 2.52% E) 3.82%

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92) You spent the summer touring Western Canadian cities. You spent four nights in a hotel in Vancouver at $175 a night, three nights in a Banff hotel at $280 a night, two nights in Calgary for $139, two nights in Saskatoon for $129 and two nights in Winnipeg for $99 a night. What was the average cost of the hotel rooms for the entire trip? A) $174.92 B) $147.92 C) $179.92 D) $169.92 E) $152.92

93) You just purchased a couch at a "Pay No Sales Tax" event. The final price of the couch was $799. If PST is 7% and GST is 5%, how much must the company allocate for both taxes? A) GST $49.94 PST $35.67 B) GST $35.67 PST $49.94 C) GST $53.67 PST $49.94 D) GST $35.67 PST $51.94 E) GST $25.67 PST $39.94

94) Your company advertises all prices on the menu board as a final price, including HST of 13%. A customer asks what the actual cost of a cup of coffee is if it is listed on the menu board for $1.85?

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A) $1.46 B) $1.96 C) $1.64 D) $3.28 E) $2.64

95) You are looking at purchasing a house with an assessed value of $197,000. What will be the annual property taxes if the mill rate is 14.5437? A) $2,915.11 B) $2,725.11 C) $2,015.11 D) $2,865.11 E) $2,245.11

96)

Evaluate the following: 20 - 4 x 2 - 8

97)

Evaluate the following: 18 ÷ 3 + 6 x 2

98)

Evaluate the following: (20 - 4) x 2 - 8

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99)

Evaluate the following: 18 ÷ (3 + 6) x 2

100)

Evaluate the following: 20 - (4 x 2 - 8)

101)

Evaluate the following: (18 ÷ 3 + 6) x 2

102)

Evaluate the following: 54 - 36 ÷ 4 + 22

103)

Evaluate the following: (5 + 3)2 - 32 ÷ 9 + 3

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104)

Evaluate the following: (54 - 36) ÷ (4 + 2)2

105)

Evaluate the following: 5 + (32 - 3)2 ÷ (9 + 3)

106)

Evaluate the following:

107)

Evaluate the following:

108)

Evaluate the following: 3(6 + 4)2 - 5(17 - 20)2

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109)

Evaluate the following: (4 x 3 - 2)2 ÷ (4 - 3 x 22)

110)

Evaluate the following: [(20 + 8 x 5) - 7 x (-3)] ÷ 9

111)

Evaluate the following: 5[19 + (52 - 16)2]2

112)

Evaluate the following accurate to the nearest cent:

113)

Evaluate the following accurate to the nearest cent:

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114)

Evaluate the following accurate to the nearest cent:

115)

Evaluate the following accurate to the nearest cent: $1000(1 + 0.02)3

116)

Evaluate the following accurate to the nearest cent:

117)

Evaluate the following accurate to the nearest cent:

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118) If you want four-figure accuracy in your answer, what minimum number of figures must be retained in the values used in the calculations? a) 4 B) 5 C) 6

119) For a final result of approximately $7000 to be accurate to the nearest cent, what minimum number of figures must be retained in the values used in the calculations? a) 6 B) 7 C) 8

120) For a final result of approximately 5 million dollars to be accurate to the nearest dollar, what minimum number of figures must be retained in the values used in the calculations? a) 6 B) 7 C) 8

121) If an interest rate (which could be greater than 10%) is to be calculated to the nearest 0.01%, what minimum number of figures must be retained in the values used in the calculations? a) 3 B) 4 C) 5

122)

The following fraction has a terminating decimal equivalent form. Express its decimal

and percent equivalent forms to five-figure accuracy:

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123)

The following fraction has a terminating decimal equivalent form. Express its decimal

and percent equivalent forms to five-figure accuracy:

124)

The following fraction has a terminating decimal equivalent form. Express its decimal

and percent equivalent forms to five-figure accuracy:

125)

The following fraction has a terminating decimal equivalent form. Express its decimal

and percent equivalent forms to five-figure accuracy:

126)

The following fraction has a terminating decimal equivalent form. Express its decimal

and percent equivalent forms to five-figure accuracy:

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127)

The following mixed number has a terminating decimal equivalent form. Express its

decimal and percent equivalent forms to five-figure accuracy:

128)

The following fraction has a terminating decimal equivalent form. Express its decimal

and percent equivalent forms to five-figure accuracy:

129)

The following fraction has a terminating decimal equivalent form. Express its decimal

and percent equivalent forms to five-figure accuracy:

130)

The following mixed number has a terminating decimal equivalent form. Express its

decimal and percent equivalent forms to five-figure accuracy:

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131)

The following mixed number has a terminating decimal equivalent form. Express its

decimal and percent equivalent forms to five-figure accuracy:

132)

The following fraction has a terminating decimal equivalent form. Express its decimal

and percent equivalent forms to five-figure accuracy:

133)

The following fraction has a terminating decimal equivalent form. Express its decimal

and percent equivalent forms to five-figure accuracy:

134) The following fraction has a repeating decimal equivalent form. Express the decimal and percent equivalent form in the repeating decimal notation. Show just the minimum number of decimal places needed to display the repeating digit or group of digits.

135) The following fraction has a repeating decimal equivalent form. Express the decimal and percent equivalent form in the repeating decimal notation. Show just the minimum number of decimal places needed to display the repeating digit or group of digits.

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136) The following mixed number has a repeating decimal equivalent form. Express the decimal and percent equivalent form in the repeating decimal notation. Show just the minimum number of decimal places needed to display the repeating digit or group of digits.

137) The following mixed number has a repeating decimal equivalent form. Express the decimal and percent equivalent form in the repeating decimal notation. Show just the minimum number of decimal places needed to display the repeating digit or group of digits.

138) The following fraction has a repeating decimal equivalent form. Express the decimal and percent equivalent form in the repeating decimal notation. Show just the minimum number of decimal places needed to display the repeating digit or group of digits.

139) The following fraction has a repeating decimal equivalent form. Express the decimal and percent equivalent form in the repeating decimal notation. Show just the minimum number of decimal places needed to display the repeating digit or group of digits.

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140) The following fraction has a repeating decimal equivalent form. Express the decimal and percent equivalent form in the repeating decimal notation. Show just the minimum number of decimal places needed to display the repeating digit or group of digits.

141) The following fraction has a repeating decimal equivalent form. Express the decimal and percent equivalent form in the repeating decimal notation. Show just the minimum number of decimal places needed to display the repeating digit or group of digits.

142)

Round the following to four-figure accuracy: 11.3845

143)

Round the following to four-figure accuracy: 9.6455

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144)

Round the following to four-figure accuracy: 0.5545454

145)

Round the following to four-figure accuracy: 1000.49

146)

Round the following to four-figure accuracy: 1.0023456

147)

Round the following to four-figure accuracy: 0.030405

148)

Round the following to four-figure accuracy: 40.09515

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149)

Round the following to four-figure accuracy: 0.0090909

150)

Convert the following fraction to its decimal equivalent and percent equivalent values,

rounded to five figures:

151)

Convert the following fraction to its decimal equivalent and percent equivalent values,

rounded to five figures:

152)

Convert the following fraction to its decimal equivalent and percent equivalent values,

rounded to five figures:

153)

Convert the following mixed number to its decimal equivalent and percent equivalent

values, rounded to five figures:

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154)

Convert the following fraction to its decimal equivalent and percent equivalent values,

rounded to five figures:

155)

Convert the following fraction to its decimal equivalent and percent equivalent values,

rounded to five figures:

156)

Convert the following fraction to its decimal equivalent and percent equivalent values,

rounded to five figures:

157)

Convert the following fraction to its decimal equivalent and percent equivalent values,

rounded to five figures:

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158)

Evaluate the following accurate to the nearest cent:

159)

Evaluate the following accurate to the nearest cent:

160)

Evaluate the following accurate to the nearest cent:

161)

Evaluate the following accurate to the nearest cent:

162)

Evaluate the following accurate to the nearest cent:

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163)

Evaluate the following accurate to the nearest cent:

164)

Evaluate the following accurate to the nearest cent:

165)

Evaluate the following accurate to the nearest cent:

166)

Evaluate the following accurate to the nearest cent:

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167)

Evaluate the following accurate to the nearest cent:

168)

What is

169)

What is 2.75% of $2.75?

170)

What amount is 250% of $25?

171)

0.025% of $200 is what amount?

172)

How much is

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of $1527?

of $30? 50

173) Bethany and Irwin estimate their total cost for a vacation in Cuba to be $14,775. If 53% of this cost is for flights and accommodations and 42% is for meals, how much money will they be able to spend on entertainment?

174) In the month of July, a convenience store had total sales of $102,300 from its gas pumps and other in-store products. If HST is 13% of sales, how much HST was collected on the in-store products if these sales represent 36% of total sales?

175) In a basketball game, the Langara College Falcons scored of 33 shots from the 2-point zone, of 15 attempts from the 3-point distance, and 79.3% of 29 free throws (1 point each). How many points did the Falcons score?

176)

Evaluate the following accurate to the nearest cent:

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177)

Evaluate the following accurate to the nearest cent:

178)

Evaluate the following accurate to the nearest cent:

179)

Evaluate the following accurate to the nearest cent:

180)

Evaluate the following accurate to the nearest cent:

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181)

Evaluate the following accurate to the nearest cent:

182) The Calgary Flames hockey team announced that its season's ticket sales represent 67.50% of the Scotiabank Saddledome's seating capacity of 19,289 seats. Rounded to the nearest 100, how many seats were not sold to season's ticket holders?

183) The Royal Canadian Mint sells one troy ounce (31.16 grams) platinum collector coins of 95% purity. How many milligrams of impurities are in a single coin?

184) Stan is a real estate salesperson. He receives 60% of the 4.8% commission that the real estate agency charges on sales. If his sales for the past year were $5,225,000, what was the dollar value of his commission?

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185) The maximum amount an individual can contribute to her Registered Retirement Savings Plan (RRSP) for a year is set from time to time by the Regulations of the Income Tax Act. For the year 2013, the maximum contribution was the lesser of $23,820 or 18% of the individual's "earned income" during 2012. What was the maximum RRSP amount that could be contributed in 2013 based on an income of $128,500 in 2012?

186) 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? Assume there are 52 weeks in a year.

187) Lucille receives an annual salary of $37,500 based on a 37.5-hour workweek. What are her gross earnings for a two-week pay period in which she works 9 hours of overtime at 1½ times her regular rate of pay? Assume there are 52 weeks in a year.

188) 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. Assume there are exactly 52 weeks in a year.

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189) Ross's compensation is to be changed from an hourly rate of $31.50 for a 40-hour week to a salary paid semimonthly. What should he be paid semimonthly in order for his annual earnings to remain the same?

190) 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 to Friday, respectively.

191) Sam is paid $34.50 per hour as a power plant engineer. He is paid 1½ 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 were his gross earnings for a week in which he clocked 8, 9.5, 8, 8, 10, 0, and 8 hours on Saturday to Friday, respectively, where Monday was a statutory holiday?

192) Mary sews for a clothing manufacturer. She is paid $7.50 per hour plus a piece 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 shirts in an 8-hour shift. What will be her total pay for a regular workweek in which her output on successive days was 24, 26, 27, 28, and 30 shirts?

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193) 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?

194) Svetlana is an independent insurance broker placing various clients with any of several insurance companies. On homeowner insurance policies, each month she receives: $20 for each renewal of an existing policy; $35 for each policy placed with a new client; and 5.5% of the annual premiums on all policies (new and renewed) written in the month. In October, she placed 37 new-client policies representing $14,375 in annual premiums and 126 policy renewals representing $47,880 in annual premiums. What amount did Svetlana earn in October?

195) 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 earnings be for a year in which her average monthly sales are $11,000?

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196) 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 base salary of $1500 per month plus commission rates of 3% on the first $25,000 of sales and 6% on additional sales in a month. Based on past experience in similar sales positions, Manfred is confident he can attain average monthly sales of $55,000. At this level of sales, what would be his average gross earnings per month from each retailer?

197) A shoe salesman is paid the greater of $600 per week or 11% of sales. a) What will be his earnings for a week in which sales are $5636? b) At what volume of sales per week will he start to earn more from the commission based compensation?

198) Tom sells mutual funds on a graduated commission structure. He receives 3.3% on the first $50,000 of sales in a month, 4.4% on the next $50,000, and 5.5% on all further sales. What are his gross earnings for a month in which he sells $140,000 worth of mutual funds?

199) Sharon is a manufacturer's representative selling office furniture directly to businesses. She receives a monthly salary of $2000 plus a 2.2% commission on sales exceeding her quota of $150,000 per month. a) What are her earnings for a month in which she has $227,000 in sales? b) If her average monthly sales are $235,000, what straight commission rate would generate the same average monthly earnings as her current basis of remuneration? (Round to the nearest 0.01%)

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200) Julio is paid on a graduated commission scale of 5% on the first $20,000 of sales in a month, 7.5% on the next $20,000, and 10% on all additional sales. a) What will he be paid for a month in which his sales are $54,880? b) What single commission rate on all sales would result in the same earnings for the month? (Round to the nearest 0.01%)

201) Karen works in a retail computer store. She receives a weekly base salary of $300 plus a commission of 3% of sales exceeding her quota of $20,000 per week. What were her sales for a week in which she earned $630.38?

202) Jason's gross pay for August was $3296.97 on sales totalling $15142. If his base salary is $1500 per month, what is his rate of commission on sales exceeding his monthly quota of $100,000? (Round to the nearest 0.01%)

203) Daniella's gross monthly earnings are based on commission rates of 4% of the first $40,000 of sales, 5% of the next $50,000, and 6% of all additional sales for the month. What was her sales total for a month in which she was paid $5350?

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204) 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?

205) In what circumstance should you calculate a weighted average instead of a simple average?

206)

In what circumstances will the weighted average be equal to the simple average?

207) How must you allocate your money among a number of investments so that your portfolio's overall rate of return will be the same as the simple average of the rates of return on individual investments?

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208) A survey of 254 randomly chosen residences in a city revealed that 4 had four television sets, 22 had three sets, 83 had two sets, 140 had one set, and 5 had no TV set at all. Based on the survey, what would you estimate to be the average number of TV sets per household? (Round to 2 decimal places)

209) An investor accumulated 1800 shares of Corel Corporation over a period of several months. She bought 1000 shares at $15.63, 500 shares at $19.00, and 300 shares at $21.75. What was her average cost per share? (Note: Investors who purchase shares in the same company at more than one price must eventually do this calculation. Tax rules require that the capital gain or loss on the sale of any of the shares be calculated using the weighted-average price paid for all of the shares rather than the particular price paid for the shares actually sold.)

210) A hockey goalie's "goals against average" (GAA) is the average number of goals scored against him per (complete) game. In his first 20 games in goal, O. U. Sieve had one shutout, two 1-goal games, three 2-goal games, four 3-goal games, seven 4-goal games, two 6-goal games, and one 10-goal disaster. Calculate his GAA.

211) Serge's graduated commission scale pays him 3% on his first $30,000 in sales, 4% on the next $20,000, and 6% on all additional sales in a month. What will be his average commission rate on sales for a month totaling: a) $60,000? b) $100,000?

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212) The RBC Royal Bank offers an "add-on option" on fixed-rate mortgages. The option allows the customer to borrow additional funds partway through the term of the mortgage. The interest rate charged on the combined mortgage debt becomes the weighted average of the old rate on the former balance and the current competitive rate on new mortgage financing. Suppose Herschel and Julie had a mortgage balance of $37,500 at 8%, when they borrowed another $20,000 at 7%. What interest rate will they be charged by the RBC Royal Bank on the new consolidated balance? (Round to the nearest 0.01%)

213)

Margot's grades and course credits in her first semester at college are listed below:

Grade

C+

B-

B+

C-

Credits

Using the table below for converting Letter Grades to Grade Point Values, calculate Margot's grade point average for the semester.

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Letter Grade

Grade Points

4.0

A-

3.7

B+

3.3

3.0

B-

2.7

C+

2.3

2.0

C-

1.7

1.0

214) The distribution of scores obtained by 30 students on a quiz marked out of 10 is listed below: Score

Number of Students

What was the average score on the test?

215) Alihan's transcript shows the following academic record for four semesters of part-time college studies. Calculate his cumulative GPA at the end of his fourth semester. Semester

Credits

GPA

3.5

3.0

III

2.75

7.5

3.2

216) The "age" of an account receivable is the length of time that it has been outstanding. At the end of October, a firm has $12,570 in receivables that are 30 days "old," $6,850 that are 60 days "old," and $1325 that are 90 days "old. " What is the average "age" of its accounts receivable at the end of October? (Round to 2 decimal places)

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217) One year ago, Sook-Yin allocated the funds in her portfolio among five securities in the proportions listed below. The rate of (total) return on each security for the year is given in the third column of the table. Security

Portion Invested (%)

Rate of Return for the year (%)

Company A Shares

Province B Bonds

Company C Shares

-13

Units in Fund D

Company E Shares

Calculate the rate of return for the entire portfolio. (Round to the nearest 0.01%)

218) One of the methods permitted by Generally Accepted Accounting Principles for reporting the value of a firm's inventory is weighted-average inventory pricing. The Boswell Corporation began its fiscal year with an inventory of 156 units valued at $10.55 per unit. During the year it made the purchases listed in the following table: Date

Units Purchased

Unit Cost ($)

February 10

300

10.86

June 3

1000

10.47

August 23

500

10.97

At the end of the year, 239 units remained in inventory. Determine: a) The weighted-average cost of the units purchased during the year. b) The weighted-average cost of the beginning inventory and all units purchased during the year. c) The value of the ending inventory based on the weighted-average cost calculated in part b.

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219) Suppose a group of consumers spends 30% of its disposable income on food, 20% on clothing, and 50% on rent. If over the course of a year the price of food rose 10%, the price of clothing dropped 5%, and rent rose 15%, what was the average price increase experienced by these consumers? (Round to the nearest 0.01%)

220) The balance on Nucorp's revolving loan began the month at $35,000. On the eighth of the month another $10,000 was borrowed. Nucorp was able to repay $20,000 on the 25th of the 31day month. What was the average balance on the loan during the month? (Use each day's closing balance as the loan balance for the day. )

221) A seasonal manufacturing operation began the calendar year with 14 employees. During the year, employees were taken on or laid off on various dates as presented in the table below: Date

Employee Changes

April 1

7 hired

May 1

8 hired

June 1

11 hired

Sept. 1

6 laid off

Oct. 1

14 laid off

What was the average number of employees on the payroll during the calendar year? (Assume that each month has the same length.) (Round to 1 decimal place)

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222) Marcel must temporarily invest extra money in his retail business every fall to purchase additional inventory for the Christmas season. On September 1 he already had a total of $57,000 invested in his business. Subsequently, he invested or withdrew cash on various dates as shown in the following table: Date

Additional injection or withdrawal

Oct. 1

$15,000 injection

Nov. 1

$27,000 injection

Feb. 1

$23,000 withdrawal

March 1

$13,000 withdrawal

May 1

$6,000 withdrawal

What was the average cumulative investment in the business during the period from September 1 to August 31? (Assume that each month has the same length. )

223) When a company calculates its earnings per common share for its financial statements, it uses the weighted-average number of common shares outstanding during the year. Enertec Corp. began its fiscal year (January 1 to December 31) with 5 million common shares outstanding. Additional common shares were issued during the year as indicated in the following table: Date

Event

Additional Shares Issued

March 1

New public offering

1,000,000

June 1

Employees and officers exercise stock options

500,000

Nov. 1

Convertible bonds exchanged for shares

750,000

What was average number of common shares outstanding during the year? (Assume that each month has the same length. )

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224) Lien, the proprietor of a grocery store, prepares her Deluxe Nut Combo by mixing various ingredients she buys in bulk. The second column of the following table presents the amount of each ingredient Lien uses in making a batch of the Combo mix. In order to set the retail price of the Deluxe Nut Combo at 150% of her cost, Lien must determine her cost based on the average wholesale cost of the ingredients given in the third column. Ingredient

Amount

Cost per kg

Peanuts

5 kg

$2.95

Cashews

2 kg

$9.50

Almonds

1 kg

$11.50

Sunflower seeds

500 g

$2.75

Raisins

400 g

$3.60

Smarties

300 g

$6.40

a) What is Lien's average cost per 100 g of her Deluxe Nut Combo? (Round to 4 decimal places) b) What is her retail price per 100 g? (Round to 2 decimal places)

225) Johnston Distributing, Inc. files quarterly GST returns. The purchases on which it paid the GST and the sales on which it collected the GST for the last four quarters were as follows: Quarter

Purchases ($)

Sales ($)

596,476

751,841

967,679

627,374

823,268

1,231,916

829,804

994,622

Calculate the GST remittance or refund due for each quarter. (Assume GST = 6%)

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226) Sawchuk's Home and Garden Centre files monthly GST returns. The purchases on which it paid the GST and the sales on which it collected the GST for the last four months were as follows: Month

Purchases ($)

Sales ($)

March

135,650

57,890

April

213,425

205,170

May

176,730

313,245

June

153,715

268,590

Calculate the GST remittance or refund due for each month. (Assume GST = 6%)

227) Province

GST rate (%)

HST rate (%)

PST rate (%)

Alberta

British Columbia

Manitoba

New Brunswick

Newfoundland and Labrador

Nova Scotia

Ontario

Prince Edward Island

Quebec

9. 975

Saskatchewan

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Calculate the total amount, including both GST and PST, that an individual will pay for a car priced at $39,500 in: a) Alberta. b) Saskatchewan. c) Quebec.

228) Province

GST rate (%)

HST rate (%)

PST rate (%)

Alberta

British Columbia

Manitoba

New Brunswick

Newfoundland and Labrador

Nova Scotia

Ontario

Prince Edward Island

Quebec

9. 975

Saskatchewan

How much more will a consumer pay for an item listed at $1000 (pretax) in Prince Edward Island than in Manitoba?

229)

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Province

GST rate (%)

HST rate (%)

PST rate (%)

Alberta

British Columbia

Manitoba

New Brunswick

Newfoundland and Labrador

Nova Scotia

Ontario

Prince Edward Island

Quebec

9. 975

Saskatchewan

Sam buys a sweater listed at $100. How much will he pay for the sweater including taxes in: a) Ontario? b) Quebec? c) Alberta? d) Manitoba?

230) Angie's Flower Shop charges 13% Harmonized Sales Tax (HST) on all purchases. a) How much HST will she report for a plant priced at $39.45? b) As of February 4, 2013, if a consumer pays cash and cannot give the exact change, the total amount of the transaction must be rounded up or down to the nearest five cents. How much change will be given if the above purchase is paid for with a $50 bill?

231) To attract shoppers, retailers occasionally advertise something like "Pay no HST!" Needless to say, neither the federal nor the provincial government is willing to forego its sales tax. In this situation, the retailer must calculate and remit the HST as though the "ticket" price already includes these sales taxes. How much HST must a retailer in New Brunswick (where HST is 13%) report on a $495 item that he sells on a Pay-No-HST basis? (Hint: What percentage is the HST of an HST-inclusive price? )

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232)

What are the taxes on a property assessed at $227,000 if the mill rate is 16.8629?

233) a) Express a property tax increase of 0.1 mill in terms of dollars per $100 of assessed value? b) If the mill rate increases by 0.1 mill, what is the dollar increase in property taxes on a $200,000 home?

234) 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 on the farm?

235) The assessed value on a property increased from $285,000 last year to $298,000 in the current year. Last year's property tax rate was $1.56324 per $100 of assessed value. a) What will be the change in the property tax from last year if the new tax rate is set at $1.52193 per $100? b) What would the new tax rate have to be for the dollar amount of the property taxes to be unchanged?

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236) The school board in a municipality will require an extra $2,430,000 for its operating budget next year. The current mill rate for the school tax component of property taxes is 7.1253. a) If the total of the assessed values of properties in the municipality remains at the current figure of $6.78 billion, at what value must next year's school mill rate be set? b) If the total of all assessed values rises by 5% over this year's aggregate assessment, at what value must next year's school mill rate be set?

237) The total assessed value of property in Brockton has risen by $97 million from last year's figure of $1.563 billion. The property tax rate last year for city services was $0.94181 per $100 of assessed value. If the city's budget has increased by $750,000, what tax rate should it set for the current year?

238)

Evaluate the following: (23 - 3)2 - 20 ÷ (2 + 23)

239)

Evaluate the following: [4(2 x 32 - 23)2 ÷ (10 - 4 x 5)]

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240)

Evaluate the following accurate to the nearest cent:

241)

Evaluate the following accurate to the nearest cent:

242)

Evaluate the following accurate to the nearest cent:

243)

Evaluate the following accurate to the nearest cent:

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244)

Evaluate the following accurate to the nearest cent:

245)

Evaluate the following accurate to the nearest cent:

246)

Evaluate the following: 96 - (6 - 42) x 7 - 2

247)

Evaluate the following: 81 ÷ (52 - 16) - 4(23 - 13)

248)

Evaluate the following accurate to the nearest cent:

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249)

Evaluate the following accurate to the nearest cent:

250)

Evaluate the following accurate to the nearest cent:

251)

What amount is 62% of $99?

252)

What is 80% of $156.25?

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253)

of $133.33 is what amount?

254)

How many minutes is 12.5% of 2 hours?

255) The profit forecast for the most recent fiscal quarter is $23,400. The actual profit is 90% of the forecast profit. What is the actual profit?

256) Renalda sold Westel stock that she purchased at $2.20 per share one year ago for a 35% gain. At what price did she sell the stock?

257) Luther is paid an annual salary of $56,600 based on a 37½-hour workweek. a) What is his equivalent hourly wage? (Assume that a year has exactly 52 weeks). b) What would be his total remuneration for a bi-weekly pay period of that year if he worked 4.5 hours of overtime at time and a half?

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258) Istvan earns an annual salary of $61,000 as an executive with a provincial utility. He is paid biweekly. During a strike, he worked 33 hours more than the regular 75 hours for a twoweek pay period. What was his gross pay for that period if the company agreed to pay 1.5 times his equivalent hourly rate for overtime? (Assume that a year has exactly 52 weeks. )

259) Sonja is paid $42.50 per hour as a veterinarian. She is paid 1½ times the regular rate for all time exceeding 7½ hours in a day or 37½ hours per week. Work on a statutory holiday is paid at double time. What were her gross earnings for a week in which she worked 6, 0, 3, 7½, 9, 7½, and 8 hours on Saturday to Friday, respectively, and the Monday was a statutory holiday?

260) Marion receives a monthly base salary of $1000. On the first $10,000 of sales above her monthly quota of $20,000, she is paid a commission of 8%. On any additional sales, the commission rate is 10%. What were her gross earnings for the month of August, in which she had sales amounting to $38,670?

261) Lauren's gross pay for July was $3188.35 on net sales totalling $88,630. If her base salary is $1000 per month, what is her rate of commission on sales exceeding her monthly quota of $40,000? (Round to the nearest 0.01%)

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262) Havel signed a listing agreement with a realtor. The commission rate is 4% on the first $200,000 of the selling price, and 2.5% on the remainder. a) What commission will Havel pay if he sells his home for $289,000? b) What is the average commission rate on the selling price? (Round to the nearest 0.01%)

263) "Souvenirs and Such" is a gift shop in Niagara Falls. Last year 22% of its revenue came from the sale of clothing, 18% from food items, 32% from novelty items and the remainder from special services they provide for tourists. This past year they experienced a 5% increase in the sale of clothing, a 2% increase in the sale of food items, a 9% drop in novelty items and a 2% drop in special services. What is the average change in their revenue for this year? (Round to the nearest 0.01%)

264) Ms. Yong invested a total of $73,400 in three mutual funds as shown in the table below. The third column shows the change in value of each fund during the subsequent six months. Mutual Fund

Amount Invested ($)

Change in Value (%)

Canadian equity fund

16,800

-4.3

US equity fund

25,600

-1.1

Global equity fund

31,000

8.2

What was the percent change in value of Ms. Yong's overall mutual fund portfolio during the six-month holding period? (Round to the nearest 0.01%)

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265) One year ago Helga allocated the funds in her portfolio among five securities in the amounts listed in the following table. The rate of return on each security for the year is given in the third column of the table. Security

Amount Invested ($)

Rate of Return for the year (%)

Company U shares

5,000

Province V bonds

20,000

-3

Company W shares

8,000

-15

Units in Fund X

25,000

Company Y shares

4,500

Calculate the rate of return for the entire portfolio. (Round to the nearest 0.01%)

266) Anthony began the year with $96,400 already invested in his Snow 'n Ice retail store. He withdrew $14,200 on March 1 and another $21,800 on April 1. On August 1, he invested $23,700, and on November 1 he contributed another $19,300. What was his average cumulative investment during the year? (Assume that each month has the same length. )

267) The fiscal year for Pine Valley Skiing Ltd., the owner of a downhill skiing facility, ends on June 30. The company began the recently completed fiscal year with its summer maintenance crew of 7. The following table presents the sequence of employees hired and laid off during the fiscal year:

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Date

Employee Changes.

Sept. 1

6 hired

Nov. 1

18 hired

Dec. 1

23 hired

Mar. 1

11 laid off

Apr. 1

20 laid off

May 1

16 laid off

What was the average number of employees working for Pine Valley during the fiscal year? (Assume that each month has the same length. ) (Round to 1 decimal place)

268)

Evaluate the following accurate to the nearest cent:

269)

Evaluate the following accurate to the nearest cent:

270)

Evaluate the following accurate to the nearest cent:

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271)

Evaluate the following accurate to the nearest cent: $700(1 + 0.05)3

272)

Evaluate the following accurate to the nearest cent:

273)

Evaluate the following accurate to the nearest cent:

274)

Evaluate the following accurate to the nearest cent:

275)

Evaluate the following accurate to the nearest cent:

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276)

Evaluate the following accurate to the nearest cent:

277)

Evaluate the following accurate to the nearest cent: $1700(1 + 0.04)3

278)

Evaluate the following accurate to the nearest cent:

279)

Evaluate the following: 30 ÷ 3 + 12 ÷ 4

280)

Evaluate the following: 30 ÷ (3 + 12) ÷ 2

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281)

Evaluate the following: 12 + 3[2 + (42 - 13)2]2

282)

Evaluate the following: 5 - (2 - 4)2 + 23 - 42

283)

Convert the following to its decimal and percent equivalents:

284)

Convert the following to its decimal and percent equivalents:

285)

Evaluate the following accurate to the nearest cent:

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286)

Evaluate the following accurate to the nearest cent:

287)

What is 0.54% of $200?

288)

20% of $75 is what amount?

289) Syed's net pay is 81% of his gross pay. His net pay for two weeks is $1069.20. What is his gross pay for two weeks?

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290)

What amount is 130% percent of $1150?

291) Hany earns $17.00 per hour for a forty-hour week. His overtime rate is 1½ times any hours exceeding forty in a week. What will Hany's gross earnings be for a week if he works 42.5 hours?

292) Larissa works in a retail store in Square One in Mississauga. She earns a base salary of $320 per week, and a commission of 3% on sales over her quota of $5000. How much will Larissa earn if her sales for the week are: a) $4500? b) $8500?

293) Kristina is a sales representative for a pharmaceutical company. She is paid the greater of $3500 per month or 5% of sales. a) What are her earnings for the month if her sales are $60,000? $78,000? b) At what volume of sales per month will she start to earn more from the commissionbased compensation?

294) Safa's gross pay last month was $3300.00. Her base salary is $3000 per month, plus a commission of 2% on sales over $60,000. What were Safa's sales for last month?

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295) Cliff is a sales manager for a convention centre. He is paid on a graduated commission scale of 0.5% on the first $200,000, 0.7% on the next $300,000, and 0.8% on all additional sales for the month. What are Cliff's gross earnings in a month in which he sells: a) $400,000? b) $700,000?

296)

Fatima took six courses last semester. Her grades and course credits are as follows: Course

Grade

Credits

Accounting

B+

Business Mathematics

Human Resources

Economics

C+

Computer Applications

Marketing

Using the Letter Grade to Grade Point Value conversion table below, calculate her grade point average for the semester. (Round to 2 decimal places) Letter Grade

Grade Points

4.0

A-

3.7

B+

3.3

3.0

B-

2.7

C+

2.3

2.0

C-

1.7

1.0

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297) The following grades are from the first business mathematics test in the semester. What is the class average? Grade

Number of Students

100

298) Mrs. Sandhu invested $10,000 at 5%, $15,000 at 4%, and $20,000 at 3%. Calculate Mrs. Sandhu's overall rate of return. (Round to the nearest 0.01%)

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299) Akini is paid on a graduated commission scale of 1% on his first $200,000 in sales, 2% on the next $300,000, and 4% on all additional sales in a month. What is Akini's average commission rate on monthly sales totalling $600,000?

300) Jenna bought a car for $42,050.90, which included 8% PST and 5% GST. What was the selling price of the car?

301) M Studios files GST returns quarterly. In the last quarter, M Studios sold picture frames totalling $3,750, photographic equipment for $78,225, and billed $43,580 for studio work. In the same time period, M Studios paid $3,000 for rent, $1275 for utilities, and purchased goods subject to GST for $65,000. What GST must be remitted by M Studios for this quarter? (Assume GST = 5%)

302) The town of Simcoe is considering raising the $2 billion required for a sports complex by approving a new capital levy component of the property tax. The levy must be collected over the next five years. If the total assessed value of property in the town is $875 billion, what additional tax will a home owner of a property assessed at $300,000 pay?

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303)

Solve: 10 + 18 × 12

304)

Solve: 2 × 4 + 7 −12

305)

Solve: (10 + 3) × 4

306)

Solve: 2 × (8 - 2) − 12

307)

Solve: 4 + 4 × 3 - 33 + 9

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308)

Solve: 7 − 2 × 2 + 23 × 2

309)

Solve: 3 × 5 + (32 + 2)

310)

Solve: (1 − 2) × (1 + 22) × 10

311)

Solve: 12 − 42 ( 5 − 1) x 4

312)

Solve:

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313)

Solve:

314)

Solve: (4 - 3 x 2)2 ÷ (4 - 5 × 22)

315)

Solve: [(4 + 8 × 4) − 5 × (−7)] ÷ 2

316)

Solve: 4[2 + (32 − 6)2]3

317)

Solve:

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318)

What is 331/3% of 999.

319)

What is 5.65% of $4.99?

320)

What amount is 400% of $175?

321)

0.075% of $185 is what amount?

322)

How much is 12% of $120?

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323) A local nightclub measures customers coming into the club to measure peak hours in three hour intervals. If the nightclub is open from 6pm to 3am and the amount of patrons are as follows: 100 person between 6pm and 9pm, 150 people between 9pm and 12am and 250 people between 12am and 3am. What percentage of patrons is attributed to each three hour period?

324) You are building a new garage and have budgeted 15% of the $60,000 construction cost for a garage door. If you purchase a garage built out of recyclable materials, you can get a 7% rebate on your tax bill from the local government. What is the dollar value of the rebate on the windows?

325) You are trying to budget your college education and have $15,000 to spend over an eight month period. You believe books will cost $3,000, tuition will be $8,000 and the balance will be for personal expenses. What percentage of the budget will you allocate towards personal expenses?

326) In the three-month quarter ending in March, your store had sales of $98,200, not including taxes, from its clothing and shoes. If clothing accounted for 62% of sales and you collected 5% GST on these sales, how much GST was collected on sales from clothing?

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327) In the three-month quarter ending in March, your store had sales of $98,200, not including taxes, from its clothing and shoes. If clothing accounted for 62% of sales and you collected 13% HST on these sales, how much HST was collected on sales from clothing?

328) At a fundraising event, the local charity raised 32% of their sales in chocolate chip cookies, 40% of their sales in oatmeal raisin cookies and the balance in white macadamia cookies. If the charity sold 120 chocolate chip cookies, how many white macadamia cookies did they sell?

329) The local school announced they sold tickets to their local play. Total tickets were sold were 120. There were two different prices, $5 for students and $10 for all others. If total sales were $800 and 662/3 sales were to students, how much money was raised by tickets to others?

330) The local health department reported that the local water supply is 98.5% clean of toxins, well in accordance with health standards. If a person normally drinks eight glasses of water a day, each glass is 400ml of water, how many ml of impurities do they digest on a daily basis?

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331) You are offered an opportunity to work for a local car company. They will pay a 13% commission on all sales. You will have to pay 35.45% in taxes and other deductions to the government. How many dollars in sales much you achieve in order to net $50,000?

332) You have been offered an annual salary of $78,000, paid bi-weekly. You will be paid for 37.5 hours per week and will receive overtime at the rate of one and a half times for any excess hours per week. What will be your overtime rate per hour if you do work any overtime?

333) Your client receives an annual salary of $46,800 based on a forty-hour workweek. They have asked you to help decide how much to contribute to a RRSP account. What are their gross earnings for a two-week pay period in which they work four hours of overtime at one and a half times their regular rate of pay?

334) Your younger sister has asked you to help figure out if their paycheque is correct. She is paid an annual salary of $50,050 based on a 35-hour workweek. What should be her gross pay for a biweekly pay period if she works 37 hours in the first week and 42 hours in the second week? Overtime is paid at time and a half.

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335) Your company is switching you from an employee to working on a contract basis. Your current compensation is an hourly rate of $42.50 for a 37.5-hour workweek and will switch to an amount to be paid monthly. What should you be paid every month in order for your annual earnings to remain the same? Assume the same dollar amount per month, regardless of the number of days in a month.

336) Your regular hourly rate of pay is $15.86 and you are paid double time for all work on weekends and for any time over forty hours per week (Monday to Friday). Calculate your gross earnings for a week in which you work 4.5 hours (Saturday), 0 hours (Sunday) and forty-three hours Monday through Friday.

337) A new immigrant to Canada is offered a job working in a meat factory preparing chickens for packaging. The job offer is to be paid $15.50 per hour plus a piecework rate that depends on the number of chickens processed. A flat fee of $0.25 per chicken is paid plus an additional $0.25 for any chickens processed over fifty per hour in an eight-hour shift. (Assume five days per week) What is their total pay for a regular workweek in which their output on successive days is 48, 54, 46, 56, and 43 chickens?

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338) You are offered a job planting trees for a summer. You will be paid $0.10 per tree with no hourly wage. If you exceed 1,000 trees per day, you will receive a bonus of $0.10 a tree. In the first week you worked seven days and planted the following amount of trees per day: 900, 900, 800, 1,100, 900, 1,200 and 1,300. If you planted more than 5,000 trees per week, you received a $100 bonus. What would be your gross earnings for the week?

339) As a financial services graduate, you are offered a part-time job at an independent insurance broker placing various clients with any of several insurance companies. On homeowner insurance policies, each month, you will receive a 10% commission on all sales. For automobile policies, you will receive 1% on all sales and $5 per policy. You will also receive a 3% monthly bonus, on all sales, if your policy sales exceed $7,000. If you sold ten homeowner policies for $5,500 and twelve automobile policies for $3,200 (four policies), how much are your gross earnings?

340) Your partner opens a new business selling sparkling wine from Belgium to the local wine stores. They will receive a straight commission of $5 per bottle. At the year-end, they can receive a 9% bonus on all sales that exceed 10,000 bottles, from the vintner. What will their gross annual earnings be for a year in which their average monthly sales are 1,000 bottles, at a selling price of $15 per bottle?

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341) You classmate is considering two job offers from two manufacturers. Offer A is a base salary of $4,000 per month plus 3.5% of total sales. Sales are estimated to be $35,000 per month. Offer B is a base salary of $2,000 per month plus 4.5% on the first $500,000 of annual sales, increasing to 6,5% for all sales over $500,000. Monthly sales are estimated to be $49,000 per month. Which offer would produce the highest gross income and what are the estimated annual earnings for the best job?

342) Based on past experience in similar sales positions, a salesperson believes they can earn $5,000 per month. The company is offering a commission of 3% on the first $100,000 in sales and 4.5% on all sales that exceed $100,000. What sales would need to be achieved in order to meet the monthly earnings of $5,000 per month?

343) A car salesperson is paid the greater of $2,500 per month or 11.5% of sales. What are their earnings for a month if they can sell $24,000 worth of vehicles?

344) A commercial real estate salesperson receives commission on a graduated commission structure. They receive 1.5% on the first $100,000 of a sell, 2.2% between $100,000 and $200,000 and 3% on sales in excess of $200,000. What are their gross earnings for a month in which they sell three listings, the first for $180,000, the second for $240,000 and the last for $340,000?

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345) A survey of 460 students randomly chosen revealed that 200 had one child at home, 100 had two kids at home, 50 had three kids at home and the remainder had no kids at home. No students exceeded more than three kids in their household. Based on the survey, what would you estimate to be the average number of kids per student?

346) In your TFSA account, you purchased 10,000 shares of ATH at a cost of $1.75. As the price dropped, you purchased another 10,000 shares at $1.22 each. You purchased another 5,000 shares when the price dropped again, to $.80. By averaging down, what is your average cost per share?

347) A car salesperson's sales for the month are as follows: four days with no sales, ten days with one sale, twelve days with two sales, three days with three sales and two days with four sales. Calculate the average daily sales?

348) A salesperson will receive a graduated commission that pays them 2.4% on the first $100,000 in sales, 3.2% on the next $200,000, and 4.7% on all additional sales in a month. What is the average commission rate on sales for a month totaling $600,000?

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349) You spent the summer touring Western Canadian cities. You spent four nights in a hotel in Vancouver at $175 a night, three nights in a Banff hotel at $280 a night, two nights in Calgary for $139, two nights in Saskatoon for $129 and two nights in Winnipeg for $99 a night. What was the average cost of the hotel rooms for the entire trip?

350) You trying to consolidate your debt. You currently have $5,200 on your credit card at 21% per year, $2,000 on a line of credit at 7% per year and $12,000 on a bank loan at 5.5% per year. What is your average cost of debt?

351) One year ago, you allocated the funds in your portfolio among four securities in the proportions listed below. The rate of return on each security for the year is given in the third column of the table. Security

Proportion invested (%)

Rate of return for the year (%)

Canadian Equity

Provincial Bonds

Asian Equity

Ethical Funds

-12

Calculate the rate of return for the entire portfolio.

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352) Boeing Canada began its fiscal year with an inventory of 14 units valued at $10,900 per unit. During the year it made the purchases listed in the following table. Date

Units purchased

Unit cost ($)

January

10,700

June

9,800

October

10,970

At the end of the year, seven units remained in inventory. Determine: The weighted average cost of the ending inventory. Round to the nearest whole dollar.

353) The balance on your line of credit began the month at $2,000. On the fifth of the month, another $1,000 was borrowed. A payment of $500 was made on the 16th day of the month. Assuming 31 days in the month, what was the average balance on the loan during the month? (Use each day's closing balance as the loan balance for the day.)

354) A small pizzeria specializes in deluxe pizzas. They need to calculate their cost so they can properly price the deluxe pizza. The following list is each ingredient and the cost. Ingredient

Amount

Cost per kg

Ham

1 kg

$9.90

Green Peppers

1 kg

$4.50

Onions

1 kg

$2.50

Cheese

500 g

$12.00

Sauce

200 g

$1.60

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100

What is the cost of the deluxe pizza if the deluxe pizza requires 100 grams of ham, 50 grams of green peppers, 20 grams of onions, 200 grams of cheese and 100 grams of sauce? Assume a single crust costs $1.20.

355) Your company files quarterly GST returns. If purchases were $212,000 and sales were $543,000, was there a GST (5%) remittance or refund and for what amount?

356) Johnson Controls files monthly HST returns. They purchased $100,000 on which it paid the HST and they sold $356,000 on which it collected the HST. Based on an HST rate of 13%, calculate the HST remittance or refund due.

357) You are calculating whether to purchase small cartons for your company in Alberta or in Manitoba. If the total tax rate in Alberta is 5% and 12% in Manitoba, which province would provide the best deal if MB charges $2.00 a carton and Alberta charges $2.00 a carton plus a taxable delivery fee of $0.20 per carton? What is the savings per carton?

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101

358) Canada has converted to Swedish rounding for all cash transactions. If a customer purchases an item for $19.99, PST is 7% and GST is 5%, how much change will they receive if they pay with a $20 bill and a $10 bill?

359) You just purchased a couch at a "Pay No Sales Tax" event. The final price of the couch was $799. If PST is 7% and GST is 5%, how much must the company allocate for both taxes?

360) Your company advertises all prices on the menu board as a final price, including HST of 13%. A customer asks what the actual cost of a cup of coffee is if it is listed on the menu board for $1.85?

361) You are looking at purchasing a house with an assessed value of $197,000. What will be the annual property taxes if the mill rate is 14.5437?

362) You are looking at purchasing a house with an assessed value of $497,000. What will be the annual property taxes if the tax rate is 1.5689?

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102

363) The assessment on a small business consists of $450,000 for the warehouse and outbuildings and $1,050,000 for the land. A mill rate of 13.0586 applies to warehouse and buildings, and a rate of 5.8567 applies to the land. What are the total property taxes payable on the property?

364) The assessment on a small business consists of $450,000 for the warehouse and outbuildings and $1,050,000 for the land. A tax rate of 1.3059 applies to warehouse and buildings, and a rate of 5856 applies to the land. What are the total property taxes payable on the property?

365) The assessed value on a property increased from $432,000 last year to $568,000 in the current year. Last year's property mill rate was $13.6324. What will be the change in the property tax from last year if the new mill rate is set at $13.2193?

366) The police department in a city will require an extra $7,820,000 for its operating budget next year, due to a dramatic increase in crime. The current mill rate for the police department component of property taxes is 4.1253. If the total of the assessed values of properties in the city remains at the current figure of $9.62 billion, what value must next year's mill rate be set at? Version 1

103

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104

Answer Key Test name: Chap 01_10ce 1) A 2) B 3) C 4) D 5) E 6) A 7) B 8) C 9) D 10) D 11) E 12) A 13) B 14) C 15) D 16) E 17) A 18) B 19) C 20) D 21) E 22) A 23) B 24) C 25) D 26) E Version 1

105

27) A 28) B 29) C 30) D 31) E 32) A 33) A 34) B 35) D 36) E 37) A 38) B 39) C 40) D 41) E 42) A 43) B 44) C 45) D 46) E 47) A 48) B 49) C 50) D 51) E 52) A 53) B 54) C 55) D 56) E Version 1

106

57) B 58) C 59) C 60) D 61) E 62) A 63) B 64) B 65) E 66) B 67) C 68) C 69) A 70) C 71) B 72) D 73) D 74) D 75) B 76) E 77) B 78) E 79) D 80) A 81) B 82) E 83) A 84) B 85) C 86) E Version 1

107

87) A 88) B 89) C 90) D 91) E 92) A 93) B 94) C 95) D

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108

CHAPTER 2 1)

Simplify and collect like terms: -a + (2b - c) - (a - b + c) A) -2a + 3b - 2c B) -2a + b - 2c C) 3b - 2c D) -2a + 3b E) -2a + 2b - 2c

Simplify and collect like terms: 1 - (3x - xy + y) - (-x + y - 5xy) A) 1 - 2x - 2y - 6xy B) 1 - 2x - 2y + 6xy C) 1 - 4x - 2y + 6xy D) 1 - 2x - 2y + 4xy E) 1 - 4x - 2y - 6xy

Simplify and collect like terms: 3(x - 2y) + 4x(2x + y) A) 3x + 6xy + 4xy B) 7x2 -3x + 6y 4xy C) 8x2 + 3x-6y + 4xy D) 8x2 - 9xy + 6x - 4y E) 8x2 + 10x - 6y + 6xy

Simplify and collect like terms: 9x - [4y - 3(x - y)]

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A) 12x + 7y B) 6x - 7y C) 6x + 7y D) 12x - 7y E) 9x - 7y

Simplify and collect like terms: A) -1.6x - 14.075 B) -1.6x - 15.325 C) 2.6x + 15.325 D) 2.6x - 14.075 E) -1.6x + 15.325

Simplify and collect like terms: A) -0.7x2 - 0.25x + 1 B) 0.7x2 - 0.4x + 1.15 C) -0.7x2 - 0.4x + 0.35 D) 0.7x2 - 0.4x + 0.35 E) -0.7x2 - 0.8x + 1.15

Simplify and collect like terms:

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A) 3.076P B) 3.018P C) 2.787P D) 3.532P E) 2.956P

Simplify and collect like terms: A) 2.957x B) 2.208x C) 3.057x D) 2.068x E) 1.983x

9) Simplify the following: 6xy - 6x2 2x A) 3x + 3y B) 3xy - 2x C) 3xy + 2x3 D) 3x - 3y E) 3x - 232

10)

Simplify the following:

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A) 2y2 - 3x2y + 5y3 B) 2xy - 3x2y + 5y3 C) 2y - 3x2y + 5y D) 2y - 3x2 + 5y E) 2y - 3x2y + 5y3

11)

Simplify the following: a × a6 × a3 A) a8 B) a7 C) a10 D) a12 E) a13

12)

Simplify the following: (a2)(a-6)(a3) A) a11 B) a C) a-36 D) a-1 E) a-5

13)

Simplify the following: b8 ÷ b2 A) b4 B) b10 C) b16 D) b-6 E) b6

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14)

Simplify the following: y8 ÷ y-5 A) y13 B) y3 C) y-40 D) y40 E) y-13

15)

Simplify the following: (x5)2 A) x9 B) x10 C) x D) x-1 E) x0

16)

Simplify the following: (2x3)5 A) 10x15 B) 32x8 C) 32x15 D) 2x15 E) 2x8

17)

Simplify the following:

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A) x-1 B) x6 C) x-2 D) x7 E) x2

18)

Simplify the following: A) a0 B) a C) a-11 D) a-5 E) a-12

19)

Simplify the following: A) 16a10b5 B) 2a10b5 C) 16a3b3 D) 2a5b5 E) 16a5b3

20)

Simplify the following:

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A) B) C) D) E)

21)

Evaluate the following: 201/2 A) 10 B) 400 C) 4.47 D) 4.65 E) 5.73

22)

Evaluate the following: A) 32 B) 64 C) -64 D) -32 E) 10

23)

Evaluate the following:

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A) 14,857.17 B) 487.56 C) 3714.29 D) 60.945 E) 11.04

24)

Evaluate the following: A) 12.006 B) 698.137 C) 1.201 D) 36.006 E) 35.58

25)

Evaluate the following: A) 233.95 B) 6.888 C) 0.689 D) 23.395 E) 23.763

26)

Evaluate the following:

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A) -5.857 B) -10.446 C) 5.857 D) 0.5857 E) 13.485

27)

Evaluate the following: A) -9.971 B) -22.579 C) 58.29 D) 9.971 E) 25.743

28)

Evaluate the following:

A) B) C) D) E) 1

29) The retail price of a computer is $250.00, which includes a discount of 50%. What is the original price of the computer?

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A) $500 B) $125.00 C) $166.67 D) $375.00 E) $400.00

30) The retail price of a packaged CD is $60.00, which includes a tax of 4%. What is the actual price of the CD before tax? A) $57.60 B) $57.69 C) $61.60 D) $50.00 E) $62.00

31) The commission on a transaction is 3% of the first $100,000 and 2% of the balance. What was the amount of a transaction where the commission charged was $10,100? A) $225,000 B) $545,000 C) $310,000 D) $355,000 E) $455,000

32) Sam has $20,000 to invest. He invested part of the money at 5% and the rest at 6%. His investments earned $1120 total interest for the year. How much did Sam invest at each rate?

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A) $12,000 at 5% and $8000 at 6% B) $10,000 at 5% and $10,000 at 6% C) $6000 at 5% and $14,000 at 6% D) $14,000 at 5% and $6000 at 6% E) $8000 at 5% and $12,000 at 6%

33) Anders has $35,000 to invest. He invested $20,000 at 3% and $15,000 at 4%. How much total interest did Anders earn? A) $1,200 B) $600 C) $2,400 D) $800 E) $900

34) Tickets for the school play were $3 for students and $5 for all others. The box office sold 750 tickets for a total of $3200. How many student tickets were sold? A) 475 B) 275 C) 500 D) 250 E) 300

35) At a United Way fundraiser, students sold a small drink for $2 and a large drink for $3. If they sold 75 drinks and they sold twice as many large drinks to small drinks, how much money did they earn?

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A) $100 B) $125 C) $200 D) $250 E) $150

36)

Simplify and collect like terms: 8 - (2x + 4y - 3) - (4y + 10) A) -8y - 2x + 21 B) -8y - 2x + 1 C) -8y - 2x - 2 D) -2x + 1 E) -2x + 21

37)

Simplify and collect like terms: (5x - 2y)(x - 2y) A) 5x2 - 12xy - 4y2 B) 5x2 + 8xy - 4y2 C) 5x2 - 12xy + 4y2 D) 5x2 - 8xy + 4y2 E) 5x2 + 12xy + 4y2

38)

Simplify and collect like terms: 2(b - 2) - (b - 2) A) b + 6 B) 3b - 2 C) 3b + 2 D) b - 2 E) b - 6

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39)

Simplify and collect like terms: A) -2a + 13 B) -2a - 1 C) -2a + 7 D) 2a + 7 E) 2a - 1

40)

Evaluate the following: A) 95.396217 B) 0.0104826 C) 1.2 D) 3.0 E) 0.8333333

41)

Simplify the following: A) r9t4 B) r6t6 C) r6t7 D) r9t11 E) r9t9

42)

Simplify the following:

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A) r5 B) C) r12 D) r2 E) r36

43)

Evaluate the following: (82)(2-4)(2)2 A) 1024 B) 256 C) 4 D) 48 E) 16

44)

Solve for the unknown variable:

A) B) C) D) E)

45)

Solve for the unknown variable:

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A) B) C) 1.5 D) E) 3.875

46)

Solve for the unknown variable: A) 6 B) -6 C) -10 D) E) 10

47)

Solve for the unknown variable: A) 13.9082 B) 13.8996 C) 14.8148 D) 25 E) 225

48) An employee earns $1600 for 50 hours of work during last week. His regular workweek is 40 hours and he's paid overtime at time and one-half the regular rate of pay. What is the regular hourly rate of pay?

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A) $29.09 B) $32.00 C) $29.52 D) $28.52 E) $25.00

49) The price of a litre of gasoline has decreased by 25% since last month. The new price is $1.08 per litre, what was the old price? A) $1.41 B) $1.33 C) $.81 D) $1.44 E) $1.52

50) A company laid off 80% of its work force. The number of employees after the layoff is 3000. How many employees were there before the layoff? A) 5400 B) 7200 C) 3600 D) 15,000 E) 3750

51) The population of a city has grown by 10% in year one, 12% in year two and decreased by (5%) in year three. If the original population was 20,000, what is the current population?

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A) 28,459 B) 23,408 C) 24,640 D) 22,000 E) 23,580

52) Bill and Ted decide to throw a party. Bill will have twice as many friends attend as Ted. If each agrees to pay their own share (per friend) and the party will cost $900, what will be the cost per guest if Bill asks twenty friends to attend? A) $10 B) $20 C) $30 D) $45 E) $50

53) John and Jill agree to form a partnership. The partnership agreement requires that John invests $7000.00 less than one-half of what Jill is to invest. If the total investment of both is $125,000.00, how much is Jill's investment? A) $88,000.00 B) $37,000.00 C) $78,666.67 D) $46,333.33 E) $74,393.33

54) A used car lot sold 150 cars this month. They had budgeted to sell 200 cars. By what percentage did they fall short?

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A) 25% B) 50% C) 12.5% D) 20% E) 40%

55)

Simplify and collect the like terms: (-p) + (-3p) + (4p)

56)

Simplify and collect the like terms: (5s - 2t) - (2s - 4t)

57)

Simplify and collect the like terms: 4x2y + (-3x2y) - (-5x2y)

58)

Simplify and collect the like terms: 1 - (7e2 - 5 + 3e - e3)

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59)

Simplify and collect the like terms: (6x2 - 3xy + 4y2) - (8y2 - 10xy - x2)

60)

Simplify and collect the like terms: (7m3 - m - 6m2 + 10) - (5m3 - 9 + 3m - 2m2)

61)

Simplify and collect the like terms: 2(7x - 3y) - 3(2x - 3y)

62)

Simplify and collect the like terms: 4(a2 - 3a - 4) - 2(5a2 - a - 6)

63)

Simplify and collect the like terms: 15x - [4 - 2(5x - 6)]

64)

Simplify and collect the like terms: 6a - [3a - 2(2b - a)]

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65)

Simplify the following: 4a(3ab - 5a + 6b)

66)

Simplify the following: 9k(4 - 8k + 7k2)

67)

Simplify the following: -5xy(2x2 - xy - 3y2)

68)

Simplify the following:

69)

Simplify the following and collect the like terms: (4r - 3t)(2t + 5r)

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70)

Simplify the following and collect the like terms: (3p2 - 5p)(-4p + 2)

71)

Simplify the following and collect the like terms: 3(a - 2)(4a + 1) - 5(2a + 3)(a - 7)

72)

Simplify the following and collect the like terms: 5(2x - y)(y + 3x) - 6x(x - 5y)

73)

Simplify the following:

74)

Simplify the following:

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75)

Simplify the following:

76)

Simplify the following:

77)

Simplify the following:

78)

Simplify the following:

79)

Simplify the following:

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80)

Simplify the following:

81)

Simplify the following expression and collect the like terms:

82)

Simplify the following expression and collect the like terms:

83)

Simplify the following expression and collect the like terms:

84)

Simplify the following expression and collect the like terms:

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85)

Simplify the following expression and collect the like terms. Maintain five-figure

accuracy.

86)

Simplify the following expression and collect the like terms. Maintain five-figure

accuracy.

87)

Simplify the following expression and collect the like terms. Maintain five-figure

accuracy.

88)

Simplify the following expression and collect the like terms. Maintain five-figure

accuracy.

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89) Evaluate the following expression for the given values of the variables: (1 + i)m - 1 for i = 0.0225, m = 4

90)

Evaluate the following expression for the given values of the variables and calculate the

result accurate to the nearest cent:

91)

Evaluate the following expression for the given values of the variables and calculate the

result accurate to the nearest cent:

92)

for R = $550, i = 0.085, n = 3

for R= $910, i = 0.1038129, n = 4

Evaluate the following expression for the given values of the variables and calculate the

result accurate to the nearest cent:

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for R = $630, i = 0.115, n = 2

93)

Evaluate the following expression for the given values of the variables and calculate the

result accurate to the nearest cent:

94)

Simplify the following: a2 x a3

95)

Simplify the following: (x6)(x-4)

96)

Simplify the following: b10 ÷ b6

97)

Simplify the following: h7 ÷ h-4

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for

98)

Simplify the following: (1 + i)4 x (1 + i)9

99)

Simplify the following: (1 + i) x (1 + i)n

100)

Simplify the following: (x4)7

101)

Simplify the following: (y3)3

102)

Simplify the following:

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103)

Simplify the following: (n0.5)8

104)

Simplify the following:

105)

Simplify the following:

106)

Simplify the following: [2(1 + i)]2

107)

Simplify the following:

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108)

Simplify the following:

109)

Simplify the following:

110)

Evaluate the following expression:

111)

Evaluate the following expression:

112)

Evaluate the following expression to six-figure accuracy:

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113)

Evaluate the following expression to six-figure accuracy:

114)

Evaluate the following expression: (0.001)-2

115)

Evaluate the following expression to six-figure accuracy:

116)

Evaluate the following expression to six-figure accuracy: (1.0085)5(1.0085)3

117)

Evaluate the following expression to five-figure accuracy: (1.001)4(1.075)3

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118)

Evaluate the following expression to six-figure accuracy: (1.005)3(1.005)-6

119)

Evaluate the following expression to six-figure accuracy:

120)

Evaluate the following expression to six-figure accuracy:

121)

Evaluate the following expression:

122)

Evaluate the following expression to six-figure accuracy:

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123)

Evaluate the following expression to six-figure accuracy:

124)

Evaluate the following expression to six-figure accuracy:

125)

Evaluate the following expression to six-figure accuracy:

126)

Evaluate the following expression to six-figure accuracy:

127)

Evaluate the following expression to six-figure accuracy:

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128)

Evaluate the following expression to six-figure accuracy:

129)

Evaluate the following expression to six-figure accuracy:

130)

Evaluate the following expression to six-figure accuracy:

131)

Solve the following equation: 10a + 10 = 12 + 9a

132)

Solve the following equation: 29 - 4y = 2y - 7

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133)

Solve the following equation: 0.5(x - 3) = 20

134)

Solve the following equation:

135)

Solve the following equation: y = 192 + 0.04y

136)

Solve the following equation: x - 0.025x = 341.25

137)

Solve the following equation: 12x - 4(2x - 1) = 6(x + 1) - 3

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138)

Solve the following equation: 3y - 4 = 3(y + 6) - 2(y + 3)

139)

Solve the following equation: 8 - 0.5(x + 3) = 0.25(x - 1)

140)

Solve the following equation: 5(2 - c) = 10(2c - 4) - 6(3c + 1)

141)

Solve the following equation: 3.1t + 145 = 10 + 7.6t

142)

Solve the following equation: 1.25y - 20.5 = 0.5y - 11.5

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143)

Solve the following equation accurate to the cent:

144)

Solve the following equation accurate to the cent:

145)

Solve the following equation accurate to the cent:

146)

Solve the following equation accurate to the cent:

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147)

Solve the following equation accurate to the cent:

148)

Solve the following equation accurate to the cent:

149)

Use I = Prt to calculate P, if r = 0.05, I = $.625, t = 0.25

150)

Use

151)

Use S = P(1 + rt) to calculate P, if r = 0.004, S = $3626, t = 9

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to calculate i, if PMT = $900, PV = $150,000

152)

Use N = L(1 - d) to calculate L, if N = $891, d = 0.10

153)

Use N = L(1 - d) to calculate d, if N = $410.85, L = $498

154)

Use S = P(1 + rt) to calculate t, if r = 0.0025, S = $5100, P = $5000

155)

Use NI = (CM)X - FC to calculate CM, if NI = $15,000, X = 5000, FC = $60,000

156)

Use NI = (CM)X - FC to calculate X, if NI = -$542.50, CM = $13.50, FC = $18,970

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157) 0.10

Use N = L(1 - d1)(1 - d2)(1 - d3) to calculate L, if N = $1468.80, d1 = 0.20, d2 = 0.15, d3 =

158) 0.05

Use N = L(1 - d1)(1 - d2)(1 - d3) to calculate d2, if N = $70.29, L = $99.99, d1 = 0.20, d3 =

159) Use FV = PV(1 + i1)(1 + i2)(1 + i3) to calculate i1, if PV = $1000, $1094.83, i2 = 0.03, i3 = 0.035

160)

Use

to calculate PMT, if FV = $1508.54, n = 4, i = 0.05

161)

Use

to calculate PMT, if PV = $6595.20, n = 20, i = 0.06

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162)

Rearrange I = Prt to isolate t on the left side.

163)

Rearrange

164)

Rearrange N = L(1 - d) to isolate d on the left side.

165)

Rearrange NI = (CM)X - FC to isolate CM on the left side.

166)

Rearrange NI = (CM)X - FC to isolate X on the left side.

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to isolate i on the left side.

167)

Rearrange S = P(1 + rt) to isolate r on the left side.

168)

Rearrange S = P(1 + rt) to isolate t on the left side.

169)

Rearrange N = L(1 - d1)(1 - d2)(1 - d3) to isolate d1 on the left side.

170)

Rearrange N = L(1 - d1)(1 - d2)(1 - d3) to isolate d3 on the left side.

171)

Rearrange FV = PV(1 + i)n to isolate PV on the left side.

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172)

Use FV = PV(1 + i)n to calculate i, if PV = $2000, FV = $9321.91, n = 20

173)

Use FV = PV(1 + i)-n to calculate i, if PV = $5167.20, FV = $10,000, n = 15

174)

Rearrange FV = PV(1 + i)n to isolate i on the left side.

175) A web site had 2/7 more hits last month than in the same month of the preceding year. If there were 2655 hits last month, how many were there 1 year earlier?

176) A newspaper agency had 1/3 more subscribers for one month due to a marketing promotion. If there were 2,400 subscribers at the end of the promotion (including all new subscribers), how many more subscribers were added because of the marketing promotion? Version 1

177) The retail price of a pair of skis consists of the wholesale cost to the retailer plus the retailer's markup. If skis retailing for $712 are marked up by 60% of the wholesale cost, what is that wholesale cost?

178) The price tags in Annie's Flower Shop include the 13% Harmonized Sales Tax (HST). How much HST will she report for a plant sold at $39.55?

179) The Furniture Store offered a couch for sale during a "Pay no Tax" promotion. If the list price was $975 and the total tax rate was 12%, how much was the price of the couch?

180) A stockbroker's commission on a transaction is 2.5% of the first $5000 of the transaction amount and 1.5% of the remainder. What was the amount of a transaction that generated a total commission of $227?

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181) A caterer has the following price structure for banquets. The first 20 meals are charged the basic price per meal. The next 20 meals are discounted by $2 each and all additional meals are each reduced by $3. If the total cost for 73 meals comes to $1686, what is the basic price per meal?

182) Econocar offers two plans for one-week rentals of a compact car. A rate of $295 per week includes the first 1000 kilometres. Extra distance costs 15 cents per kilometre. A weekly rate of $389 allows unlimited driving. Rounded to the nearest kilometre, beyond what driving distance is the unlimited driving plan cheaper?

183) You have a choice of leasing a vehicle or renting a vehicle. The lease rate is $500 per month and $.20 per kilometer over 10,000 kms. The rental vehicle is $700 per month with a mileage charge of $.10 per kilometer over 20,000 kms. If you plan on driving the vehicle for 50,000 kms., what will be the difference in price between the lease and the rental.

184) Alicia pays 38% income tax on any additional earnings. She has an opportunity to work overtime at 1.5 times her base wage of $23.50 per hour. Rounded to the nearest quarter hour, how much overtime must she work to earn enough money (after tax) to buy a canoe that costs $2750 including sales taxes?

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185) Bob pays a dividend tax of 20% on Canadian investments. If Bob purchases 1,000 shares that pay a 4% annual dividend, how much would each share have to be worth to net $10,000?

186) When making a salad dressing, you need twice as much vinegar as oil and four times as much sugar as oil. If you need 2.1 cups of salad dressing, how many cups of sugar do you require?

187) Classic Homes has found from experience that there should be 40% as many twobedroom homes as three-bedroom homes in a subdivision, and twice as many two-bedroom homes as four-bedroom homes. How many homes of each type should Classic build in a new 96home subdivision?

188) Broadway Mazda usually spends half as much on radio advertising as on newspaper advertising, and 60% as much on television advertising as on radio advertising. If next year's total advertising budget is $160,000, how much (rounded to the nearest dollar) should be allocated to each form of advertising?

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189) A city's commercial construction by-laws require five parking spaces for every 100 square metres of retail rental space in a shopping centre. Four percent of the parking spaces must be large spaces for the physically handicapped. Of the remainder, there must be 40% more regular-size spaces than "small-car" spaces. How many parking spaces of each type are required for a 27,500 square metre shopping centre?

190) Erin has invested in both an equity mutual fund and a bond mutual fund. Her financial advisor told her that her overall portfolio rose in value by 1.1% last year. Erin noted in the newspaper that the equity fund lost 3.3% last year while the bond fund rose 7.7%. What percentage of her portfolio was in the equity fund at the beginning of the year?

191) Steel is an alloy of iron and nickel. A steel recycling company has two piles of scrap steel. Pile A contains steel with 5.25% nickel content. Pile B contains steel with 2.84% nickel. The company has an order for 32.5 tonnes of steel containing 4.15% nickel. How much scrap steel should be taken from each pile for reprocessing?

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192) The board of directors of Meditronics Inc. has designated 100,000 stock options for distribution to employees and management of the company. Each of three executives is to receive 2000 more options than each of eight scientists and engineers. Each scientist and engineer is to receive 50% more options than each of 14 technicians. How many options will a person in each position receive?

193) You can pick and choose ingredients at a local food mart. Vegetable ingredients are $2.00/kg and meat ingredients are $1.00/100 grams. You wish to purchase a stir fry for a party that will weigh 4 kgs. You wish to use three times as much vegetables as meat. How much will the meat portion and vegetable portion cost you?

194) Dash Canada offers two long-distance telephone plans. Plan X costs 6.5 cents per minute for calls between 8 a.m. and 6 p.m. weekdays (business hours) and 4.5 cents per minute at other times. Plan Y costs 5.3 cents per minute any time. Above what percentage of business-hour usage will Plan Y be cheaper?

195) Quality Grocer makes its own bulk "trail mix" by mixing raisins and peanuts. The wholesale cost of raisins is $3.75 per kg and the cost of peanuts is $2.89 per kg. To the nearest 0.1 kg, what amounts of peanuts and raisins should be mixed to produce 50 kg of trail mix with an effective wholesale cost of $3.20 per kg?

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196) A firm received a bill from its accountant for $3310, representing a combined total of 41 "billable" hours for both the Certified General Accountant (CG A) and her accounting technician, for conducting the firm's audit. If the CGA charges her time at $120 per hour and the technician's time at $50 per hour, how many hours did each work on the audit?

197) A lawyer wishes to bring on two new partners. The current partner has a net worth in the company of $500,000. Partner B wishes to bring in 30% of the original partners' capital and partner C will bring 1/3 of partner B's amount. If all partners wish to have a total balance of $800,000, how much extra will need to be raised to reach the goal of $800,000?

198) Joan, Stella, and Sue have agreed to form a partnership. For the original capital investment of $32,760, Sue agrees to contribute 20% more than Joan, and Joan agrees to contribute 20% more than Stella. How much will each contribute?

199) The annual net income of the SGR partnership is to be distributed so that Sven receives 30% less than George, and Robert receives 25% more than George. If the past year's net income was $88,880, what amount should be allocated to each?

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200) It takes 20 minutes of machine time to manufacture Product X and 30 minutes of machine time to manufacture Product Y. If the machine operated 47 hours last week to produce a combined total of 120 units of the two products, how many units of Y were manufactured?

201) The tickets for a hockey game cost $19.00 for the blue section and $25.50 for the red section. If 4460 tickets were sold for a total of $93,450, how many seats were sold in each section?

202) The annual dues for the Southern Pines Golf Club are $2140 for regular members and $856 for student members. If the total revenue from the dues of 583 members for the past year was $942,028, how many members did the club have in each category?

203) The Hungry Heifer diner offers an all-you-can-eat buffet at $12.95 per adult and $8.95 per child. On a particular day, the diner had total buffet revenue of $3304.70 from 266 customers. How many of the customers were children?

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204) Tina drove from Calgary to Vancouver, a distance of 1000 km, in 12.3 hours. She drove at 100 km/h on the "open road," but slowed to 50 km/h on urban and curving roads. What distance did she drive at each speed? (Hint: Travelling time at a particular speed = Distance/Speed)

205) Product X requires 30 minutes of machining on a lathe, and product Y requires 45 minutes of machining. If the lathe was operated for 60.5 hours last week for machining a combined total of 93 units of Products X and Y, how many units of each product were produced?

206) A convenience store sells canned soft drinks at $4.35 for a six-pack or 90 cents for a single can. If revenue from the sale of 225 cans of soft drinks on a weekend was $178.35, how many six-packs and how many single cans were sold?

207) Mr. Parker structured his will so that each of his four children will receive half as much from the proceeds of his estate as his wife, and each of 13 grandchildren will receive one-third as much as each child. After his death, $759,000 remains after expenses and taxes for distribution among his heirs. How much will each child and grandchild receive?

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208) To coordinate production in a three-stage manufacturing process, Stage B must be assigned 60% more workers than Stage A. Stage C requires three-quarters as many workers as Stage B. How should the foreman allocate 114 workers among the three stages?

209) Fred has centralized the purchasing and recordkeeping functions for his three pharmacies in a single office. The annual costs of the office are allocated to the three stores. The Hillside store is charged $1000 less than twice the charge to the Barnett store. The Westside store is charged $2000 more than the Hillside store. What is the charge to the Westside store if the cost of operating the central office for a year is $27,600?

210) $100,000 is to be distributed under a firm's profit-sharing plan. Each of 3 managers is to receive 20% more than each of 26 production workers. How much will each manager and production worker receive?

211)

Simplify and collect the like terms: 4(3a + 2 b)(2b - a) - 5a(2a - b)

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212)

Simplify and collect the like terms:

213)

Simplify and collect the like terms:

214)

Simplify and collect the like terms: 6(4y - 3)(2 - 3y) - 3(5 - y)(1 + 4y)

215)

Simplify and collect the like terms:

216)

Simplify and collect the like terms:

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217)

Simplify:

218)

Evaluate the following expression for the given values of the variables:

for

219) Evaluate the following expression for the given values of the variables: L(1 - d1)(1 - d2)(1 - d3) for L = $340, d1 = 0.15, d2 = 0.08, d3 = 0.05

220) Evaluate the following expression for the given values of the variables: $575, i = 0.085, n = 3

for R =

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221)

Simplify:

222)

Simplify:

223)

Simplify:

224)

Evaluate to six-figure accuracy: (1.0075)24

225)

Evaluate to six-figure accuracy:

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226)

Evaluate to six-figure accuracy:

227)

Evaluate to six-figure accuracy:

228)

Evaluate to six-figure accuracy:

229)

Evaluate to six-figure accuracy:

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230)

Solve the following equation accurate to the cent:

231)

Solve the following equation accurate to the cent:

232)

Solve the following equation accurate to the cent:

233)

Solve the following equation accurate to the cent:

234) Use N = L(1 - d1)(1 - d2)(1 - d3) to calculate d2, if N = $324.30, L = $498, d1 = 0.20, d3 = 0.075

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235) Use Vf = Vi(1 + c1)(1+ c2)(1 + c3) to calculate c2, if Vf = $586.64, Vi = $500, c1 = 0.17, c3 =0.09

236)

Rearrange FV = PV(1 + i1)(1 + i2) to isolate i1 on the left side.

237) The annual net income of the Todd Bros. partnership is distributed so that Ken receives $15,000 more than 80% of Hugh's share. How should a net income of $98,430 be divided between the partners?

238) The profits from a partnership are to be distributed so that Grace receives 20% more than Kajsa, and Mary Anne receives five-eighths as much as Grace. How much should each receive from a total distribution of $36,000?

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239) Through a calculation (on Canadian Individual Tax Returns) known as the " Old Age Security clawback", an individual receiving Old Age Security (OAS) benefits must repay an increasing portion of these benefits to the federal government as the individual's net income rises beyond a certain threshold. If the OAS clawback is 15% of net income exceeding $68,000, at what amount of net income must a taxpayer repay all $6300 OAS benefits received in the year?

240) During a one-day special, a grocery store sells cucumbers at 98 cents each or four for the price of three. At the end of the day, the store's computer reports that revenue from the sale of 541 cucumbers was $418.46. How many cucumbers were sold on the four-for-three promotion?

241)

Simplify:

242)

Simplify:

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243)

Simplify:

244)

<p>Simplify:

245) A wholesaler sells to retailers at a 27% discount from the suggested retail price. What is the suggested retail price of an item that costs the retailer $100?

246) Tom's wholesale company sells t-shirts with a MSRP of $25.99. If they sell these t-shirts with a discount of 47%, what is the profit to the retailer?

247)

Simplify and collect the like terms: 2a - (- a) + 4a - 5a

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248)

Simplify and collect the like terms: -4x - [-3x + 2(x - 6)]

249) Evaluate the following expression for the given values of the variables: $1200, i = 0.02, n = 6

250)

Simplify:

251)

Simplify: x7÷ x-4÷ x3

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for R =

252)

Evaluate the following to six-figure accuracy:

253)

Solve the following equation: 3(x - 6) + 5x - 2(2x - 3) = 0

254)

Solve the following equation: 9x + 10 = -3x + 34

255)

Solve the following equation: 2y - 4 = 4y + 6

256)

Solve the following equation: 1.5a + 3(4a - 6) = a(1.5)2

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257)

Solve the following equation accurate to the cent:

258) Surinder works in a retail store in Square One in Mississauga. She earns a base salary of $320 per week, and a commission of 3% on sales over her quota of $5000. If Surinder earned $515 last week, what was the value of her sales?

259) Tickets for the end of semester dance sold for $10 if purchased in advance, and $15 if purchased at the door. If 392 tickets were sold for a total of $4280, how many tickets were sold at the door?

260) Omar earns $17.00 per hour for a forty-hour week. His overtime rate is 1½ times any hours exceeding forty in a week. If Omar earned $807.50 last week, how many overtime hours did he work?

261) Mrs. Singh invested $20,000 in two investments paying 2% and 3% respectively. She earned $460 interest for the year. How much did Mrs. Singh invest at 3%?

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262) Mr. Johnson invested $10,000 and earned 7% in year one, -5% in year two and 2% in year three. How much money did he earn in year three in interest?

263) Kristina is in charge of billing for a company that does computer training. She is preparing an invoice for $1340 for 32 hours of work, which includes training at $70 per hour and preparation of a manual at $25 per hour. How many hours of training are included in the invoice?

264) Sunrise Foods is billing a customer for 120 drinks for a meeting. They supplied coffee at $2 per cup and tea at $1 per cup. If the total bill was $200, how many cups of coffee were sold?

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Answer Key Test name: Chap 02_10ce 1) A 2) B 3) C 4) D 5) E 6) A 7) B 8) C 9) D 10) E 11) C 12) D 13) E 14) A 15) B 16) C 17) D 18) E 19) A 20) B 21) C 22) D 23) E 24) A 25) B 26) C Version 1

27) D 28) E 29) A 30) B 31) E 32) E 33) A 34) B 35) C 36) B 37) C 38) D 39) C 40) C 41) E 42) C 43) E 44) B 45) B 46) A 47) B 48) A 49) D 50) D 51) B 52) C 53) A 54) A

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CHAPTER 3 1) What was the percent change in unit price when a box of tissues dropped from 200 to 150 tissues per box (with no change in the price per box)? A) 25% B) 20% C) 30% D) 35% E) 33.3%

2) What was the percent change in unit price when a box of tissues dropped from 400 to 350 tissues per box (with no change in the price per box)? A) 12.5% B) 15% C) 17.5% D) 11.7% E) 14.3%

3) What is the percent change in unit price of a bag of cookies if the number of cookies per bag is decreased by 15% (with no change in the price per bag)? A) 17.6% B) 15% C) 20% D) 10% E) 11.1%

4) A mortgage company dropped the interest rate it charges on mortgages from 4.5% to 3.9%. What percent reduction did this represent? Version 1

A) 6% B) 13.3% C) 15.4% D) 20.3% E) 15.7%

5) A loan company dropped the interest rate it charges on second mortgages from 8.7% to 7.3%. What percent reduction did this represent? A) 1.4% B) 19.2% C) 16.1% D) 14% E) 15.6%

6) If the Canadian dollar drops in value from.7589 to.7496, by what percentage does the Canadian dollar drop in value? A) 15% B) 12.4% C) 12.3% D) 1.23% E) 1.24%

7) If the Canadian dollar is worth 22% less than the U.S. dollar, by what percentage does the U.S. dollar exceed the value of the Canadian dollar?

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A) 22% B) 20% C) 25.2% D) 30.8% E) 28.2%

8) A car dealer normally lists cars at 25% above cost. During a sale the manger offered a 10% reduction. If a car sold for $20,812.50, what was the cost price to the dealership? A) $18,500 B) $23,125 C) $18,315 D) $16,650 E) $17,250

9) A car dealer offers a sale price of 10% off MSRP, which is applied before taxes of 12%. If the MSRP of the car is $18,550, what is the total percentage change of the price of the final cost of the car compared to the MSRP? A) -10.67% B) 8% C) 10.67% D) -.8% E) 12%

10) If the euro is worth 57% more than the Canadian dollar, how much less (in percentage terms) is the Canadian dollar worth than the euro?

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A) 43% B) 63.7% C) 36.3% D) 42% E) 45%

11)

What number is 30% less than 90? A) 88 B) 99 C) 107 D) 63 E) 125

12)

0.51% of $8500 is what amount? A) $43,444.44 B) $1663.04 C) $43.35 D) $166,304.35 E) $434.44

13)

35% of $180 is what amount? A) $63.00 B) $243.00 C) $117.00 D) $514.29 E) $276.92

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14)

If a list price is $10, what is the sale percentage of an item on sale for $8? A) 20% B) 2% C) 4% D) 10% E) 5%

15) After adding 2¼% to a sum of money, the new amount is $45,000.00. What was the original amount of money? A) $43,987.50 B) $44,009.78 C) $2,000,000.00 D) $46,035.81 E) $20,000.00

16) An item listed at 40% above cost was sold by a dealer during a special sale at a 15% reduction from the list price. What did the item cost the dealer if it was sold for $23,765.00? A) $23,494.81 B) $33,271.00 C) $19,970.59 D) $27,958.82 E) $43,965.25

17) After real estate fees of 3% had been deducted from the proceeds of the sale of a property, the real estate agent sent the vendor (seller) of the property $244,400. What was the amount of fees retained by the real estate agent? Version 1

A) $7558.76 B) $251,958.76 C) $7800.00 D) $7118.45 E) $237,281.55

18)

$100 is what percent less than $125? A) 125% B) 45% C) 25% D) 20% E) 15%

19)

What sum of money, increased by 7% equals $187.25? A) $200.36 B) $174.14 C) $180.25 D) $175.00 E) $170.00

20)

How much is 600 increased by 44%? A) 840 B) 644 C) 864 D) 1,367 E) 788

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21)

What amount, when reduced by 60% equals $840? A) $336 B) $900 C) $1,680 D) $1,400 E) $2,100

22) Your car can travel 100 km per 4.4 litres of fuel, and the manufacturer says you should be able to travel 100 km per 3.6 litres of fuel. What percent extra fuel are you burning per 100 kilometres? A) 24.6 B) 30 C) 1.2 D) 22.2 E) 20

23)

What percent of 36 is 90? A) 150% B) 140% C) 175% D) 200% E) 250%

24) A mutual fund paid 3.5%, 4%, 3.5%, 6%, and 5% over the past five years. If you had invested $1000 at the beginning of the five-year period, what was your investment worth at the end of the five-year period? Calculate the result to the nearest cent. Version 1

A) $1220.00 B) $1617.34 C) $1771.38 D) $1239.96 E) $1180.92

25) A mutual fund paid 5.5%, 9%, -8%, 3.5% and 5% over the past five years. If you had invested $2000 at the beginning of the five-year period, what was your investment worth at the end of the five-year period? Calculate the result to the nearest cent. A) $2300.00 B) $2699.37 C) $2570.83 D) $2608.09 E) $2299.46

26) A stock valued at $150 increased by 25% and then decreased by 25%. What was the value of the stock after the decrease? Calculate the result to the nearest cent. A) $140.63 B) $150.00 C) $187.50 D) $112.50 E) $125.00

27) A stock valued at $75 decreased by 20% and then increased by 20%. What was the value of the stock after the increase? Calculate the result to the nearest cent.

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A) $75.00 B) $72.00 C) $60.00 D) $90.00 E) $80.00

28) Three different brands compete in the same Canadian market and their sales for 2018 are as follows: Brand A $1.6 million, Brand B $2.3 million and Brand C $.9 million. Calculate the market share for each brand for both 2018. A) A 33.3% B 47.9% C 18.8% B) A 33% B 47% C 19% C) A 22.5% B 48.5% C 29.0% D) A 25.0% B 50.0% C 25.0% E) A 33.3% B 66.6% C 33.3%

29) Hires root beer and A&W have been fighting for dominance in the root beer drink industry for years. In one year, Hires held 5.88% of the soft drink market and A&W held 8.64% of the market. If the market as a whole consumed 12.4 million litres of soft drinks in the year, how many millions of litres of Hires and A&W were consumed?

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A) Hires 744,000 A&W 992,000 B) Hires 756,520 A&W 1,713,600 C) Hires 729,120 A&W 1,071,360 D) Hires 736,885 A&W 1,713,620 E) Hires 745,675 A&W 1,045,547

30) Canadian Industries tracks the annual sales from each of its three divisions to help evaluate performance and plan budgeting for the following year. Calculate the difference in market growth for mining over transportation? 2017

2018

Mining

1.25 million

1.45 million

Transportation

4.52 million

4.53 million

Retail

1.2 million

1.65 million

A) 26.14 B) 15.78 C) 18.92 D) 16.75 E) 17.43

31) Canadian Industries tracks the annual sales from each of its three divisions to help evaluate performance and plan budgeting for the following year. Calculate the difference in market growth for mining over the total for all three divisions? 2017

2018

Mining

1.25 million

1.45 million

Transportation

3.5 million

4.55 million

Retail

1.2 million

1.15 million

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A) 3.62 B) 4.25 C) 3.92 D) 4.17 E) 5.25

32) The top selling brand of vape machines sold 10,000 units at $89 per unit in 2018. What is their market share if the vape machine market had sales of $1.4M?

33) McDonalds two most popular sandwiches are Big Macs, with a 21% market share, and Quarter Pounder with Cheese, with a 14% market share. If sales in the quick service sandwich market were $4.5B for the year, what were sales for Big Macs and Quarter Pounders with Cheese?

34) The two top selling brands in a specific market hold 24% and 19% market shares, respectively. If the top selling brand sold 152,800, how many units of the second top selling brand were sold during the year? Round your answer to the nearest whole number.

35)

What is the percent rate if a quantity is

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of the base?

36)

What is the percent rate if a quantity is four times the size of the base?

37)

What is the percent rate if a quantity is

38)

If the percent rate is 1000%, what multiple is the portion of the base?

39)

If the percent rate is 0.01%, what fraction is the portion of the base?

40)

Calculate 1.75% of $350 accurate to the cent.

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of the base?

41)

Calculate

42)

What percent is $1.50 of $11.50? Calculate to three-figure accuracy.

43)

What percent is 88₵ of $44? Calculate to three-figure accuracy.

44)

$45 is 60% of what amount accurate to the cent?

45)

$69 is 30% of what amount accurate to the cent?

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of $666.66 accurate to the cent.

46)

What amount is 233.3% of $75 accurate to the cent?

47)

What amount is 0.075% of $1650 accurate to the cent?

48)

$134 is what percent of $67? Calculate to three-figure accuracy.

49)

$1.34 is what percent of $655? Calculate to three-figure accuracy.

50)

150% of $60 is what amount accurate to the cent?

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51)

of $1500 is what amount accurate to the cent?

52)

7½% of what amount is $1.46 accurate to the cent?

53)

12¾% of what amount is $27.50 accurate to the cent?

54)

What percent of $950 is $590? Calculate to three-figure accuracy.

55)

What percent of $590 is $950? Calculate to three-figure accuracy.

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56)

95% of what amount is $100 accurate to the cent?

57)

8⅓% of what amount is $10 accurate to the cent?

58)

30 m is what percent of 3 km? Calculate to three-figure accuracy.

59)

500 grams is what percent of 2.8 kilograms? Calculate to three-figure accuracy.

60)

How much is ½% of $10 accurate to the cent?

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61)

0.75% of $100 is what amount accurate to the cent?

62)

$180 is 120% of what amount accurate to the cent?

63)

$559.35 is 113% of what amount accurate to the cent?

64)

130½% of $455 is what amount accurate to the cent?

65)

0.0505% of $50,000 is what amount accurate to the cent?

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66)

$281.25 is 225% of what amount accurate to the cent?

67)

350% of what amount is $1000 accurate to the cent?

68)

$10 is 0.5% of what amount accurate to the cent?

69)

$1.25 is ¾% of what amount accurate to the cent?

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70) Cecilia and Nathan estimate their total cost for a vacation in Australia to be $14,775. a) What percentage is this cost of their combined gross monthly income of $8775? Calculate to three-figure accuracy. b) If 72% of their gross monthly income is already consumed by rent, taxes, car payments, and other regular living expenses, what percentage is the trip's cost of their remaining annual disposable income? Calculate to three-figure accuracy.

71) In a one-month period, a convenience store had sales of $65,560 from its gas pumps and sales of $36,740 from other in-store products. What percent of total sales were from gasoline? Calculate to three-figure accuracy.

72) A 540 ml can of K-9 Diet dog food contains 28% protein, 15.5% fat and 6% fiber. a) How many ml of other ingredients are there in the can? b) The recommended serving for a small dog is 5/8 of a can. How many ml of protein are in one small dog serving?

73) A provincial Minister of Education recently announced that his government's forecast expenditure of $2.68 billion on education next year represents 23.5% of the provincial budget. Rounded to the nearest million dollars, what is the province's total budget for the next year?

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74) Unusually high snowfall during the past winter resulted in Brockton's costs for snow plowing and removal to reach $320,200. This represents 127% of its budgeted cost. Rounded to the nearest $100, what amount did Brockton budget for snow clearance?

75) The royalty rate performing artists receive from songs downloaded from Apple iTunes is 5.7%. If a band received royalties from Apple of $99,736.41 for a year, how many song downloads at $0.99 each did the band have for that year?

76) Your regular workweek is 7.5 hours per day for five days. If you do not work on seven public holidays and you receive two weeks vacation, what percentage of the total hours in a year are you actually at work? Assume that a year has exactly 52 weeks. Calculate to three-figure accuracy.

77) In the month of December, Bernie's Bargain Barn had sales of $9,820 in their clothing department, $4,035 in their shoe department and $1830 in accessories. If 17% of the merchandise purchased from the clothing department was returned, 8% was returned from the shoe department and 3% was returned in accessories, what percent of the total revenue for December were the returns if full refunds were given on all merchandise? Calculate to fourfigure accuracy.

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78) Ivory hand-soap is advertised as being of impurities are in a 150-gram bar of Ivory soap?

pure. (It floats!) How many milligrams

79) An online discount broker charges a transaction fee of $30 plus an additional 3 cents per share. A full-service broker charges a commission rate of 2.4% of the total dollar value of a stock transaction. Suppose you purchase 200 shares of the Bank of Nova Scotia at $55.40 per share. What percentage are the total fees charged by the online discount broker of the commission you would pay the full-service broker? Calculate to three-figure accuracy.

80) A full-service broker charges a commission rate of 2.2% of the total dollar value of a stock transaction. A discount broker charges a transaction fee of $25 plus an additional five cents per share. Suppose you purchase 800 shares of Talisman Energy at $21.75 per share. What percentage of the commission fee charged by the full-service broker would you save by using the discount broker? Calculate to three-figure accuracy.

81) A province's progressive income tax rates are structured as follows: 16% tax on the first $15,000 of taxable income, 26% on the next $20,000, 35% on the next $40,000, and 45% on any additional taxable income. Calculating to three-figure accuracy, what percentage is an individual's total income tax of his (taxable) income if his taxable income for a year is: a) $33,000? b) $66,000? c) $99,000?

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82) In 2009, Canada's population was 33,700,000 and Japan's population was 127,600,000. Canada's land area is 9,093,500 square kilometres but Japan's area is only 377,835 square kilometres. To the nearest 0.01%, what percentage was Canada's population density (people per square kilometre) of Japan's population density in 2009? Calculate to three-figure accuracy.

83) A property sold for 250% of what the vendors originally paid for it. What was that original price if the recent selling price was $210,000?

84) The Calgary Flames hockey team announced that its season's ticket sales of 11,542 represents 67.50% of the Scotiabank Saddledome's seating capacity. Rounded to the nearest 100, how many seats were not sold to season's ticket holders?

85) Studies have shown that the average adult male requires 7.5 hours of sleep a night and females require 20 minutes more than males. If the average life expectancy in Canada is 82.7 years for women and 78 years for men, what percentage are the male waking hours of a female's waking hours for a lifetime?

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86) Stan is a real estate salesperson. He receives 60% of the 4.8% commission that the real estate agency charges on sales. If his income for the past year was $150,480, what was the dollar value of his sales for the year?

87) A stockbroker is paid 45% of the commission her firm charges her clients. If she personally received $134.55 on an $11,500 transaction, what is the firm's commission rate? Calculate to three-figure accuracy.

88) A mortality rate indicates the fraction of individuals in a population who are expected to die in the next year. a) If the mortality rate among 35-year-old males is 0.34%, what is the expected number of deaths per year among a province's total of 50,000 such males? b) If 35year-old males constitute 0.83% of the overall population in a city of 1.45 million, how many deaths of such males are expected in that city in a year?

89) Calculate the missing value: Initial Value = $95; Final Value = $100; Percent Change = ? Calculate the answer accurate to the nearest 0.01%.

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90) Calculate the missing value: Initial Value = $100; Final Value = $95; Percent Change = ? Calculate the answer accurate to the nearest 0.01%.

91) Calculate the missing value: Initial Value = 35 kg; Final Value = 135 kg; Percent Change = ? Calculate the answer accurate to the nearest 0.01%.

92) Calculate the missing value: Initial Value = 135 kg; Final Value = 35 kg; Percent Change = ? Calculate the answer accurate to the nearest 0.01%.

93) Calculate the missing value: Initial Value = 0.11; Final Value = 0.13; Percent Change = ? Calculate the answer accurate to the nearest 0.01%.

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94) Calculate the missing value: Initial Value = 0.095; Final Value = 0.085; Percent Change = ? Calculate the answer accurate to the nearest 0.01%.

95) Calculate the missing value: Initial Value = $134.39; Final Value = ? Percent Change = 12%. Calculate the answer accurate to the cent.

96) Calculate the missing value: Initial Value = 112 g; Final Value = ? Percent Change = 112%. Calculate the answer accurate to the nearest 0.01 g.

97) Calculate the missing value: Initial Value = 26.3 cm; Final Value = ? Percent Change = 300%. Calculate the answer accurate to the nearest 0.1 cm.

98) Calculate the missing value: Initial Value = 0.043; Final Value = ? Percent Change = 30%. Calculate the answer to three-figure accuracy.

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99) Calculate the missing value: Initial Value = ? Final Value = $75; Percent Change = 200%. Calculate the answer accurate to the cent.

100) Calculate the missing value: Initial Value = ? Final Value = $75; Percent Change = -50%. Calculate the answer accurate to the cent.

101)

$100 is what percent more than $90? Calculate the answer accurate to the nearest 0.01%.

102)

$100 is what percent less than $110? Calculate the answer accurate to the nearest 0.01%.

103) cent.

What amount when increased by 25% equals $100? Calculate the answer accurate to the

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104) What sum of money when increased by 7% equals $52.43? Calculate the answer accurate to the cent.

105)

$75 is 75% more than what amount? Calculate the answer accurate to the cent.

106)

How much is $56 increased by 65%? Calculate the answer accurate to the cent.

107) $754.30 is what percent less than $759.00? Calculate the answer accurate to the nearest 0.01%.

108) 77,787 is what percent more than 77,400? Calculate the answer accurate to the nearest 0.01%. Version 1

109)

How much is $75 increased by 75%? Calculate the answer accurate to the cent.

110)

$100 is 10% less than what number? Calculate the answer accurate to the cent.

111) cent.

What amount after a reduction of 20% equals $100? Calculate the answer accurate to the

112) cent.

What amount after a reduction of 25% equals $50? Calculate the answer accurate to the

113) cent.

What amount after a reduction of

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equals $549? Calculate the answer accurate to

114)

How much is $900 after a decrease of 90%? Calculate the answer accurate to the cent.

115)

How much is $103 after a decrease of 2%? Calculate the answer accurate to the cent.

116)

How much is $103 after a decrease of 100%? Calculate the answer accurate to the cent.

117) $750 is what percent more than $250? Calculate the answer accurate to the nearest 0.01%.

118)

$250 is what percent less than $750? Calculate the answer accurate to the nearest 0.01%.

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119)

How much is $10,000 increased by ¾%? Calculate the answer accurate to the cent.

120)

How much is $1045 decreased by 0.5%? Calculate the answer accurate to the cent.

121) cent.

What amount when increased by 150% equals $575? Calculate the answer accurate to the

122) What amount after being increased by 210% equals $465? Calculate the answer accurate to the cent.

123)

How much is $150 after an increase of 150%? Calculate the answer accurate to the cent.

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124) The total cost of a coat (including HST of 13% of the retail price) is $281.37. What is the retail price of the coat?

125) On the purchase of a plasma TV, the total cost to the customer (including 5% GST and 7% PST) came to $2797.76. How much GST and how much PST did the customer pay?

126) In 2009, Canada's population reached 33,710,000, a level that was 10.56% higher than ten years earlier. Rounded to the nearest 10,000, what was the population figure for 1999?

127) Becker Tools sold 32,400 hammers at an average price of $15.10 in Year 1 and 27,450 hammers at an average price of $15.50 in Year 2. What was the percent change from Year 1 to Year 2 in: a) The number of hammers sold? b) The average selling price? c) The revenue from the sale of hammers?

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128) An investor purchased shares of Digger Resources at a price of $0.55 per share. One year later, the shares traded at $1.55, but they fell back to $0.75 by the end of the second year after the date of purchase. Calculate the percent change in the share price accurate to the nearest 0.01%: a) In the first year. b) In the second year. c) Over both years.

129) What was the percent change in unit price when the regular size of Lily soap bars dropped from 100 g to 90 g (with no change in the price per bar)? Calculate the answer accurate to the nearest 0.01%.

130) After Island Farms increased the container size for its premium ice cream from 1.65 L to 2.2 L, the retail price increased from $5.49 to $7.98. What was the percent change in the unit price? Calculate the answer accurate to the nearest 0.01%.

131) Fluffy laundry detergent reduced its regular size from 3.6 kg to 3 kg. The retail price dropped from $7.98 to $6.98. What was the percent change in the unit price? Calculate the answer accurate to the nearest 0.01%.

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132) The retail price of Paradise Island cheddar cheese dropped from $10.98 to $9.98 when the package size was reduced from 700 g to 600 g. What was the percent change in the unit price? Calculate the answer accurate to the nearest 0.01%.

133) The Edmonton Real Estate Board reports that the average selling price of homes last month in the greater Edmonton area was $338,500, an increase of 8.7% over the past year. Rounded to the nearest $100, what was the average selling price one year ago?

134) Mountain Sports is advertising "30% Off All Skiing Equipment" in its Spring Clearance Sale. On ski boots marked down to $348.60, what is the regular price?

135) Last year, Canada's exports to the U.S. exceeded imports from the U.S. by 23%. By what percentage were the United States' exports to Canada less than its imports from Canada? Calculate the answer accurate to the nearest 0.01%.

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136) For the final seven months of 2013, Apple Computer projects sales of 55.0 million iPhones. This would outpace the projected sales of the Galaxy S4 phones by 35%. What are the projected sales for the Galaxy phone for the same period (rounded to the nearest 10,000)?

137) Projected sales for the iPhone in 2012 were 116.4 million which represented an increase of 17.2% on phones sold in 2011. How many iPhones were sold in 2011(rounded to the nearest 10,000)?

138) Mutual Fund A charges an annual management fee of 2.38% of money under management. The corresponding management fee for Mutual Fund B is 1.65%. On the same invested amount, what percentage more fees will you pay to Fund A than to Fund B? Calculate the answer accurate to the nearest 0.01%.

139) In January of 2014, the Nova Scotia government reduced the HST rate from 15% to 14%. What was the resulting percent reduction in the dollar amount of HST consumers paid on any item? Calculate the answer accurate to the nearest 0.01%.

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140) In April of 2013, Facebook had 164,130,000 unique visitors, up 6.18% from a year earlier. What was the absolute increase, year-over-year, in the number of unique visitors (rounded to the nearest 10,000)?

141) The price of the shares of Nadir Explorations Ltd. fell by 76% in the past year, to the current price of $0.45 per share. In dollars and cents, how much did the price of each share drop in the past year?

142) A piece of machinery has depreciated by 55% of its original purchase price during the past four years, to the current value of $24,300. What is the dollar amount of the total depreciation during the last four years?

143) General Paint and Cloverdale Paint normally offer the same prices. For its Spring Specials Sale, General Paint has marked down the price of outdoor latex paint by 30%. What percentage more will you pay if you buy paint at the regular price at Cloverdale? Calculate the answer accurate to the nearest 0.01%.

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144) Sears reported that its sales in January were down 17.4% from its sales in December. What percentage were December sales of January sales? Calculate the answer accurate to the nearest 0.01%.

145) If operating expenses are 40% of revenue, by what percentage does revenue exceed operating expenses?

146) Elegance shampoo has a suggested retail price of $4.49 for its 500 ml bottle. The manufacturer of the shampoo wants to increase the unit retail price by 10% at the same time that it reduces the container size to 425 ml. What should be the suggested retail price of the smaller bottle?

147) The manufacturer of Caramalt chocolate bars wants to implement a 7.5% increase in the unit retail price along with a reduction in the bar size from 100 g to 80 g. If the current retail price of a 100-g bar is $1.15, what should be the price of an 80-g bar?

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148) Goldfield Resources' share price fell by $4 in Year 1 and then rose by $4 in Year 2. If the share price was $6 at the end of Year 1, what was the percent change in share price each year? Calculate the answer accurate to the nearest 0.01%.

149) If the Canadian dollar is worth 6.5% less than the U.S. dollar, by what percentage does the U.S. dollar exceed the value of the Canadian dollar? Calculate the answer accurate to the nearest 0.01%.

150) The owner listed a property for 140% more than she paid for it 12 years ago. After receiving no offers during the first 3 months of market exposure, she dropped the list price by 10%, to $172,800. What was the original price that the owner paid for the property?

151) A car dealer normally lists new cars at 22% above cost. A demonstrator model was sold for $17,568 after a 10% reduction from the list price. What amount did the dealer pay for this car?

152) If the denominator of a fraction decreases by 20% and the numerator remains unchanged, by what percentage does the value of the fraction change? Version 1

153) The Hampton District school board decided to reduce the number of students per teacher next year by 15%. If the number of students does not change, by what percentage must the number of teachers be increased?

154) The Lightning laser printer prints 30% more pages per minute than the Reliable laser printer. What percentage less time than the Reliable will the Lightning require for long print jobs? Calculate the answer accurate to the nearest 0.01%.

155) If the euro is worth 39% more than the Canadian dollar, how much less (in percentage terms) is the Canadian dollar worth than the euro? Calculate the answer accurate to the nearest 0.01%.

156) A hospital can increase the dollar amount budgeted for nurses' overtime wages during the next year by only 3%. The nurses' union has just won a 5% hourly rate increase for the next year. By what percentage must the hospital cut the number of overtime hours in order to stay within budget? Calculate the answer accurate to the nearest 0.01%.

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157)

How much is $10 after an increase of 900%?

158) Manvir bought a stock for $80 last week. Yesterday, the stock went up by 20%. Today it dropped by 20%. What is the current value of the stock?

159) Cliff just received a raise to $18.45 per hour from $18.00. What is the percent increase in his hourly rate?

160) If the CPI increases from 120.0 to 125.0 over a period, what is the percent increase in the CPI?

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161) A coat is reduced by 30% to a sale price of $45.99. What was the selling price of the coat?

162) Sales have increased by 10% over last year. What percentage less were last year's sales than this year's sales? Calculate the answer accurate to the nearest 0.01%.

163) Madison found a sweater at a suburban discount mall for 25% less than at a store in downtown Toronto. What percentage more would she have paid if she bought the sweater in downtown Toronto? Calculate the answer accurate to the nearest 0.01%.

164) If December sales were 30% more than November sales, by what percent are November sales less than December sales? Calculate the answer accurate to the nearest 0.01%.

165) If operating expenses are 25% of revenue, by what percentage does revenue exceed operating expenses?

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166) Wilfredo can do a task 35% faster than Kunal. What percentage less time than Kunal does Wilfredo take to do a task? Calculate the answer accurate to the nearest 0.01%.

167)

Calculate the missing quantities. Calculate percentages accurate to the nearest 0.01%.

Initial Value $100

168)

$10

Final Value $110

Income Yield Capital Gain Yield Rate of Total Return ?

Calculate the missing quantities. Calculate percentages accurate to the nearest 0.01%.

Initial Value $100

169)

Income

Income $10

Final Value $90

Income Yield Capital Gain Yield Rate of Total Return ?

Calculate the missing quantities. Calculate percentages accurate to the nearest 0.01%.

Initial Value $90

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Income $10

Final Value $86

Income Yield Capital Gain Yield Rate of Total Return ?

170)

Calculate the missing quantities. Calculate percentages accurate to the nearest 0.01%.

Initial Value

Income

$135

171)

$1367

$151

Income $141

Final Value $1141

Income Yield Capital Gain Yield Rate of Total Return ?

Calculate the missing quantities. Calculate percentages accurate to the nearest 0.01%.

Initial Value $879

173)

Income Yield Capital Gain Yield Rate of Total Return

Calculate the missing quantities. Calculate percentages accurate to the nearest 0.01%.

Initial Value

172)

Final Value

Income $280

Final Value $1539

Income Yield Capital Gain Yield Rate of Total Return ?

Calculate the missing quantities. Calculate percentages accurate to the nearest 0.01%.

Initial Value $2500

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Income $200

Final Value $0

Income Yield Capital Gain Yield Rate of Total Return ?

174)

Calculate the missing quantities. Calculate percentages accurate to the nearest 0.01%.

Initial Value $1380

175)

Income $250

Income

$2000

Final Value ?

Income

$4300

Income Yield Capital Gain Yield Rate of Total Return

$2200

Final Value ?

Income Yield Capital Gain Yield Rate of Total Return

$3950

-5%

Calculate the missing quantities. Calculate percentages accurate to the nearest 0.01%.

Initial Value $3730

178)

$2875

Calculate the missing quantities. Calculate percentages accurate to the nearest 0.01%.

Initial Value

177)

Income Yield Capital Gain Yield Rate of Total Return

Calculate the missing quantities. Calculate percentages accurate to the nearest 0.01%.

Initial Value

176)

Final Value

Income

Final Value

$250

Income Yield Capital Gain Yield Rate of Total Return ?

Calculate the missing quantities. Calculate percentages accurate to the nearest 0.01%.

Initial Value $1800

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Income $50

Final Value

Income Yield Capital Gain Yield Rate of Total Return ?

150%

179)

Calculate the missing quantities. Calculate percentages accurate to the nearest 0.01%.

Initial Value

Income ?

180)

Income ?

$1800

-40%

-30%

Final Value

$100

Income Yield Capital Gain Yield Rate of Total Return ?

15%

Calculate the missing quantities. Calculate percentages accurate to the nearest 0.01%.

Initial Value

Income

$1600

182)

Income Yield Capital Gain Yield Rate of Total Return

Calculate the missing quantities. Calculate percentages accurate to the nearest 0.01%.

Initial Value

181)

Final Value

Final Value ?

Income Yield Capital Gain Yield Rate of Total Return ?

Calculate the missing quantities. Calculate percentages accurate to the nearest 0.01%.

Initial Value

Income ?

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$150

Final Value $270

Income Yield Capital Gain Yield Rate of Total Return ?

80%

183) One year ago, $13,000 was invested in units of a mutual fund. The units paid a distribution of $260 during the year, but the mutual fund units are now worth only $11,400. Calculated to the nearest 0.01%, what has been the: a) Income yield? b) Capital gain yield? c) Rate of total return?

184) Rose purchased units of the Trimark Fund 1 year ago at $24.10 per unit. Today they are valued at $25.50. On the intervening December 31, there was a distribution of $0.83 per unit. Accurate to the nearest 0.01%, calculate Rose's income yield, capital gain yield, and rate of total return for the year.

185) The market value of Stephanie's bonds has declined from $1053.25 to $1031.75 per bond during the past year. In the meantime she has received two semiannual interest payments of $35. Calculate Stephanie's income yield, capital gain yield, and rate of total return for the year. Determine yields and rates of return accurate to the nearest 0.01%.

186) Vitaly's shares of Offshore Petroleum have dropped in value from $36.75 to $32.25 during the past year. The shares paid a $0.50 per share dividend 6 months ago. Calculate Vitaly's income yield, capital gain yield, and rate of total return for the year. Determine yields and rates of return accurate to the nearest 0.01%.

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187) Jeff purchased some Target preferred shares on the Toronto Stock Exchange for $56.49. The shares pay a quarterly dividend of $0.30. Twelve months later the shares were trading at $65.75. What was Jeff's rate of total return for the year, accurate to the nearest 0.01%?

188) In the last year, the market value of the Muirs' bonds has declined from $1040.25 to $1030.75 each, and the coupons paid $30 in interest semiannually. Calculate the following: a) Income yield. Determine the yield accurate to the nearest 0.01%. b) Capital gain yield. Determine the yield accurate to the nearest 0.01%. c) Rate of total return. Calculate rates of return accurate to the nearest 0.01%.

189) One year ago, Art Vandelay bought Norwood Industries shares for $37 per share. Today they are worth $40 per share. During the year, Art received dividends of $0.60 per share. Accurate to the nearest 0.01%, what was his income yield, capital gain yield, and rate of total return for the year?

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190) One year ago, Christos bought 1000 units of the Dominion Aggressive Growth Fund at $20.35 per unit. Today a unit's value is $19.10. During the year, the fund made a distribution of $0.40 per unit. Accurate to the nearest 0.01%, determine Christo's: a) Income yield. b) Capital gain yield. c) Rate of total return.

191) One year ago, Morgan invested $5000 to purchase 400 units of a mutual fund. He has just noted in the Financial Post that the fund's rate of return on investment for the year was 22% and that the current price of a unit is $13.75. What amount did the fund distribute as income per unit during the year? Calculate the result to the nearest cent.

192) The Globe and Mail Report on Business noted that the shares of Compact Computers produced a 55% rate of total return in the past year. The shares paid a dividend of $0.72 per share during the year, and they currently trade at $37.50. What was the price of the shares 1 year ago? Calculate the result to the nearest cent.

193) Gabriel received $200 of income from an investment during the past year. This represents an income yield of 4%. If the capital gain yield for the year was 10%, what was the value of the investment (not including income) at the end of the year? Calculate the result to the nearest cent.

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194) An $8600 investment was worth only $7900 one year later. If the rate of total return for the year was -5%, how much income was received from the investment during the year? Calculate the result to the nearest cent.

195)

What is meant by a "capital loss"?

196)

What is meant by the "total return" from an investment?

197) Does the combined effect of a 20% increase followed by a 20% decrease differ from the combined effect of a 20% decrease followed by a 20% increase? Justify your answer.

198) How much will an investment of $100 be worth after 20 years if it increases in value by 25% in half of the years, but declines by 20% in the other years?

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199) The federal government cut transfer payments to the provinces by a total of 20% over a five-year period. In the next budget speech, the Minister of Finance announced "the level of transfer payments will be restored to their former level by a 20% increase to be phased in over the next two years." Is this an accurate statement? Explain briefly.

200) Adjusted for stock splits, the price of Microsoft shares rose 6.84%, 13.71%, 13.50%, and 36.04% in the years 2011 to 2014, respectively. In 2015, the share prices fell 1.13%. a) What was the overall five-year percent change in the price of Microsoft shares? Determine accurate to the nearest 0.01%. b) If the share price at the end of 2015 was $45.57, what was the price at the beginning of 2011?

201) A company's annual report states that the prices of its common shares had changes of 23%, 10%, -15%, and 5% during the past 4 fiscal years. If the shares were trading at $30.50 just after the 5% increase in the most recently completed year: a) What was the price of the shares at the beginning of the 4-year period? b) How much (in dollars and cents) did the price decline in the third year?

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202) Victor cannot find the original record of his purchase four years ago of units of the Imperial Global Fund. The current statement from the fund shows that the total current value of the units is $47,567. From a mutual fund database, Victor found that the fund's rates of return for Years 1 to 4 have been 15.4%, 24.3%, 32.1%, and -3.3%, respectively. a) What was Victor's original investment in the fund? b) What was the dollar increase in the value of his investment in Year 3?

203) One of the more volatile mutual funds in recent years has been the AGF China Focus Fund. The fund's annual returns in successive years from 2007 to 2012 inclusive were 30.53%, 41.67%, 27.75%, 1.27%, -20.71% and 17.0%, respectively. What was the fund's equivalent compound annual return for the six years ended December 31, 2012? Calculate percentages accurate to the nearest 0.01%.

204) A portfolio earned -13%, 18%, 5%, 24%, and -5% in five successive years. What was the portfolio's five-year compound annual return? Calculate percentages accurate to the nearest 0.01%.

205) The Fidelity Latin America Sr B fund (managed by Fidelity Investments Canada) has had rather volatile returns for the five years ending December 31, 2012. As of December 31, 2012, what three-year and five-year compound annual returns did the fund report if its annual returns in successive years from 2008 to 2012 inclusive were -41.8%, 62.5%, 9.84%, -15.3% and 0.54%, respectively? Calculate percentages accurate to the nearest 0.01%.

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206) The price of Bionex Inc. shares rose by 25% in each of 2 successive years. If they began the 2-year period at $12 per share, what was the percent increase in price over the entire 2 years? Determine rates of return accurate to the nearest 0.01%.

207) The price of Biomed Corp. shares began a two-year period at $12, but fell 25% in each year. What was their overall percent decline in price? Determine rates of return accurate to the nearest 0.01%.

208) What rate of return in the second year of an investment will wipe out a 50% gain in the first year? Determine rates of return accurate to the nearest 0.01%.

209) What rate of return in the second year of an investment will nullify a 25% return on investment in the first year? Determine rates of return accurate to the nearest 0.01%.

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210) What rate of return in the second year of an investment is required to break even after a 50% loss in the first year? Determine rates of return accurate to the nearest 0.01%.

211) What rate of return in the second year of an investment is required to break even after a rate of return of -20% in the first year? Determine rates of return accurate to the nearest 0.01%.

212) After two consecutive years of 10% rates of return, what rate of return in the third year will produce a cumulative gain of 30%? Determine rates of return accurate to the nearest 0.01%.

213) After two consecutive years of 10% losses, what rate of return in the third year will produce a cumulative loss of 30%? Determine rates of return accurate to the nearest 0.01%.

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214) In 3 successive years the price of the common shares of XYZ Ltd. fell 35%, 55%, and 80%, ending the third year at 75 cents. a) What was the share price at the beginning of the 3-year skid? Calculate the result to the nearest cent. b) How much (in dollars and cents) did the share price drop in the third year? Calculate the result to the nearest cent.

215) Three years ago, General Avionics announced plans to triple its annual R&D spending over the next 4 years. If R&D spending was increased by 25%, 30%, and 35% in the first 3 years, what minimum percent increase is required in the fourth year to reach the target? Calculate percentages accurate to the nearest 0.01%.

216) An investor purchased preferred shares on the Toronto Stock Exchange for $15.00. The shares pay a semi-annual dividend of $1.12. Six months later, the shares were trading at $14.50. What was the rate of total return for the six-month period? Calculate rates of return accurate to the nearest 0.01%.

217) What rate of return in the second year of an investment is required to break even after a 30% loss in the first year? Calculate rates of return accurate to the nearest 0.01%.

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218) After two consecutive years of 7% rates of return, what rate of return in the third year will produce a cumulative gain of 25%? Calculate rates of return accurate to the nearest 0.01%.

219) Company Name

Share price ($) at the end of: 2012

2013

Dividends ($) paid in:

2014

2013

2014

TD Bank

84.33

94.24

47.78

0.41

Potash Corporation

40.69

32.96

35.32

0.35

Cameco Corporation

19.59

22.04

19.05

0.10

Suncor Energy

32.71

37.24

36.90

0.20

0.28

BlackBerry Ltd.

11.80

7.90

12.74

0.00

Name of Mutual Fund

Unit price ($) at the end of: 2012

2013

Distribution ($) in:

2014

2013

2014

AGF Canadian Dividend Fund

41.48

46.27

49.14

3.20

2.90

Mawer New Canada Fund

47.98

69.92

73.42

1.76

4.92

BMO Dividend Fund

45.43

52.80

58.60

0.75

1.30

Desjardins Dividend Growth Fund

14.37

17.23

18.36

0.16

0.46

Scotia Canadian Bond Fund

11.71

11.16

11.72

0.35

0.36

Calculate the income yield, capital gain yield, and rate of total return in 2014 for Potash Corporation's shares and Mawer New Canada Fund units. Determine yields and rates of return accurate to the nearest 0.01%.

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220) Company Name

Share price ($) at the end of: 2012

2013

Dividends ($) paid in:

2014

2013

2014

TD Bank

84.33

94.24

47.78

0.41

Potash Corporation

40.69

32.96

35.32

0.35

Cameco Corporation

19.59

22.04

19.05

0.10

Suncor Energy

32.71

37.24

36.90

0.20

0.28

BlackBerry Ltd.

11.80

7.90

12.74

0.00

Name of Mutual Fund

Unit price ($) at the end of: 2012

2013

Distribution ($) in:

2014

2013

2014

AGF Canadian Dividend Fund

41.48

46.27

49.14

3.20

2.90

Mawer New Canada Fund

47.98

69.92

73.42

1.76

4.92

BMO Dividend Fund

45.43

52.80

58.60

0.75

1.30

Desjardins Dividend Growth Fund

14.37

17.23

18.36

0.16

0.46

Scotia Canadian Bond Fund

11.71

11.16

11.72

0.35

0.36

Calculate the income yield, capital gain yield, and rate of total return in each of 2013 and 2014 for Cameco Corporation shares and Desjardins Dividend Growth Fund units. Determine yields and rates of return accurate to the nearest 0.01%.

221) Company Name

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Share price ($) at the end of:

Dividends ($) paid in:

2012

2013

2014

2013

2014

TD Bank

84.33

94.24

47.78

0.41

Potash Corporation

40.69

32.96

35.32

0.35

Cameco Corporation

19.59

22.04

19.05

0.10

Suncor Energy

32.71

37.24

36.90

0.20

0.28

BlackBerry Ltd.

11.80

7.90

12.74

0.00

Name of Mutual Fund

Unit price ($) at the end of: 2012

2013

Distribution ($) in:

2014

2013

2014

AGF Canadian Dividend Fund

41.48

46.27

49.14

3.20

2.90

Mawer New Canada Fund

47.98

69.92

73.42

1.76

4.92

BMO Dividend Fund

45.43

52.80

58.60

0.75

1.30

Desjardins Dividend Growth Fund

14.37

17.23

18.36

0.16

0.46

Scotia Canadian Bond Fund

11.71

11.16

11.72

0.35

0.36

Calculate the income yield, capital gain yield, and rate of total return in each of 2013 and 2014 for BlackBerry shares and Scotia Canadian Bond Fund units. Determine yields and rates of return accurate to the nearest 0.01%.

222) Company Name

Share price ($) at the end of: 2012

2013

Dividends ($) paid in:

2014

2013

2014

TD Bank

84.33

94.24

47.78

0.41

Potash Corporation

40.69

32.96

35.32

0.35

Cameco Corporation

19.59

22.04

19.05

0.10

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Suncor Energy

32.71

37.24

36.90

0.20

0.28

BlackBerry Ltd.

11.80

7.90

12.74

0.00

Name of Mutual Fund

Unit price ($) at the end of: 2012

2013

Distribution ($) in:

2014

2013

2014

AGF Canadian Dividend Fund

41.48

46.27

49.14

3.20

2.90

Mawer New Canada Fund

47.98

69.92

73.42

1.76

4.92

BMO Dividend Fund

45.43

52.80

58.60

0.75

1.30

Desjardins Dividend Growth Fund

14.37

17.23

18.36

0.16

0.46

Scotia Canadian Bond Fund

11.71

11.16

11.72

0.35

0.36

Assume that the Suncor Energy shares will pay a $0.54 per share dividend in 2015. What must the share price be at the end of 2015 for a total rate of return in 2015 of 10%? Calculate the result accurate to the cent.

223) Company Name

Share price ($) at the end of: 2012

2013

Dividends ($) paid in:

2014

2013

2014

TD Bank

84.33

94.24

47.78

0.41

Potash Corporation

40.69

32.96

35.32

0.35

Cameco Corporation

19.59

22.04

19.05

0.10

Suncor Energy

32.71

37.24

36.90

0.20

0.28

BlackBerry Ltd.

11.80

7.90

12.74

0.00

Name of Mutual Fund

Unit price ($) at the end of:

AGF Canadian

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2012

2013 41.48

Distribution ($) in:

2014 46.27

2013 49.14

2014 3.20

2.90

Dividend Fund Mawer New Canada Fund

47.98

69.92

73.42

1.76

4.92

BMO Dividend Fund

45.43

52.80

58.60

0.75

1.30

Desjardins Dividend Growth Fund

14.37

17.23

18.36

0.16

0.46

Scotia Canadian Bond Fund

11.71

11.16

11.72

0.35

0.36

Assume that the Potash Corporation shares will pay a $0.48 per share dividend in 2015. What must the share price be at the end of 2015 for a total rate of return in 2015 of 7%? Calculate the result accurate to the cent.

224) The following table shows the rates of total return in successive years from 2010 to 2014 for the Mawer New Canada Fund and for the benchmark Toronto Stock Exchange S&P/TSX Composite Index. By how much did the mutual fund's overall percentage return exceed or fall short of the Index's growth? Determine rates of return accurate to the nearest 0.01%. Fund Name

Rate of total return (%) 2010

2011

2012

2013

2014

Mawer New Canada Fund

23.91

1.09

16.36

49.42

12.19

S&P/TSX Composite Total Return Index

8.82

-1.49

8.17

11.48

12.06

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225) The following table presents the rates of total return in successive years from 2010 to 2014 for the BMO Dividend Fund and for the benchmark Toronto Stock Exchange S&P/TSX Composite Index. By how much did the mutual fund's overall percentage return exceed or fall short of the Index's growth? Determine rates of return accurate to the nearest 0.01%. Fund Name

Rate of total return (%) 2010

2011

2012

2013

2014

BMO Dividend Fund

9.71

-2.62

6.92

17.91

13.54

S&P/TSX Composite Total Return Index

8.82

-1.49

8.17

11.48

12.06

226) The following table presents the rates of total return in successive years from 2010 to 2014 for the Fidelity Canadian Asset Allocation Fund and for the benchmark Toronto Stock Exchange S&P/TSX Composite Index. By how much did the mutual fund's overall percentage return exceed or fall short of the Index's growth? Determine rates of return accurate to the nearest 0.01%. Fund Name

Rate of total return (%) 2010

2011

2012

2013

2014

Fidelity Canadian Asset Allocation Fund

11.09

-4.25

3.83

11.34

11.06

S&P/TSX Composite Total Return Index

8.82

-1.49

8.17

11.48

12.06

227) The following table presents the rates of total return in successive years from 2010 to 2014 for the PH&N Bond Fund and for the benchmark Toronto Stock Exchange S&P/TSX Composite Index. By how much did the mutual fund's overall percentage return exceed or fall short of the Index's growth? Determine rates of return accurate to the nearest 0.01%.

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Fund Name

Rate of total return (%) 2010

2011

2012

2013

2014

PH&N Bond Fund

6.85

8.33

3.43

-1.26

8.66

S&P/TSX Composite Total Return Index

8.82

-1.49

8.17

11.48

12.06

228)

Can the income yield from an investment be negative? Explain or give an example.

229)

Is it possible for the capital gain yield to exceed 100%? Explain or give an example.

230)

Is it possible for a capital loss to be worse than -100%? Explain or give an example.

231) If a series of compound percent changes are all positive, is the overall percent change larger or smaller than the sum of the individual changes? Justify your answer.

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232) If a series of compound percent changes are all negative, is the overall percent decrease larger or smaller (in magnitude) than the sum of the individual changes? Justify your answer.

233)

What amount is 17.5% more than $29.43?

234) You have to pay a premium of 18% to purchase a $500 bond. What is the price of the bond?

235) You need to reduce your current staff of 120 people by 15%, how many people do you have to layoff?

236)

What amount reduced by 80% leaves $100?

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237)

What amount reduced by 15% equals $100?

238)

What is $47.50 increased by 320%?

239)

What amount when decreased by 62% equals $213.56?

240) If you receive 55.5% off of a stereo for a final sale, what is the original price if the discounted price is $200.

241)

What amount when increased by 125% equals $787.50?

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242)

What amount is 30% less than $300?

243)

What percent of $6.39 is $16.39? Calculate to four-figure accuracy.

244)

80% of what amount is $100?

245)

of what amount is $1.00?

246)

Fifteen minutes is what percentage of two hours?

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247)

180 days is what percentage of a full calendar year?

248) Yellowknife Mining sold 34,300 oz of gold in 1992 at an average price of $1160 per ounce. Production was down to 23,750 oz in 1993 because of a strike of the miners, but the average price obtained was $1280 per ounce. What was the percent change from 1992 to 1993 in: a) The amount of gold produced? b) The average selling price per ounce? c) The revenue from the sale of gold?

249) Your retirement portfolio started at $5,000. After one year it grew to $5,250, the second year it's value dropped to $5,100 and the third the value dropped to $4,800. What was the annual percent change per year?

250) Two years ago the shares of Diamond Strike Resources traded at a price of $3.40 per share. One year later the shares were at $11.50, but then they declined in value by 35% during the subsequent year. Calculate: a) The percent change in the share price during the first year. b) The current share price.

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251) Barry recently sold some stock after holding it for 2 years. The stock rose 150% in price during the first year but fell 40% in the second year. At what price did he buy the stock if he sold it for $24 per share?

252) Albion Distributors' revenues and expenses for the fiscal year just completed were $2,347,000 and $2,189,000, respectively. a) If in the current year revenues rise by 10% but expense increases are held to 5%, what will be the percent increase in operating profit? b) If, instead, revenues decline by 10% and expenses are reduced by 5%, what will be the percent change in operating profit?

253) Quarterly Paper had sales of $1.9 million in 2016 and $1.7 million in 2017. Cost of goods sold in 2016 were $1.2 million and $1.4 million in 2017. What was the percent change of sales, expenses and overall gross profit?

254)

What percent is $1.75 of $12.50? Calculate to three-figure accuracy.

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255)

What percent is $2.49 of $18.99? Calculate to three-figure accuracy.

256)

1.5% of $125 is what amount accurate to the cent?

257)

$250 is 220% of what amount accurate to the cent?

258)

$12.59 is 89% of what amount accurate to the cent?

259)

A 12.5% tariff on an invoice of $489.56 is equal to what amount, to the nearest cent?

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260) A final sales amount of $800 includes 14% of taxes. What is the amount of the purchase before taxes?

261) Bus tickets are sold including all taxes and service charges. If the final price is $10.00, and this includes 10% tax and 5% service charge, what was the amount of the ticket before all taxes and charges? (to the nearest cent)

262) In a fraction, the numerator increases by 10% and the denominator increases by 25%. What is the overall percent change (increase or decrease) of the fraction?

263) The Winnipeg District school board wants to increase the property taxes of the school division by 2%. If they wish to spend an additional $50,000 on every new teacher, how many teachers will can be hired if the property values are $125M?

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264) A Red Seal chef can prepare meals 20% quicker than a chef who has just graduated from a culinary college. If a newly graduated chef can prepare ten meals every fifteen minutes, how many more meals should a Red Seal chef be able to prepare in one hour?

265) If the USD is worth 22% more than the Canadian dollar, how much less (in percentage terms) is the Canadian dollar worth than the USD? Calculate the answer accurate to the nearest 0.01%.

266) A city can increase the dollar amount budgeted for fire fighter's overtime wages during the next year by only 1.5%. The fire fighter's union has just won a 3% hourly rate increase for the next year. By what percentage must the city cut the number of overtime hours in order to stay within budget? Calculate the answer accurate to the nearest 0.01%.

267)

How much is $10 after an increase of 425%?

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268) Argent bought a share for $1.80 last month. Yesterday, the stock went up by 8%. Today it dropped by 4%. What is the current value of the stock?

269) Tabby just received a raise to $15.50 per hour from $14.45. What is the percent increase in her hourly rate?

270) If the CPI increases from 110.0 to 118.4 over a period, what is the percent increase in the CPI?

271) An oven is reduced by 331/3% to a sale price of $569.99. What was the original selling price of the oven?

272) If there are 36 vacation days in a calendar year, what is what percentage of vacations days in a full calendar year?

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273) Stoney Beer sold 42,000 canned beers in 2017 at an average price of $1.50 per can. Production was down to 38,000 cans in 2018 because of a strike in the brewery, but the average price obtained was $1.72 per can. What was the percent change from 2017 to 2018 in: a) The number of cans sold? b) The average selling price per can? c) The total revenue from the sale of all beer?

274) Your investment account to purchase a new house started at $12,000. After one year it grew to $15,250, the second year its value dropped to $15,100 and the third the value increased by an additional $4,800. What was the annual percent change per year?

275) Two years ago the shares of Stornoway Diamonds traded at a price of $1.06 per share. One year later the shares were at $1.135, but then they declined in value by 78% during the subsequent year. Calculate: a) The percent change in the share price during the first year. b) The current share price.

276) Charles recently sold some stock after holding it for four years. The stock rose 12% in price during the first year, fell 4% in the second year, dropped an additional 10% in the third year and dropped an additional 38% in the last year. At what price did he buy the stock if he sold it for $12 per share?

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277) Glacier Ice revenues and expenses for the fiscal year just completed were $838,000 and $645,000, respectively. a) If in the current year revenues rise by 5% but expense increases are held to 4%, what will be the percent increase in operating profit? b) If, instead, revenues decline by 12% and expenses are reduced by 5%, what will be the percent change in operating profit?

278) Xu purchased units of the Fidelity Global Index Fund one year ago at $8.10 per unit. Today they are valued at $9.22. On the intervening December 31, there was a distribution of $0.22 per unit. Accurate to the nearest 0.01%, calculate Rose's income yield, capital gain yield, and rate of total return for the year.

279) The market value of Rosalita's savings bonds has declined from $1050 to $1025 per bond during the past year. In the meantime she has received two semiannual interest payments of $22. Calculate Stephanie's income yield, capital gain yield, and rate of total return for the year. Determine yields and rates of return accurate to the nearest 0.01%.

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280) Yanni's shares of Canadian Petroleum have increased in value from $9.75 to $12.21 during the past year. The shares paid a $0.25 per share dividend 6 months ago. Calculate Vitaly's income yield, capital gain yield, and rate of total return for the year. Determine yields and rates of return accurate to the nearest 0.01%.

281) Jeff purchased some HBC preferred shares on the Toronto Stock Exchange for $75.42. The shares pay a monthly dividend of $0.05 Twelve months later the shares were trading at $65.75. What was Jeff's rate of total return for the year, accurate to the nearest 0.01%?

282) In the last year, the market value of the Stoss' bonds has declined from $1025 to $1012.50 each, and the coupons paid $10 in interest semiannually. Calculate the rate of total return to the nearest 0.01%.

283) The following table shows the rates of total return in successive years from 2014 to 2018 for the CIBC Small Cap Fund and for the benchmark Toronto Stock Exchange S&P/TSX Composite Index. By how much did the mutual fund's overall percentage return exceed or fall short of the Index's growth? Determine rates of return accurate to the nearest 0.01%. Fund Name

Rate of total return (%) 2014

2015

2016

2017

2018

CIBC Small Cap

2.65

4.56

5.20

4.32

1.02

S&P/TSX Composite Total Return Index

1.02

4.32

5.20

4.56

2.65

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284) The following table presents the rates of total return in successive years from 2014 to 2018 for the RBC Asian Large Cap Fund and for the benchmark Toronto Stock Exchange S&P/TSX Composite Index. By how much did the mutual fund's overall percentage return exceed or fall short of the Index's growth? Determine rates of return accurate to the nearest 0.01%. Fund Name

Rate of total return (%) 2014

2015

2016

2017

2018

RBC Asian Large Cap

8.56

10.57

6.92

7.91

1.54

S&P/TSX Composite Total Return Index

7.72

9.68

10.55

11.23

10.99

285) What rate of return in the second year of an investment is required to break even after a 25% loss in the first year? Determine rates of return accurate to the nearest 0.01%.

286) What rate of return in the third year of an investment is required to break even after a rate of return of -20% in the first year and 5% in the second year? Determine rates of return accurate to the nearest 0.01%.

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287) After two consecutive years of 5% rates of return, what rate of return in the third year will produce a cumulative gain of 40%? Determine rates of return accurate to the nearest 0.01%.

288) BP stock returned 10% in year one and 8.25% in year two. If your starting investment was $1,000, what was the return in year three if you had a value of $1,260 at the end of year three?

289) In two successive years the price of the common shares of ATH Oil & Gas fell 35% and 55%, ending the second year at 68 cents. a) What was the share price at the beginning of year two? Calculate the result to the nearest cent. b) How much (in dollars and cents) did the share price drop in the first year? Calculate the result to the nearest cent.

290) General Dynamics needs $1.5M at the end of year four. They had $900,000 to invest at day one and received 15%, 12% and 25% in respective years. What percent will they require in year four to reach their target of $1.5M?

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291) An investor purchased preferred shares on the Toronto Stock Exchange for $15.00. The shares pay a monthly dividend of.25%. Six months later, the shares were trading at $14.50. What was the rate of total return for the six-month period? Calculate rates of return accurate to the nearest 0.01%.

292) Safeway normally offer the same prices as Sobeys. For its Christmas sale, Safeway has marked down the price of turkeys 30%. What percentage more will you pay if you buy a turkey at the regular price at Sobeys? Calculate the answer accurate to the nearest 0.01%.

293) General Motors reported that its sales in quarter one were down 12% from its sales in quarter four, the year prior. What percentage were quarter four sales of quarter one sales? Calculate the answer accurate to the nearest 0.01%.

294) If the CAD drops 8% due to a trade war compared to the USD, how much will the CAD have to increase to get back to its original value?

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Answer Key Test name: Chap 03_10ce 1) E 2) E 3) A 4) B 5) C 6) D 7) E 8) A 9) B 10) C 11) D 12) C 13) A 14) A 15) B 16) C 17) A 18) D 19) D 20) C 21) E 22) D 23) E 24) D 25) E 26) A Version 1

27) B 28) A 29) C 30) B 31) D

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CHAPTER 4 1)

Express the ratio 0.3 : 1.50 : 9 in its lowest terms: A) 3 : 15 : 90 B) 1 : 15 : 90 C) 1 : 5 : 30 D) 2 : 28 : 170 E) 2 : 14 : 85

2) In 2018, J&H Limited's total overhead of $300,000 was allocated as follows: 25% to Auto Manufacturing, 40% to Broad Retailing, and the remainder to Construction. What is the ratio of the overhead in Auto Manufacturing to the overhead in Broad Retailing to the overhead in Construction, in lowest terms? A) 8 : 2 : 4 B) 5 : 8 : 7 C) 10 : 16 : 14 D) 1 : 1.5 : 1.75 E) 1 : 4 : 5

Solve the proportion: 2 : 5 = 6 : y A) 15 B) 5 C) 10 D) 6 E) 12

Solve the proportion: 0.75 : 5.5 = 6 : x

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A) 40 B) 44 C) 8 D) 6 E) 24

5) You have a new recipe for a drink and you are trying to assign costs to each component. You have rum at 40%, vodka at 56% and the rest is gin. If the total cost is $1.80 per drink, how much is each component? A) vodka $1.01 rum $.72 gin $.07 B) vodka $.72 rum $1.01 gin $.07 C) vodka $.36 rum $.505 gin $.035 D) vodka $.70 rum $1.00 gin $.10 E) vodka $.75 rum $1.20 gin $.05

Solve the proportion: 2.6 : 5.5 : 10 = 13 : x : y

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A) x = 50 and y = 27.5 B) x = 5.5 and y = 20 C) x = 27.5 and y = 50 D) x = 11 and y = 20 E) x = 26 and y = 11

7) Nitin and Sam have invested in a partnership in the ratio of 3 : 5. If Sam adds another $10,000 to the business, how much should Nitin invest in order to maintain the same ratio? A) $10,000 B) $3,000 C) $5,000 D) $6,000 E) $12,000

8) Kuldip and Jane invested $35,000 and $55,000 respectively in a partnership. Kuldip added another $20,000 and Jane wants to add enough to maintain their investments in the original ratio. How much should Jane invest in order to maintain the same ratio? A) $12,727 B) $30,000 C) $35,000 D) $31,429 E) $25,000

9) A college allows parking permits for students in the ratio of 5.5 students to a parking permit. The college currently has 11,000 students. The student council did a survey and found that the ratio should be 4 : 1. The college has agreed to add the extra parking spaces. How many more spaces are required to meet the 4 : 1 ratio?

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A) 2750 B) 2200 C) 1250 D) 1150 E) 750

10) A punch recipe calls for orange juice, ginger ale, and vodka to be mixed in the ratio of 4.5 : 2.5 : 1. How much orange juice and vodka should be mixed with a 2-litre bottle of ginger ale? A) 3.6 litres of orange juice and 0.8 litres of vodka B) 3.5 litres of orange juice and 0.75 litres of vodka C) 6 litres of orange juice and 1.25 litres of vodka D) 5 litres of orange juice and 1.1 litres of vodka E) 4.1 litres of orange juice and 0.9 litres of vodka

11) Mr. Malik is considering a larger house in the same area. Currently the taxes on his $250,000 home amount to $3000 per year. If he expects the taxes on other homes in the area to be in the same ratio as the assessed values, what tax amount will Mr. Malik pay on a house assessed at $300,000? A) $3200 B) $3600 C) $3500 D) $3000 E) $4000

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12) Based on past experience, a production process requires 15 hours of direct labour and 2 assemblers for every $450 of raw materials. If the company has budgeted for $33,750 worth of raw materials, how many hours of direct labour and how many assemblers will the company require? A) 112.5 hours of direct labour and 15 assemblers B) 2250 hours of direct labour and 300 assemblers C) 1125 hours of direct labour and 150 assemblers D) 112.5 hours of direct labour and 150 assemblers E) 1125 hours of direct labour and 300 assemblers

13) A gym club membership costs $499 for two years. A member may cancel at any time and a refund less a $75 administration fee will be issued. The notice of cancellation must be received by the 15th of the month in order for the cancellation to be effective for the following month. Najib purchased a membership on March 1st last year, and decided to cancel it on June 10th of this year. How much of a refund will Najib receive? A) $166.33 B) $332.67 C) $257.55 D) $91.33 E) $112.13

14) Aaron, Luc, and Isaac invested in a business in the ratio of 3.5 : 5 : 7.5. The factory that they leased requires renovations of $125,000. If the partners want to maintain their investments in the business in the same ratio, how much should each partner pay for the renovations? A) Aaron: $58,593.75 Luc: $27,343.75 Isaac: $39,062.50 B) Aaron: $35,000 Luc: $50,000 Isaac: $75,000 C) Aaron: $20,000 Luc: $40,000 Isaac: $60,000 D) Aaron: $27,343.75 Luc: $58,593.75 Isaac: $39,062.50 E) Aaron: $27,343.75 Luc: $39,062.50 Isaac: $58,593.75

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15) Sam, Domenic, and Sally invested $50,000, $75,000, and $125,000, respectively, in a business. The profits from last year were $40,000. What will be the profit share of each partner? A) Sam: $8,000 Domenic: $12,000 Sally: $20,000 B) Sam: $10,000 Domenic: $16,000 Sally: $14,000 C) Sam: $8,000 Domenic: $12,000 Sally: $10,000 D) Sam: $8,000 Domenic: $10,000 Sally: $22,000 E) Sam: $6,000 Domenic: $12,000 Sally: $22,000

16) Sam, Domenic, and Sal invested $100,000, $125,000, and $150,000, respectively, in a business. In order to expand, a further investment was required. Sal invested $200,000. If the other partners agreed to provide capital in the same ratio as the initial investment, how much did Sam and Domenic invest? Round to the nearest dollar. A) Sam: $166,667 Domenic: $133,333 B) Sam: $133,333 Domenic: $166,667 C) Sam: $150,000 Domenic: $175,000 D) Sam: $175,000 Domenic: $150,000 E) Sam: $133,333 Domenic: $150,000

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17) Sam, Domenic, and Sal invested $200,000, $125,000, and $150,000, respectively, in a business. In order to expand, a further investment was required. Sal invested $200,000. If the other partners agreed to provide capital in the same ratio as the initial investment, how much did Sam and Domenic invest? Round to the nearest dollar. A) Sam: $166,667 Domenic: $266,667 B) Sam: $250,000 Domenic: $175,000 C) Sam: $266,667 Domenic: $166,667 D) Sam: $175,000 Domenic: $250,000 E) Sam: $266,667 Domenic: $250,000

18) Susan, Lynda, and Monica opened a used clothing shop. The partnership agreement states that the responsibilities for the provision of capital are in the ratio of 2 : 3 : 4. If the total investment in the business was $360,000, how much did each partner invest? A) Susan: $82,000 Lynda: $118,000 Monica: $160,000 B) Susan: $85,000 Lynda: $1150,000 Monica: $40,500 C) Susan: $90,000 Lynda: $110,000 Monica: $160,000 D) Susan: $80,000 Lynda: $120,000 Monica: $160,000 E) Susan: $8,000 Lynda: $12,000 Monica: $16,000

19) Jane, Lynda, and Ginny run a consignment dress store. The partnership agreement states that the profits are distributed according to the hours each works in the store. For the month of July, profits are $8500. The hours worked by Jane, Lynda, and Ginny are 170, 190, and 200, respectively. How should the month's profits be allocated? A) Jane: $2000 Lynda: $3000 Ginny: $3000 B) Jane: $3000 Lynda: $3000 Ginny: $2000 C) Jane: $2883.93 Lynda: $2580.36 Ginny: $3035.71 D) Jane: $3035.71 Lynda: $2883.93 Ginny: $2580.36 E) Jane: $2580.36 Lynda: $2883.93 Ginny: $3035.71

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20) The current exchange rates show that C$1.00 = US$0.7525. If you have $120 Canadian dollars, what is the equivalent amount in US dollars? A) US$90.30 B) US$159.47 C) US$93.20 D) US$92.15 E) US$98.00

21) The current exchange rates show that C$1.00 = €0.5600. If you have $200 Canadian dollars, what is the equivalent amount in euros? A) €114 B) €112 C) €136 D) €56 E) €44

22) The current exchange rates show that C$1.00 = US$0.7632. If you have $500 Canadian dollars to exchange and the currency exchange store charges 2% on all transactions, how many US dollars will you be able to buy? A) US$374.96 B) US$381.60 C) US$373.97 D) US$500.38 E) US$379.37

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23) The current exchange rates show that C$1.00 = €0.7441. If you have $1000 Canadian dollars to exchange and the currency exchange charges 4% on all transactions, how many euros will you be able to buy? A) €744.10 B) €773.86 C) €1343.91 D) €714.34 E) €1290.15

24) The current exchange rates show that US$1.00 = C$1.3536. If you have $375 US dollars, what is the equivalent amount in Canadian dollars? A) C$507.00 B) C$509.00 C) C$408.50 D) C$506.70 E) C$507.60

25) The current exchange rates show that US$1.00 = €0.7643. If you have $600 US dollars, what is the equivalent amount in euros? A) €458.58 B) €785.03 C) €746.83 D) €750 E) €600

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26) The current exchange rates show that US$1.00 = €0.7643. If you have $450 US dollars to exchange and the currency exchange charges 2.5% on all transactions, how many euros will you be able to buy? A) €343.94 B) €335.34 C) €602.55 D) €587.49 E) €450

27) The current exchange rates show that C$1.00 = £0.5010. If you have C$250, what is the equivalent amount in British pounds? A) £115.25 B) £105.00 C) £125.25 D) £375.00 E) £250

28) A hamburger in Canada costs C$7.00, and the same hamburger costs €5.50 in France. What percentage more is the cost of a hamburger in € in France? Use the French price as the base in the comparison. (C$1.00 = €0.7441) A) 21.43% B) 4.74% C) 6.64% D) 5.30% E) 27.0%

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29) A litre of gas costs €2.50 in France. What would be the equivalent cost in Canada? Use C$1.00 = €0.5650 as the exchange rate. A) C$1.12 B) C$4.56 C) C$3.86 D) C$4.24 E) C$4.42

30) How much will it cost in C$ to buy €2000 in traveller's cheques if the exchange rate is C$1.00 = €0.7441, and the financial institution charges a fee of 0.5%? A) C$2701.25 B) C$2687.81 C) C$2822.20 D) C$1488.20 E) C$11,495.64

31) You can buy euros at a currency exchange store or at the airport. If you want to buy €250, would it be better to pay a 1% transaction fee or a flat service charge of $10.00? Use C$1.00 = €0.7441 as the exchange rate. A) 1% transaction fee more expensive by C$6.64 B) 1% transaction fee less expensive by C$6.64 C) flat service charge less expensive by C$6.64 D) flat service charge more expensive by C$6.64 E) no difference in fee

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32) A movie ticket costs C$11.99 in Canada, and the same movie ticket costs US$11.99 in San Diego, California, USA. What percentage more is the cost of the movie ticket in the US than in Canada? Use the Canadian price as the base in comparison. (US$1.00 = C$1.3456). A) 33.68% B) 34.10% C) 34.53% D) 35.68% E) 32.98%

33) If the C$ strengthens by 1% relative to the US$ (US$1.00 = C$1.0271), what will be the new value for the US$ per C$1.00? A) US$0.9640 per C$1.00 B) US$0.91223 per C$1.00 C) US$1.01688 per C$1.00 D) US$0.9834 per C$1.00 E) US$1.0373 per C$1.00

34) If the C$ strengthens by 2% relative to the US$ (US$1.00 = C$1.3536), what will be the exchange value for the C$? A) $1.3458C B) $1.3372C C) $1.3217C D) $1.3323C E) $1.3271C

35) If the C$ weakens by 1.5% relative to the US$ (US$1.00 = C$1.0271), what will be the new value for the US$ per C$1.00?

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A) US$0.9590 per C$1.00 B) US$0.9884 per C$1.00 C) US$1.0425 per C$1.00 D) US$0.98531 per C$1.00 E) US$1.0921 per C$1.00

36) If the C$ weakens by 2.5% relative to the US$ (US$1.00 = C$1.0271), what will be the new value for the US$ per C$1.00? A) US$1.0528 per C$1.00 B) US$0.9493 per C$1.00 C) US$1.0327 per C$1.00 D) US$0.9898 per C$1.00 E) US$0.9651 per C$1.00

37) If the C$ weakens by 1% relative to the euro (C$1.00 = €0.7441), what will be the new values for € per C$1.00 and C$ per €1.00? A) €0.7515 per C$1.00 and C1.3574 per €1.00 B) €0.8185 per C$1.00 and C1.2674 per €1.00 C) €0.7367 per C$1.00 and C1.3574 per €1.00 D) €0.7067 per C$1.00 and C1.2674 per €1.00 E) €0.67645 per C$1.00 and C1.7367 per €1.00

38) You have booked a trip to Germany in April. In, June, the C$ weakens by 2.5% relative to the euro (C$1.00 = €0.7441), what will be the new value for the euro per C$1.00?

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A) €0.7590 per C$1.00 B) €0.7727 per C$1.00 C) €0.7292 per C$1.00 D) €0.7255 per C$1.00 E) €0.7686 per C$1.00

39) As you travel through France, the C$ strengthens by 4% relative to the euro (C$1.00 = €0.7441), what will be the new value for the euro per C$1.00? A) €0.71434 per C$1.00 B) €0.7664 per C$1.00 C) €0.7554 per C$1.00 D) €0.7751 per C$1.00 E) €0.7739 per C$1.00

40) Your company purchases software from a BASF, a company based in Hamburg, Germany. If the C$ strengthens by 3% relative to the euro (C$1.00 = €0.5673), what will be the new value for the euro per C$1.00? A) €0.5843 per C$1.00 B) €0.6213 per C$1.00 C) €0.5934 per C$1.00 D) €0.5634 per C$1.00 E) €0.7644 per C$1.00

41) If the US$ strengthens by 2% relative to the euro (US$1.00 = €0.7643), what will be the new value for the euro per US$1.00?

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A) €0.7795 per US$1.00 B) €0.7796 per US$1.00 C) €0.7319 per US$1.00 D) €0.7121 per US$1.00 E) €0.7262 per US$1.00

42) If the US$ weakens by 5% relative to the euro (US$1.00 = €0.7643), what will be the new value for the euro per US$1.00? A) €0.72790 per US$1.00 B) €0.7670 per US$1.00 C) €0.7261 per US$1.00 D) €0.7611 per US$1.00 E) €0.8685 per US$1.00

43) The basket of goods and services included in the Consumer Price Index cost $35,750 in the base year. If the same basket cost $43,000 six years later, what was the CPI on that date? A) 83.1 B) 116.7 C) 72.5 D) 120.3 E) 118.4

44) The basket of goods and services included in the Consumer Price Index cost $425 in the base year. If the same basket cost $575 ten years later, what was the CPI on that date?

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A) 73.9 B) 126.1 C) 115.0 D) 130.4 E) 135.3

45) The CPI increased from 130.0 to 135.0 over a two-year period. If a person earned $35,000 at the beginning of the two-year period, how much would he have to earn at the end of the two-year period to maintain the same purchasing power? Round to the nearest dollar. A) $36,346 B) $36,750 C) $36,296 D) $36,500 E) $40,125

46) The CPI increased from 125.0 to 132.0 over a three-year period. If a person earned $40,000 at the beginning of the three-year period, how much would they have to earn at the end of the three-year period to maintain the same purchasing power? A) $42,800 B) $42,240 C) $40,933 D) $42,121 E) $40,250

47) Nitin earns $15 per hour today. Five years ago he earned $11.75 per hour. During the five-year period the CPI rose from 136.5 to 147.6. Has Nitin's buying power increased or decreased and by how much in current year's dollars?

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A) increased by $2.37 B) decreased by $2.37 C) increased by $2.29 D) decreased by $2.29 E) increased by $1.95

48) Sally earns $25 per hour today. Seven years ago she earned $20.75 per hour. During the seven-year period the CPI rose from 136.5 to 158.2. Has Sally's buying power increased or decreased and by how much in current year's dollars? A) increased by $3.61 B) decreased by $3.61 C) decreased by $0.95 D) increased by $0.95 E) increased by $1.40

49) Mandeep is going to ask for a raise. Over the past year, the CPI has gone from 129.9 to 131.9. Mandeep currently earns $42,500. What is the minimum raise that Mandeep should ask for in order to maintain the same buying power? Round to the nearest dollar. A) $43,350 B) $43,144 C) $44,000 D) $43,500 E) $43,154

50) Fatima is going to ask for a raise. Over the past year, the CPI has gone from 119.6 to 122.6. Fatima currently earns $45,000. What is the minimum raise that Fatima should ask for in order to maintain the same buying power? Round to the nearest dollar.

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A) $46,129 B) $46,350 C) $46,101 D) $46,500 E) $46,100

51) The price of a box of chalk has increased from $0.89 to $1.39 over a ten-year period. What index number would represent the change in price over the ten-year period? A) 150.0 B) 156.2 C) 136.0 D) 142.0 E) 148.2

52) The price of a laser printer dropped from $299.99 to $175. What index number would represent the change in price? A) 125.0 B) 75.0 C) 58.3 D) 71.4 E) 41.7

53) A car requires 8 litres of gasoline to go 88 km. How many litres of gasoline will be required to go 16 km at the same rate of consumption?

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A) 1.6 B) 0.5 C) D) 176 E) 5.5

54)

Solve the proportion: A) B) 0.44 C) 1.2375 D) 0.2475 E)

55) Karina bought 25.5 hectares of land for $63,000. If she buys another 80 hectares of land at the same price per hectare as her first purchase, how much must she pay for her second purchase? A) $247,058.82 B) $197,647.06 C) $200,812.50 D) $260,647.06 E) $308,823.53

56) Three partners share the partnership's profit according to the proportion of the business each owns. Ms. A owns 30%, Mr. B owns 25% and Ms. C owns the remainder. What profit would Mr. B receive if Ms. A receives $32,500?

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A) $108,333.33 B) $8,125.00 C) $24,375.00 D) $27,083.33 E) $30,875.00

57) Total overhead of $235,000 is allocated according to the proportion of labour hours. Department A used 1830 hours, department B used 1635 hours, and department C used 1760 hours. What amount of overhead should be allocated to department C? A) $119,365.08 B) $155,842.11 C) $115,634.92 D) $82,306.22 E) $79,157.89

58) Suppose that C$1.00 is equivalent to US$0.7543. How much will it cost in C$ to purchase US$1565? (Ignore any commission.) A) C$1,964.42 B) C$1,998.34 C) C$2,174.75 D) C$2,074.77 E) C$2,762.95

59) If the basket of goods and services included in the consumer price index (CPI) cost $21,350 in the base year (when CPI = 100) and currently costs $28,550, what is the current CPI?

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A) 133.72 B) 128.63 C) 74.78 D) 125.08 E) 139.77

60)

Express the ratio 76 : 44 : 8 in its lowest terms. A) 38 : 22 : 1 B) 38 : 11 : 2 C) 9 : 5 : 1 D) 19 : 11 : 2 E) 6 : 3 : 1

61)

Express the ratio 130 : 290 : 60 in its lowest terms. A) 2 : 4 : 1 B) 26 : 58 : 12 C) 65 : 145 : 30 D) 58 : 26 : 12 E) 13 : 29 : 6

62)

Express the ratio 3 : 21 : 0.75 as an equivalent ratio whose smallest term is 1. A) 1 : 7 : 0.25 B) 3 : 21 : 1 C) 11 : 13 : 1 D) 1 : 7 : 25 E) 4 : 28 : 1

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63) On a typical day, Generous Motors sells 3,600 vans, 1,500 pickup trucks, and 7,800 passenger cars. In lowest terms, what is the sales ratio of cars to vans to pickups? A) 36 : 15 : 78 B) 1560 : 720 : 300 C) 26 : 12 : 5 D) 78 : 15 : 36 E) 12 : 5 : 26

64) To raise money for her hockey team, Juliana collected a total of $264. Her uncle Vic donated $96, her uncle Dave donated $48 and her aunt Karen donated the rest. In lowest terms, express the ratio of the donations of Vic, Dave and Karen. A) 4 : 2 : 5 B) 5 : 12 : 26 C) 2 : 5 : 4 D) 4 : 2 : 11 E) 5 : 2 : 4

65) Last year, a company's salespersons, A, B, and C recorded sales as follows: "A" recorded three sevenths (3/7) of the total, "B" recorded one quarter (1/4) of the total and "C" recorded the rest of the sales. Express, in lowest terms, the sales ratio of A : B : C. A) 3 : 7 : 4 B) 7 : 4 : 1 C) 3 : 1 : 6 D) 21 : 7 : 28 E) 12 : 7 : 9

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66)

Express the ratio 0.75 : 3 as an equivalent ratio whose smallest term is 1. A) 0.25 : 1 B) 4 : 1 C) 3 : 12 D) 2.25 : 1 E) 1 : 4

67)

Solve the proportion: 2: 4 = x : 20 A) 8 B) 10 C) 3 D) 0.5 E) 30

68)

Solve the proportion: 4.75 : 60 = 190 : x A) 24 B) 1504 C) 2400 D) 76 E) 1800

69) Betty and Lois have already invested $12,450 and $16,600 respectively. If Betty invests another $6,000 what amount should Lois contribute to maintain their investments in the same ratio?

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A) $6,000 B) $7,000 C) $8,000 D) $9,000 E) $4,000

70) Last year the team won 34 games and lost 17. This year they will play a total of 15 more games than they played last year. How many games will they have to win this year to maintain the ratio of wins to losses from last year? (There are no tie games.) A) 51 B) 24 C) 10 D) 44 E) 48

71) Hockey goals and assists each count as one point. Anthony's ratio of goals to assists is 2: 5. Last season he collected a total of 91 points. How many goals did Anthony score? A) 65 B) 35 C) 26 D) 78 E) 13

72) Mary paid $1,500 for a newspaper subscription at the beginning of the year. After 7 months she cancelled the insurance and was given a pro-rated refund based on the number of months remaining on the policy less a service charge of $15. How much money did she get back?

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A) $600 B) $635 C) $645 D) $610 E) $125

73) A group of employees won a lottery prize. It was shared by Able, Billy, and Conway by the ratio of 5 : 2 : 3. If Andy received $4,500, how much did Conway get? A) $9,000 B) $2,700 C) $3,600 D) $1,800 E) $900

74) Axel, Bonita, and Chip are partners in business. The ratio of ownership of the partnership between Axel, Bonita, and Chip respectively is 5 : 4 : 10. If Bonita's share is worth $28,000 what is the value of the whole business? A) $56,000 B) $35,000 C) $112,000 D) $133,000 E) $70,000

75) Bonus money totaling $920,000 is to be shared by Dave, Claude, Marcel, and Larry by the ratio 15 : 11 : 8 : 6. How much will Dave receive?

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A) $253,000 B) $460,000 C) $345,000 D) $368,000 E) $312,000

76) Rodger, Dodger, and Codger own a business in the ratio of 12 : 7 : 9. The value of the business is $560,000. If Codger sells his share to Dodger, what will be the new ownership ratio in the form Rodger : Dodger? A) 4 : 3 B) 21 : 7 C) 3 : 1 D) 4 : 5 E) 3 : 4

77) A bartenders' handbook recommends that one bottle of spirits be provided per 10 guests at a New Year's Eve party. Furthermore, the relative consumption of scotch, rye, and rum is in the ratio of 3 : 5 : 4. How many bottles of each liquor should be stocked for a party expecting 480 guests?

78) You wish to calculate your costs based on the following inputs: 12 : 64. Express this ratio in its lowest terms for calculation purposes.

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79) You will use 56 ounces of oil to 21 ounces of vinegar in your company's salad dressing. Express the mixture in its lowest terms:

80) Your company will utilize 45 minutes of fixed labour, 15 minutes of variable labour and 30 minutes of casual labour. Express the minutes in its lowest terms:

81)

Express the following ratio in its lowest terms: 26 : 130 : 65

82) You realize that for every hour of work, your employee spends 8 minutes playing games and 12 minutes on the phone. Express the ratio in its lowest terms:

83)

Express the following ratio in its lowest terms: 2.5 : 3.5 : 3

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84) Your company can collect $0.84 cents per click, $1,40 for subscription fees and $1.96 for new marketing contacts. Express the ratio in its lowest terms:

85)

Express the following ratio in its lowest terms: 11.7 : 7.8 : 3.9

86)

Express the following ratio in its lowest terms: 0.24 : 0.39 : 0.15

87)

Express the following ratio in its lowest terms: 0.091 : 0.021 : 0.042

88) Your company receives1/8 of their contacts from inside sales and ¾ of their contacts from outside sales. Express the ratio in its lowest terms:

Version 1

89)

Express the following ratio in its lowest terms:

90)

Express the following ratio in its lowest terms:

91)

Express the following ratio in its lowest terms:

92)

Express the following ratio in its lowest terms:

93)

Express the following ratio in its lowest terms:

Version 1

94)

Express the following ratio in its lowest terms:

95)

Express the following ratio in its lowest terms:

96)

Express the following ratio in its lowest terms:

97)

Express the following ratio in its lowest terms:

98)

Express the following ratio as an equivalent ratio whose smallest term is 1: 1.41 : 8.2203

Version 1

99) Express the following ratio as an equivalent ratio whose smallest term is 1: 0.177 : 0.81066

100) Express the following ratio as an equivalent ratio whose smallest term is 1: 0.013072 : 0.0086

101)

Rounded to 2 decimal places, express the following ratio as an equivalent ratio whose

smallest term is 1:

102)

Rounded to 2 decimal places, express the following ratio as an equivalent ratio whose

smallest term is 1:

Version 1

103) Rounded to 2 decimal places, express the following ratio as an equivalent ratio whose smallest term is 1: 77 : 23 : 41

104) Rounded to 2 decimal places, express the following ratio as an equivalent ratio whose smallest term is 1: 11 : 38 : 27

105) Rounded to 2 decimal places, express the following ratio as an equivalent ratio whose smallest term is 1: 3.5 : 5.4 : 8

106) Rounded to 2 decimal places, express the following ratio as an equivalent ratio whose smallest term is 1: 0.47 : 0.15 : 0.26

107)

Rounded to 2 decimal places, express the following ratio as an equivalent ratio whose

smallest term is 1:

Version 1

108)

Rounded to 2 decimal places, express the following ratio as an equivalent ratio whose

smallest term is 1:

109) Shaheed has budgeted 12% of his monthly spending to cell phones and internet, 22% to food and 40% to rent and utilities. In lowest terms, what is the ratio of his spending for cell phones and internet to food to rent and utilities?

110) Don, Bob, and Ron Maloney's partnership interests in Maloney Bros. Contracting are in the ratio of their capital contributions of $78,000, $52,000, and $65,000, respectively. In lowest terms, what is the ratio of Bob's to Ron's to Don's partnership interest?

111) Victoria Developments has obtained $3.6 million of total capital from three sources. Preferred shareholders contributed $550,000 (preferred equity), common shareholders contributed $1.2 million (common equity), and the remainder was borrowed (debt). What is the firm's ratio of debt to preferred equity to common equity? (Express as a ratio whose smallest term is 1 and round to 2 decimal places)

Version 1

112) The cost to manufacture a fiberglass boat consists of $4480 for materials, $6330 for direct labour, and $2650 for overhead. Express the three cost components as a ratio whose smallest term is 1. (Round to 2 decimal places)

113) A provincial government budget forecasts expenditures of $15.6 billion on education, $13.65 billion on health services, and $9.75 billion on social services. Express the three budget items as a ratio in lowest terms.

114) The brine used in an industrial process is 12.5% salt by weight. In lowest terms, what is the ratio (by weights) of salt to water in the brine?

115) The instructions for preparing the fuel mix for a two-cycle engine are to add 250 mL of oil to 5 L of gasoline. In lowest terms, what is the ratio (by volumes) of gasoline to oil in the fuel mix?

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116) b

Solve the following proportion for the unknown quantity (3-figure accuracy): 9 : 7 = 54 :

117) Solve the following proportion for the unknown quantity (3-figure accuracy): 17 : q = 119 : 91

118) : 45

Solve the following proportion for the unknown quantity (3-figure accuracy): 88 : 17 = a

119) Solve the following proportion for the unknown quantity (3-figure accuracy): d : 13.2 = 16 : 31

120) Solve the following proportion for the unknown quantity (3-figure accuracy): 1.89 : 0.31 = 175 : k

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121) Solve the following proportion for the unknown quantity (3-figure accuracy): 1.56 : h = 56.2 : 31.7

122) Solve the following proportion for the unknown quantity (3-figure accuracy): 0.043 : y = 550 : 198

123) Solve the following proportion for the unknown quantity (3-figure accuracy): 0.057 : 0.149 = z : 0.05

124)

Solve the following proportion for the unknown quantity (express as a fraction):

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125)

Solve the following proportion for the unknown quantity (express as a fraction):

126) Solve the following proportion for the unknown quantities (3-figure accuracy): 6: 7 : 5 = n : 105 : m

127) Solve the following proportion for the unknown quantities (3-figure accuracy): 3 : 4 : 13 = x : y : 6.5

128) Solve the following proportion for the unknown quantities (3-figure accuracy): 625 : f : 500 = g : 3 : 4

129) Solve the following proportion for the unknown quantities (3-figure accuracy): a : 58 : 132 = 38 : 27 : b

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130) Solve the following proportion for the unknown quantities (3-figure accuracy): 0.69 : 1.17 : 0.4 = r : s : 6.5

131)

Solve the following proportion for the unknown quantities:

132) The Borellis wish to purchase a larger house to accommodate their growing family. The current year's property tax on their home amounts to $3545 based on its assessed value of $328,000. The assessed value of a property they are seriously considering is $437,000. What property tax can the Borellis expect to pay on this home if property taxes are in the same ratio as assessed values?

133) The West Essex School Board employs 348 teachers for the 7412 students registered in the district's schools in the current year. The enrollment forecast for next year is 7780 students. Assuming the same student-teacher ratio for the next year, how many additional teaching positions must the board fill? (Round to the nearest whole number)

Version 1

134) A high-definition movie lasting 1 hour and 45 minutes consumed 4.5 GB of memory on the hard drive of a personal video recorder (PVR). Rounded to the nearest minute, what is the maximum duration of high-definition recording that could be saved on the PVR's 80-GB hard drive?

135) Connie's neighbour sold 14.5 hectares of raw land for $128,000. If Connie were to sell her 23.25 hectare parcel at a proportionate price, what amount would she receive? (Round to the nearest dollar)

136) Based on past experience, a manufacturing process requires 2.3 hours of direct labour for each $174 worth of raw materials processed. If the company is planning to consume $78,300 worth of raw materials, what total amount should it budget for labour at $31.50 per hour?

137) An international equity mutual fund includes American stocks, Japanese stocks, German stocks, and British stocks in the ratio 27 : 19 : 14 : 11, respectively. If its current holdings of German stocks are valued at $238 million, what are the values of its holdings in the securities of the other three countries?

Version 1

138) The worldwide sales for Android, iPhone, and Blackberry in 2012, respectively, were in the ratio 68 : 17 : 5. If Android had sales of 104.8 million units for the second quarter of 2012, what would the second quarter sales for iPhone and Blackberry have been? (Round to the nearest 0.01 million units)

139) A punch recipe calls for fruit juice, ginger ale, and vodka to be mixed in the ratio 6 : 2.5 : 1. How much fruit juice and vodka should be mixed with a 2 litre bottle of ginger ale?

140) A business consultant is analyzing the cost structure of two firms in the grocery business. On sales of $3.66 million, Thrifty's had wholesale costs of $2.15 million and overhead expenses of $1.13 million. If Economart had the same proportionate costs on its sales of $5.03 million, what would its wholesale costs and overhead expenses have been? (Round to the nearest 0.01 million)

Version 1

141) A province's Ministry of Social Services has found that both the number of people receiving social assistance and the province's total expenditures on social assistance are proportional to the rate of unemployment. Last August when the provincial unemployment rate was 8.4%, the province provided benefits to 89,300 individuals at a cost of $107.4 million. The forecasted unemployment rate for next August is 7.9%. How many people can the province expect to need social assistance next August? What amount should the province budget for social assistance in August? (Round the number of claimants to the nearest whole number, and the total expenditure to the nearest million)

142) Tom Nortons Donuts considers the Hamilton area to be its most mature, fully-exploited market. The 59 outlets in the metropolitan area serve a population of 675,000 and generate annual sales of $66.67 million. The management of Tom Nortons views its Calgary market as under-exploited. The 65 outlets generate annual sales of $63.05 million from a population of 1,075,000. If Tom Nortons had penetrated the Calgary market to the same degree and success as the Hamilton market, how many additional outlets would it have, and how much higher (rounded to the nearest $0.01 million) would its annual sales be?

143) The Ministry of Education reported that the average school district in the province has 13,450 students in "K to 12" programs, an annual budget of $87.4 million, and 635 full-timeequivalent teachers. The Middleton School District (MSD), with an annual budget of $69.1 million and 498 teachers, serves 10,320 students. What adjustments would have to be made to MSD's budget and staffing to have them in the same proportion to enrollment as the provincial average?

Version 1

144) Shirley had a three-sevenths interest in a partnership. She sold three-fifths of her interest for $27,000. a) What is the implied value of the entire partnership? b) What is the implied value of Shirley's remaining partnership interest?

145) Regal Resources owns a 58% interest in a mineral claim. Yukon Explorations owns the remainder. If Regal sells one-fifth of its interest for $1.2 million, what is the implied value of Yukon's interest? (Round to the nearest dollar)

146) The statistics for a professional accounting program indicate that five-sevenths of those who enter the program complete Level 1. Two-ninths of the Level-1 completers do not finish Level 2. If 587 students completed Level 2 last year, how many (including this group of 587) began Level 1? (Round to the nearest whole number)

147) Executive Fashions sold four-sevenths of its inventory at cost in a bankruptcy sale. The remainder was sold at 45% of cost to liquidators for $6700. a) What was the original cost of the inventory that was sold to the liquidators? b) What were the proceeds from the bankruptcy sale?

Version 1

148) A three-year magazine subscription costing $136 may be cancelled at any time, and a prorated refund will be made for the remaining weekly issues. If Juanita cancels her subscription after receiving 17 issues in the second year, what refund should she get? Assume there are exactly 52 weeks in a year.

149) When real estate is sold, the year's property taxes are allocated to the vendor and the purchaser in proportion to the number of days that each party owns the property during the year. If the purchaser took possession of a property effective August 8 (of a 365-day year), how will the year's property taxes of $2849 be allocated to the vendor and purchaser?

150) On May 3, Mary Ann bought a 2-year membership in a fitness club for $1260, on a special promotion. Cancellation is allowed at any time. A prorated refund will be paid based upon the number of days remaining in the membership period. If she cancelled the membership on the following September 9, what refund should she receive? (Count both May 3 and September 9 as days used.)

Version 1

151) If you use your car for both business and pleasure, the Canada Revenue Agency will usually allow you to report a portion of the costs of operating the vehicle as a business expense. This portion is determined by the ratio of the distance travelled on business to the total distance travelled in the year. Last year, Harjap spent a total of $11,348 on gasoline, oil, repairs and maintenance, and insurance. His travel log shows that he drove 14,488 km on business and 8,329 km on personal use. What vehicle expense can Harjap report for the year?

152) If you operate a home-based business, the Canada Revenue Agency (CRA) will usually allow you to report certain "office-in-home" expenses. The portion of heat, insurance, electricity, property taxes, and mortgage interest that you may report must be (in the language of the CRA) "reasonable under the circumstances." Rose uses 2 of the 11 rooms in her home for her real estate appraisal business. The combined floor area of the 2 rooms is 36 m2. The remainder of the house has an area of 147 m2. Rose's total expenses in the home-related categories were $17,512 for the year. What amount will qualify as "office-in-home" expenses if the proration is based on: a) The number of rooms used for the business? b) The floor area devoted to business use?

153) The leases in multiple-unit commercial developments commonly permit the landlord to allocate to the tenants various common area and general costs such as property taxes, janitorial services, security services, and snow removal. These costs are usually prorated on the basis of the floor area leased to each tenant. Granny's Chicken, Toys 'n Novelties, and Pine Tree Pharmacy are the three tenants in Pine Tree Square. They lease 172 square metres, 136 square metres, and 420 square metres, respectively. How should common costs totalling $9872 for the past year be allocated?

Version 1

154) Andy, Candy and Sandy agree to split the annual cost of $2739 for high speed internet for the apartment they share. If the three roommates agree to allocate the cost of the service and their usage of the monthly download allowance in the ratio 3 : 8 : 5, respectively: a) What is the cost per month for the service that each roommate is responsible for? b) How will the monthly usage allowance of 500 GB be distributed?

155) Mr. Bartlett's will specified that, upon liquidation of any asset, the proceeds be divided among his wife, his son, and his sister in the ratio of 7 : 5 : 3. a) If the son received $9500 from the sale of securities, what amounts did Bartlett's wife and sister receive? b) What amount would the sister receive from the sale of the deceased's boat for $27,000?

156) Their partnership agreement requires Bella, Edward, and Jacob to provide capital "when and as required" by the partnership in the ratio 1 : 1.35 : 0.85, respectively a) The total initial capital requirement was $256,000. How much did each partner contribute? b) One year later, Jacob's share of an additional injection of capital was $16,320. What was Edward's share?

Version 1

157) Kevin, Lyle, and Marnie operate Food Country as a partnership. Their agreement provides that half the profit in each calendar quarter be distributed in proportion to each partner's investment in the partnership, and that the other half be distributed in proportion to the total number of hours that each partner works in the business. The following table presents each partner's investment in the second column, and the hours worked (during the most recent quarter) in the third column. Rounded to the nearest dollar, how should the quarter's profit of $112,460 be allocated? Partner

Amount Invested ($)

Hours Worked

Kevin

130,000

210

Lyle

86,000

365

Marnie

29,000

158) The following table shows National Paper Products' capital investment in each of its three divisions, and the most recent year's gross sales for each division. The operating costs of the head office for the year were $839,000. These costs are allocated to the divisions before each division's profit is determined. Rounded to the nearest dollar, how much should be allocated to each division if the costs are prorated on the basis of: a) The capital investment in each division? b) The sales of each division? Division

Investment

Gross Sales

Industrial products

$25,300,000

$21,200,000

Fine paper

17,250,000

8,350,000

Containers and packaging

11,900,000

7,450,000

159) Canada reported the following sales of alcoholic beverages in Ontario and Quebec for the year 2013. (All figures are in $ millions.) Province

Beer

Spirits

Wine

Ontario

$3232

$1664

$1492

Quebec

$2276

$466

$1436

Version 1

If Ontarians had allocated their total expenditures on alcoholic beverages in the same proportion as Quebecers, a) How much more would they have spent on wine? b) How would their expenditure on beer have differed? Round both answers to the nearest $0.1 million.

160) Last year, Reliable Securities established a sales achievement bonus fund of $10,000 to be distributed at the year's end among its four-person mutual fund sales force. The distribution is to be made in the same proportion as the amounts by which each person's sales exceed the basic quota of $500,000. How much will each salesperson receive from the fund if the sales figures for the year were $910,000 for Mr. A, $755,000 for Ms. B, $460,000 for Mr. C, and $615,000 for Ms. D?

161) Geological Consultants Ltd. is a private company with four shareholders: W, X, Y, and Z. Their respective shareholdings are shown in the table below. X is retiring and has come to an agreement with the other three shareholders to sell his shares to them for $175,000. The agreement calls for the 500 shares to be purchased and allocated among W, Y, and Z in the same ratio as their present shareholdings. The shares are indivisible, and consequently the share allocation must be rounded to integer values. Partner

No. shares owned

300

500

350

400

Version 1

a) What implied value does the transaction place on the entire company? b) How many shares will W, Y, and Z each own after the buyout? c) What amount will each of the continuing shareholders contribute toward the $175,000 purchase price? Prorate the $175,000 on the basis of the allocation of the shares in part (b).

162) Canadian Can Co. operates a profit-sharing plan wherein half the annual profits are distributed to employees. By agreement, the amounts received by individual executives, supervisors, and production workers are to be in the ratio of 10 : 7 : 5 respectively. During the last fiscal year, there were 4 executives, 8 supervisors, and 45 production personnel. Rounded to the nearest dollar, what profit-sharing amount will each executive, supervisor, and production worker receive if the year's profit was $265,000?

163)

TABLE 3.2 Currency Cross Rates (Noon ET, Toronto, February 25, 2016) Per C$

Canadian dollar (C$)

Per US$ 1.3576

Per €

Per ¥

Per Sw fr

Per A$

1.4968

0.01205

1.8914

1.3719

0.9784

1.1027

0.008877

1.3933

1.0106

0.7207

0.008051

1.2637

0.9166

0.6537

156.9612

113.8563

81.1688

0.7253

0.5173

U.S. dollar (US$)

0.7366

Euro (€)

0.6681

0.9069

Japanese yen (¥)

82.9876

112.6556

124.2158

British pound (£)

0.5287

0.7177

0.7913

0.006371

Swiss franc (Swfr)

0.7289

0.9895

1.0910

0.008783

Version 1

Per £

1.3787

0.7132

Australian dollar (A$)

1.0221

1.3875

1.5298

0.01232

1.9333

1.4022

Use the currency exchange rates in Table 3.2 to calculate the equivalent amount of currency: US$1856 = C$? (Round to 2 decimal places)

164)

TABLE 3.2 Currency Cross Rates (Noon ET, Toronto, February 25, 2016) Per C$

Canadian dollar (C$)

Per US$ 1.3576

Per €

Per ¥

Per £

Per Sw fr

Per A$

1.4968

0.01205

1.8914

1.3719

0.9784

1.1027

0.008877

1.3933

1.0106

0.7207

0.008051

1.2637

0.9166

0.6537

156.9612

113.8563

81.1688

0.7253

0.5173

U.S. dollar (US$)

0.7366

Euro (€)

0.6681

0.9069

Japanese yen (¥)

82.9876

112.6556

124.2158

British pound (£)

0.5287

0.7177

0.7913

0.006371

Swiss franc (Swfr)

0.7289

0.9895

1.0910

0.008783

1.3787

Australian dollar (A$)

1.0221

1.3875

1.5298

0.01232

1.9333

0.7132 1.4022

Use the currency exchange rates in Table 3.2 to calculate the equivalent amount of currency: £123.50 = €? (Round to 2 decimal places)

Version 1

165)

TABLE 3.2 Currency Cross Rates (Noon ET, Toronto, February 25, 2016) Per C$

Canadian dollar (C$)

Per US$ 1.3576

Per €

Per ¥

Per £

Per Sw fr

Per A$

1.4968

0.01205

1.8914

1.3719

0.9784

1.1027

0.008877

1.3933

1.0106

0.7207

0.008051

1.2637

0.9166

0.6537

156.9612

113.8563

81.1688

0.7253

0.5173

U.S. dollar (US$)

0.7366

Euro (€)

0.6681

0.9069

Japanese yen (¥)

82.9876

112.6556

124.2158

British pound (£)

0.5287

0.7177

0.7913

0.006371

Swiss franc (Swfr)

0.7289

0.9895

1.0910

0.008783

1.3787

Australian dollar (A$)

1.0221

1.3875

1.5298

0.01232

1.9333

0.7132 1.4022

Use the currency exchange rates in Table 3.2 to calculate the equivalent amount of currency: C$14,500 = ¥? (Round to the nearest whole number)

166)

TABLE 3.2 Currency Cross Rates (Noon ET, Toronto, February 25, 2016) Per C$

Canadian dollar (C$)

Per US$ 1.3576

Per €

Per £

Per Sw fr

Per A$

1.4968

0.01205

1.8914

1.3719

0.9784

1.1027

0.008877

1.3933

1.0106

0.7207

0.008051

1.2637

0.9166

0.6537

156.9612

113.8563

81.1688

0.7253

0.5173

U.S. dollar (US$)

0.7366

Euro (€)

0.6681

0.9069

Japanese yen (¥)

82.9876

112.6556

124.2158

British pound (£)

0.5287

0.7177

0.7913

Version 1

Per ¥

0.006371

Swiss franc (Swfr)

0.7289

0.9895

1.0910

0.008783

1.3787

Australian dollar (A$)

1.0221

1.3875

1.5298

0.01232

1.9333

0.7132 1.4022

Use the currency exchange rates in Table 3.2 to calculate the equivalent amount of currency: ¥3,225,000 = £? (Round to 2 decimal places)

167)

TABLE 3.2 Currency Cross Rates (Noon ET, Toronto, February 25, 2016) Per C$

Canadian dollar (C$)

Per US$ 1.3576

Per €

Per ¥

Per £

Per Sw fr

Per A$

1.4968

0.01205

1.8914

1.3719

0.9784

1.1027

0.008877

1.3933

1.0106

0.7207

0.008051

1.2637

0.9166

0.6537

156.9612

113.8563

81.1688

0.7253

0.5173

U.S. dollar (US$)

0.7366

Euro (€)

0.6681

0.9069

Japanese yen (¥)

82.9876

112.6556

124.2158

British pound (£)

0.5287

0.7177

0.7913

0.006371

Swiss franc (Swfr)

0.7289

0.9895

1.0910

0.008783

1.3787

Australian dollar (A$)

1.0221

1.3875

1.5298

0.01232

1.9333

0.7132 1.4022

Use the currency exchange rates in Table 3.2 to calculate the equivalent amount of currency: €3251 = C$? (Round to 2 decimal places)

Version 1

168)

TABLE 3.2 Currency Cross Rates (Noon ET, Toronto, February 25, 2016) Per C$

Canadian dollar (C$)

Per US$ 1.3576

Per €

Per ¥

Per £

Per Sw fr

Per A$

1.4968

0.01205

1.8914

1.3719

0.9784

1.1027

0.008877

1.3933

1.0106

0.7207

0.008051

1.2637

0.9166

0.6537

156.9612

113.8563

81.1688

0.7253

0.5173

U.S. dollar (US$)

0.7366

Euro (€)

0.6681

0.9069

Japanese yen (¥)

82.9876

112.6556

124.2158

British pound (£)

0.5287

0.7177

0.7913

0.006371

Swiss franc (Swfr)

0.7289

0.9895

1.0910

0.008783

1.3787

Australian dollar (A$)

1.0221

1.3875

1.5298

0.01232

1.9333

0.7132 1.4022

Use the currency exchange rates in Table 3.2 to calculate the equivalent amount of currency: £56,700 = US$? (Round to 2 decimal places)

169)

TABLE 3.2 Currency Cross Rates (Noon ET, Toronto, February 25, 2016) Per C$

Canadian dollar (C$)

Per US$ 1.3576

U.S. dollar (US$)

0.7366

Euro (€)

0.6681

0.9069

Japanese yen (¥)

82.9876

112.6556

Version 1

Per €

Per ¥

Per £

Per Sw fr

Per A$

1.4968

0.01205

1.8914

1.3719

0.9784

1.1027

0.008877

1.3933

1.0106

0.7207

0.008051

1.2637

0.9166

0.6537

156.9612

113.8563

81.1688

124.2158

British pound (£)

0.5287

0.7177

0.7913

0.006371

0.7253

Swiss franc (Swfr)

0.7289

0.9895

1.0910

0.008783

1.3787

Australian dollar (A$)

1.0221

1.3875

1.5298

0.01232

1.9333

0.5173 0.7132

1.4022

Use the currency exchange rates in Table 3.2 to calculate the equivalent amount of currency: ¥756,000 = C$? (Round to 2 decimal places)

170)

TABLE 3.2 Currency Cross Rates (Noon ET, Toronto, February 25, 2016) Per C$

Canadian dollar (C$)

Per US$ 1.3576

Per €

Per ¥

Per £

Per Sw fr

Per A$

1.4968

0.01205

1.8914

1.3719

0.9784

1.1027

0.008877

1.3933

1.0106

0.7207

0.008051

1.2637

0.9166

0.6537

156.9612

113.8563

81.1688

0.7253

0.5173

U.S. dollar (US$)

0.7366

Euro (€)

0.6681

0.9069

Japanese yen (¥)

82.9876

112.6556

124.2158

British pound (£)

0.5287

0.7177

0.7913

0.006371

Swiss franc (Swfr)

0.7289

0.9895

1.0910

0.008783

1.3787

Australian dollar (A$)

1.0221

1.3875

1.5298

0.01232

1.9333

0.7132 1.4022

Use the currency exchange rates in Table 3.2 to calculate the equivalent amount of currency: €159,500 = US$? (Round to 2 decimal places)

Version 1

171)

TABLE 3.2 Currency Cross Rates (Noon ET, Toronto, February 25, 2016) Per C$

Canadian dollar (C$)

Per US$ 1.3576

Per €

Per ¥

Per £

Per Sw fr

Per A$

1.4968

0.01205

1.8914

1.3719

0.9784

1.1027

0.008877

1.3933

1.0106

0.7207

0.008051

1.2637

0.9166

0.6537

156.9612

113.8563

81.1688

0.7253

0.5173

U.S. dollar (US$)

0.7366

Euro (€)

0.6681

0.9069

Japanese yen (¥)

82.9876

112.6556

124.2158

British pound (£)

0.5287

0.7177

0.7913

0.006371

Swiss franc (Swfr)

0.7289

0.9895

1.0910

0.008783

1.3787

Australian dollar (A$)

1.0221

1.3875

1.5298

0.01232

1.9333

0.7132 1.4022

Use the currency exchange rates in Table 3.2 to calculate the equivalent amount of currency: C$94,350 = £? (Round to 2 decimal places)

172)

TABLE 3.2 Currency Cross Rates (Noon ET, Toronto, February 25, 2016) Per C$

Canadian dollar (C$) U.S. dollar (US$)

Version 1

Per US$ 1.3576

0.7366

Per €

Per ¥

Per £

Per Sw fr

Per A$

1.4968

0.01205

1.8914

1.3719

0.9784

1.1027

0.008877

1.3933

1.0106

0.7207

Euro (€)

0.6681

0.9069

0.008051

1.2637

0.9166

0.6537

Japanese yen (¥)

82.9876

112.6556

124.2158

156.9612

113.8563

81.1688

British pound (£)

0.5287

0.7177

0.7913

0.006371

0.7253

0.5173

Swiss franc (Swfr)

0.7289

0.9895

1.0910

0.008783

1.3787

Australian dollar (A$)

1.0221

1.3875

1.5298

0.01232

1.9333

0.7132 1.4022

Use the currency exchange rates in Table 3.2 to calculate the equivalent amount of currency: A$37,650 = ¥? (Round to the nearest whole number)

173)

TABLE 3.2 Currency Cross Rates (Noon ET, Toronto, February 25, 2016) Per C$

Canadian dollar (C$)

Per US$ 1.3576

Per €

Per ¥

Per £

Per A$

1.4968

0.01205

1.8914

1.3719

0.9784

1.1027

0.008877

1.3933

1.0106

0.7207

0.008051

1.2637

0.9166

0.6537

156.9612

113.8563

81.1688

0.7253

0.5173

U.S. dollar (US$)

0.7366

Euro (€)

0.6681

0.9069

Japanese yen (¥)

82.9876

112.6556

124.2158

British pound (£)

0.5287

0.7177

0.7913

0.006371

Swiss franc (Swfr)

0.7289

0.9895

1.0910

0.008783

1.3787

Australian dollar (A$)

1.0221

1.3875

1.5298

0.01232

1.9333

Version 1

Per Sw fr

0.7132 1.4022

Use the currency exchange rates in Table 3.2 to calculate the equivalent amount of currency: C$49,900 = €? (Round to 2 decimal places)

174)

TABLE 3.2 Currency Cross Rates (Noon ET, Toronto, February 25, 2016) Per C$

Canadian dollar (C$)

Per US$ 1.3576

Per €

Per ¥

Per £

Per Sw fr

Per A$

1.4968

0.01205

1.8914

1.3719

0.9784

1.1027

0.008877

1.3933

1.0106

0.7207

0.008051

1.2637

0.9166

0.6537

156.9612

113.8563

81.1688

0.7253

0.5173

U.S. dollar (US$)

0.7366

Euro (€)

0.6681

0.9069

Japanese yen (¥)

82.9876

112.6556

124.2158

British pound (£)

0.5287

0.7177

0.7913

0.006371

Swiss franc (Swfr)

0.7289

0.9895

1.0910

0.008783

1.3787

Australian dollar (A$)

1.0221

1.3875

1.5298

0.01232

1.9333

0.7132 1.4022

Use the currency exchange rates in Table 3.2 to calculate the equivalent amount of currency: £8950 = ¥? (Round to the nearest whole number)

Version 1

175) Calculate each exchange rate in the third column of the following table using the alternative version of the exchange rate given in the second column. (Maintain 4-figure accuracy) Part

Given exchange rate

Desired exchange rate

Swedish krona 1.00 = C$0.1501

Swedish krona ? = C$1.00

Singapore $1.225 = US$1.00

US$? = Singapore $1.00

¥7.412 = Mexican peso 1.00

Mexican peso ? = ¥1.00

C$1.00 = Indian rupee 43.96

C$? = Indian rupee 1.00

176) How much will it cost in Canadian dollars to purchase 2000 pesos in Mexican currency at a bank that charges a 3.5% commission on the transaction? Use an exchange rate of C$1.00 = Mexican peso 12.28

177) How much will it cost (in Canadian funds) to purchase £2000 worth of traveller's cheques if the commission rate for this quantity of cheques is 0.5%? Use an exchange rate of £1.00 = C$1.8914

178) Heinz returned from a holiday in Germany with €235. How much will he receive from his bank when he converts the currency back to Canadian dollars? The bank charges a 1.6% service charge for the transaction. Use an exchange rate of C$1.00 = €0.6681

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179) Keiko arrived in Oshawa to study English at Durham College. She used travelers' cheques totaling ¥1,000,000 to open a Canadian dollar bank account. What will her opening balance be if the bank charges 0.5% for the currency conversion? Use an exchange rate of C$1.00 = ¥82.9876

180) Kevin lives in Calgary and wants to buy a 2012 Corvette. The best price he can find for a low-mileage model in Alberta is $59,000. (No GST would be payable on this private sale.) Through autotrader.com he tracked down a comparable car in California that he can purchase for US$34,500. To bring the car into Canada, he will have to pay 5% GST on the purchase price at Canada Customs. Additional costs will be C$287 for airfare to San Diego, US$350 in special transaction and documentation costs, and US$850 in travel and accommodation costs while driving the vehicle back to Calgary. How much will he save (in C$) by buying the Corvette in California? Use an exchange rate of US$1.00 = C$1.3576

181) In October of 2014, Marielle bought 1200 shares of Yakamura Trading Co. on the Tokyo Stock Exchange at a price of ¥1150 per share. The exchange rate at the time was ¥94.96 per C$. She sold the stock for ¥1310 per share in August of 2015 when the exchange rate was ¥95.13 per C$. In Canadian dollars, how much did Marielle gain or lose on the investment?

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182) The following table presents the mid-rates, the Royal Bank's buy and sell rates, and ICE's buy and sell rates (at their Vancouver International Airport operation) on the same date for conversions between the Canadian dollar and three other major currencies. Royal Bank

ICE Currency Exchange

Mid-rate

Buy rate

Sell rate

Buy rate

Sell rate

C$1.4052/US$1

C$1.3853/US$1

C$1.4279/US$1

C$1.3943/US$1

C$1.5148/US$1

C$1.9762/£1

C$1.9366/£1

C$2.0290/£1

C$1.9867/£1

C$2.2916/£1

C$1.5905/€1

C$1.5384/€1

C$6435/1€1

C$1.5653/€1

C$1.8036/€1

a) As a percentage of the mid-rate, calculate to the nearest 0.01% the percent spread (between buy and sell rates) on US dollar conversions for each of the Royal Bank and ICE. b) As a percentage of the mid-rate, calculate the percent buy-sell spread on British pound conversions for each of the Royal Bank and ICE. c) As a percentage of the mid-rate, calculate the percent buy-sell spread on euro conversions for each of the Royal Bank and ICE

183) The following table presents the mid-rates, the Royal Bank's buy and sell rates, and ICE's buy and sell rates (at their Vancouver International Airport operation) on the same date for conversions between the Canadian dollar and three other major currencies. Royal Bank

ICE Currency Exchange

Mid-rate

Buy rate

Sell rate

Buy rate

Sell rate

C$1.4052/US$1

C$1.3853/US$1

C$1.4279/US$1

C$1.3943/US$1

C$1.5148/US$1

C$1.9762/£1

C$1.9366/£1

C$2.0290/£1

C$1.9867/£1

C$2.2916/£1

C$1.5905/€1

C$1.5384/€1

C$6435/1€1

C$1.5653/€1

C$1.8036/€1

How many more British pounds can you obtain with C$2000 at the Royal Bank than at ICE? On any currency exchange transaction, ICE applies a C$3.50 service charge. (Round to the nearest whole number)

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184) The following table presents the mid-rates, the Royal Bank's buy and sell rates, and ICE's buy and sell rates (at their Vancouver International Airport operation) on the same date for conversions between the Canadian dollar and three other major currencies. Royal Bank

ICE Currency Exchange

Mid-rate

Buy rate

Sell rate

Buy rate

Sell rate

C$1.4052/US$1

C$1.3853/US$1

C$1.4279/US$1

C$1.3943/US$1

C$1.5148/US$1

C$1.9762/£1

C$1.9366/£1

C$2.0290/£1

C$1.9867/£1

C$2.2916/£1

C$1.5905/€1

C$1.5384/€1

C$6435/1€1

C$1.5653/€1

C$1.8036/€1

How many more euros can you obtain with C$1500 at the Royal Bank than at ICE? On any currency exchange transaction, ICE applies a C$3.50 service charge. (Round to the nearest whole number)

185) The following table presents the mid-rates, the Royal Bank's buy and sell rates, and ICE's buy and sell rates (at their Vancouver International Airport operation) on the same date for conversions between the Canadian dollar and three other major currencies. Royal Bank

ICE Currency Exchange

Mid-rate

Buy rate

Sell rate

Buy rate

Sell rate

C$1.4052/US$1

C$1.3853/US$1

C$1.4279/US$1

C$1.3943/US$1

C$1.5148/US$1

C$1.9762/£1

C$1.9366/£1

C$2.0290/£1

C$1.9867/£1

C$2.2916/£1

C$1.5905/€1

C$1.5384/€1

C$6435/1€1

C$1.5653/€1

C$1.8036/€1

How many fewer Canadian dollars will you receive if you convert US$165 at ICE instead of at the Royal Bank? On any currency exchange transaction, ICE applies a C$3.50 service charge. (Round to the nearest whole number) Version 1

186) The following table presents the mid-rates, the Royal Bank's buy and sell rates, and ICE's buy and sell rates (at their Vancouver International Airport operation) on the same date for conversions between the Canadian dollar and three other major currencies. Royal Bank

ICE Currency Exchange

Mid-rate

Buy rate

Sell rate

Buy rate

Sell rate

C$1.4052/US$1

C$1.3853/US$1

C$1.4279/US$1

C$1.3943/US$1

C$1.5148/US$1

C$1.9762/£1

C$1.9366/£1

C$2.0290/£1

C$1.9867/£1

C$2.2916/£1

C$1.5905/€1

C$1.5384/€1

C$6435/1€1

C$1.5653/€1

C$1.8036/€1

How many fewer Canadian dollars will you receive if you convert €96 at ICE instead of at the Royal Bank? On any currency exchange transaction, ICE applies a C$3.50 service charge. (Round to the nearest whole number)

187) The following table presents the mid-rates, the Royal Bank's buy and sell rates, and ICE's buy and sell rates (at their Vancouver International Airport operation) on the same date for conversions between the Canadian dollar and three other major currencies. Royal Bank

ICE Currency Exchange

Mid-rate

Buy rate

Sell rate

Buy rate

Sell rate

C$1.4052/US$1

C$1.3853/US$1

C$1.4279/US$1

C$1.3943/US$1

C$1.5148/US$1

C$1.9762/£1

C$1.9366/£1

C$2.0290/£1

C$1.9867/£1

C$2.2916/£1

C$1.5905/€1

C$1.5384/€1

C$6435/1€1

C$1.5653/€1

C$1.8036/€1

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a) To the nearest 0.01%, what was the percent transaction cost on your purchase of £250 from each of the Royal Bank and ICE? On any currency exchange transaction, ICE applies a C$3.50 service charge. b) You returned from your trip to Scotland with £16. Assuming the exchange rates remained the same, what percent transaction cost would you have paid to convert £16 back to C$ at the Royal Bank and at ICE?

188) The following table presents the mid-rates, the Royal Bank's buy and sell rates, and ICE's buy and sell rates (at their Vancouver International Airport operation) on the same date for conversions between the Canadian dollar and three other major currencies. Royal Bank

ICE Currency Exchange

Mid-rate

Buy rate

Sell rate

Buy rate

Sell rate

C$1.4052/US$1

C$1.3853/US$1

C$1.4279/US$1

C$1.3943/US$1

C$1.5148/US$1

C$1.9762/£1

C$1.9366/£1

C$2.0290/£1

C$1.9867/£1

C$2.2916/£1

C$1.5905/€1

C$1.5384/€1

C$6435/1€1

C$1.5653/€1

C$1.8036/€1

a) To the nearest 0.01%, what was the percent transaction cost on your purchase of €1100 from each of the Royal Bank and ICE? On any currency exchange transaction, ICE applies a C$3.50 service charge. b) You returned from your trip to Italy with €53. Assuming the exchange rates remained the same, what percent transaction cost would you have paid to convert €53 back to C$ at the Royal Bank and at ICE?

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189) A cross-border shopping trip reveals that milk sells for US$3.53 per one-gallon jug versus C$6.44 per four-litre jug in Canada. Calculate the percent difference between Canada and the United States in the exchange rate-adjusted price of milk. Use the Canadian price as the base in the comparison. (1 U.S. gallon = 3.785 litres). Use the exchange rate US$1.00 = C$1.3576 and round your answer to the nearest 0.01%

190) If pork chops cost US$3.99 per pound in the United States and C$10.49 per kilogram in Canada, in which country are the chops more expensive? How much more expensive are they in C$ per kg? (1 kg = 2.2 pounds). Use the exchange rate C$1.00 = US$0.7366

191) Hamish and Grace MacDonald have been investigating the cost of a holiday in Britain. From their home in Welland, Ontario, it is equally inconvenient to fly out of Toronto or Buffalo, New York. On the Internet, they have found that they can fly Buffalo-London return on American Airlines for US$2323 each, rent a hotel room in London for two people for one night at a cost of £149, and join Jolly Tours the next day for a two-week all-inclusive coach tour at a cost of £1950 per person. Alternatively, the MacDonalds can purchase an all-inclusive package (including a similar coach tour) from a local travel agent for C$7195 per person. Which alternative is cheaper? How much cheaper is it in C$ for two people? Use the following exchange rates: US$1.00 = C$1.3576 and £1.00 = C$1.8914

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192) ArcelorMittal Dofasco can buy iron ore pellets from Minnesota at US$133 per short ton (2000 pounds) or from Labrador at C$165 per metric tonne (1000 kg). Which source is more expensive? How much more expensive is it in C$ per metric tonne? (1 pound = 0.4536 kg). Use the exchange rate US$1.00 = C$1.3576

193) The price of a 40-ounce bottle of rum at a U.S. border duty-free store was US$27.00. At the same time, the price of a 750-mL bottle of similar quality rum in an Ontario LCBO was C$28.95. Using the Ontario price as the base, what is the percent saving (on the unit price) by buying rum at the duty-free store? (1 litre = 35.2 fluid ounces). Use the exchange rate US$1.00 = C$1.3576 and round your answer to the nearest 0.01%

194) If the exchange rate in terms of units of Currency N per unit of Currency M decreases, which currency strengthened?

195) If the exchange rate in terms of units of currency P per unit of Currency Q increases, which currency weakened?

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196) If Currency G weakens relative to Currency H, will the exchange rate in terms of units of G per unit of H increase or decrease?

197) If Currency R strengthens relative to Currency S, will the exchange rate in terms of units of S per unit of R increase or decrease?

198) If the number of £ per C$1.00 increases by 0.054 from the value C$1.00 = £0.5287, which currency has depreciated and by what percentage? (Round to 2 decimal places)

199) If the number of C$ per ¥1.00 decreases by 0.00054 from the value C$0.01205 = ¥1.00, which currency has appreciated and by what percentage? (Round to 2 decimal places)

200) If the C$ weakens by 0.5% relative to the €, from the value C$1.00 = €0.6681, what will be the new values for € per C$1.00 and C$ per €1.00? (Round to 4 decimal places)

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201) If the C$ strengthens by 1.2% relative to the US$, from the value C$1.00 = US$0.7366, what will be the new values for US$ per C$1.00 and C$ per US$1.00? (Round to 4 decimal places)

202) If the C$ appreciates by C$0.0017 relative to the £, from the value C$1.8914 = £1.00, what will be the new value for £ per C$1.00? (Round to 4 decimal places)

203) If the C$ weakens by C$0.0033 relative to the US$, from the value C$1.3576 = US$1.00, what will be the new value for US$ per C$1.00? (Round to 4 decimal places)

204) If the C$ strengthens by £0.0021 from the value C$1.00 = £0.5287, what will be the new value of C$ per £1.00? (Round to 4 decimal places)

205) If the C$ weakens by €0.0211 from the value C$1.00 = €0.6681, what will be the new value of C$ per €1.00? (Round to 4 decimal places) Version 1

206) If the C$ per US$ exchange rate decreases by C$0.005 from its value C$1.3576 = US$1.00, what will be the change in the US$ per C$ exchange rate? (Round to 4 decimal places)

207) If the US$ per £ exchange rate increases by US$0.006 from its value US$1.3933 = £1.00, what will be the change in the £ per US$ exchange rate? (Round to 4 decimal places)

208) If the ¥ per A$ exchange rate increases by ¥1 from its value ¥81.1688 = A$1.00, what will be the change in the A$ per ¥ exchange rate? (Round to 5 decimal places)

209) If the € per ¥ exchange rate decreases by €0.0007 from its value €0.008051 = ¥1.00, what will be the change in the ¥ per € exchange rate? (Round to 4 decimal places)

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210) If the number of US$ per C$1.00 rises from 0.7588 to 0.7889, what will be the change in the C$ price to an importer of a US$1500 item?

211) If the number of ¥ per C$1.00 declines from 89.641 to 87.816, what will be the change in the C$ price to an importer of a ¥195,000 item?

212) If the number of £ per C$1.00 rises from 0.54182 to 0.55354, what will be the change in the C$ revenue from a foreign contract fixed at £23,000?

213) If the number of US$ per C$1.00 declines from 0.94168 to 0.92679, what will be the change in the C$ price per ounce of gold which a Canadian gold mine sells at the international price of US$975 per ounce?

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214) The basket of goods and services included in the Consumer Price Index cost $21,350 on the base date. Eight years later, the same basket cost $26,090. What was the CPI on the latter date?

215) A basket of goods and services representative of the CPI cost $2750 when the CPI stood at 118.3. a) What did the basket of goods cost 10 years earlier, when the CPI was at 93.1? b) What was the overall percent inflation experienced by consumers for the entire 10-year period? (Round to the nearest 0.01%)

216) In one year, the CPI increased from 106.3 to 108.9. How much money was required at the end of the year in order to have the same purchasing power as $1000 at the beginning?

217) A college student wishes to compare tuition fee increases during the period 2005 to 2015 to the general increase in the cost of living. Tuition increased from $350 per course in the 2005/2006 academic year to $495 per course in the 2015/2016 academic year. The CPI rose from 107.0 in mid-2005 to 126.6 in mid-2015. What would the tuition fee per course have been in the 2015/2016 year if tuition increases had merely kept pace with inflation during the 10 years?

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218) Statistics Canada calculates separate subindexes of the CPI for goods and for services. The goods index rose from 96.8 to 112.0 over a 10-year period. During the same period, the services index rose from 95.2 to 115.1. a) How much did representative goods worth $1000 at the beginning cost at the end of the 10-year period? b) How much did representative services worth $1000 at the beginning cost at the end of the 10-year period? c) What is the difference between the percent increase in the price level of services and the percent increase in the price level of goods during the decade? (Round to the nearest 0.01%)

219) From the end of 1990 to the end of 2015, the S&P/TSX Composite Index rose from 3257 to 13,279. If you had invested $50,000 in a portfolio of the shares of the companies in the Index at the end of 1990, what would the value of those shares have been at the end of 2015? (This calculation considers only the price appreciation of the original shares. It does not include the portion of the growth in the portfolio's value resulting from the receipt and reinvestment of dividends.)

220) From the end of 1990 to the end of 2015, the Standard & Poor's 500 (S&P 500) U.S. stock index rose from 330.2 to 2043.9. If you had invested US$50,000 at the end of 1990 in a portfolio of the shares of the 500 companies in the Index, what would the value (in US$) of those shares have been at the end of 2015? (This calculation considers only the price appreciation of the original shares. It does not include the portion of the growth in the portfolio's value resulting from the receipt and reinvestment of dividends.)

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221) The late 1970s and early 1980s were years of historically high rates of inflation in Canada. The CPI was at 70.8, 77.1, 84.5, 94.6, 105.4, and 114.1 at the beginning of 1978, 1979, 1980, 1981, 1982, and 1983, respectively. These price index numbers are quoted in terms of a base value of 100 in mid-1981. a) What amount was required at the beginning of 1983 in order to have the same purchasing power as $100 just 5 years earlier? b) What were the inflation rates for each of the years 1978 to 1982 inclusive? (Round to the nearest 0.01%)

222)

Express the following ratio in its lowest terms: 0.18 : 0.60 : 0.45

223)

Express the following ratio in its lowest terms:

224)

Express the following ratio in its lowest terms:

225)

Express the following ratio in its lowest terms:

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226)

Solve the following proportion for the unknown quantities: t : 26 : 10 = 24 : 39 : s

227)

Solve the following proportion for the unknown quantities: x : 3600 : y = 48 : 40 : 105

228)

Solve the following proportion to four-figure accuracy: 65 : 43 = 27.3 : x

229)

Solve the following proportion to four-figure accuracy: 1410 : 2330 : 870 = a : 550 : b

230) Mark, Ben, and Tanya own 4250, 2550, and 5950 shares, respectively, of MBT Inc. In lowest terms, what is the ratio of their shareholdings?

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231) Milan, Katka, and Shoshanna started their partnership with a total investment of $135,000 contributed in the ratio of 3 : 4 : 2. If each partner contributes another $10,000, what will be the ratio of their total contributions in lowest terms?

232) A test-marketing of a newly released Blu-ray disc in a representative Canadian city, with a population of 120,000, resulted in sales of 543 units in a 3-month period. If the Blu-ray disc sells at the same rate in the rest of the country, where 21,000,000 Canadians have access to retail outlets, what 3-month sales may be forecast for the Blu-ray disc?

233) Three years ago, when the CPI was at 115.8, the members of a union were earning $22.25 per hour. Now, with the current CPI at 120.2, they are negotiating for a new hourly rate that will restore their former purchasing power. What hourly rate are they seeking?

234) The new University Hospital is scheduled to have 436 beds. The ratio of nurses to beds to nurses' aides for staffing the hospital is 4 : 9 : 2. How many nurses and aides will need to be hired? (Round to the nearest whole number)

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235) If Indonesian rupiah 1.00 = C$0.0001121, how many rupiah can be purchased with C$1500? (Round to the nearest whole number)

236) For the last 5 years the sales of Departments D, E, and F have maintained a relatively stable ratio of 13 : 17 : 21. Department E is forecasting sales of $478,000 for next year. Based on the past sales ratio, what sales would be expected for Departments D and F? (Round to the nearest dollar)

237) If C$1.00 rises from ¥87.94 to ¥89.78, what will be the change in the C$ price to an importer of a ¥2,965,000 car?

238) A provincial government allocates 29% of its budget to education, 31% to health care, and 21% to social services. If the dollar amount budgeted for education is $13.7 billion, how much is budgeted for health care and for social services? (Round to the nearest $0.01 billion)

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239) Before Mr. and Mrs. Percival left for Great Britain, they purchased British pounds at an exchange rate of C$1.5947 = £1.00. When they returned to Canada 8 weeks later they converted their remaining £242 back to Canadian currency at the rate of C$1.632 = £1.00. How much did they gain or lose in Canadian dollars on the roundtrip transaction involving the £242?

240) How should common area costs totalling $28,575 be allocated among commercial tenants A, B, C, and D if the costs are prorated based on leased areas of 1260, 3800, 1550, and 2930 sq ft, respectively? (Round to the nearest dollar)

241) A profit-sharing bonus was divided among four employees-Ms. L, Mr. M, Ms. N, and Mr. P-in the ratio of 1.5 : 1 : 0.75 : 0.5, respectively. If Ms. N received $2000, how much did each of the others receive? (Round to the nearest dollar)

242) Wendy, Simone, and Leif share the costs of their coffee fund in the ratio will $50 be allocated among them?

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. How

243)

Mr. Nolan's will specifies that the proceeds from his estate be divided among his wife,

son, and stepson in the ratio of distribution of his $331,000 estate?

, respectively. How much will each receive from the

244) The CPI stood at 96.4, 98.6, 101.2, 103.3, 105.7, and 108.9 on the same date in successive years. a) What was the inflation rate: (i) in the fourth one-year interval? (ii) in the fifth one-year interval? (Round to the nearest 0.1%) b) What amount was required at the end in order to have the same purchasing power as $100 five years earlier?

245) If the exchange rate between the US$ and the C$ declines from US$1.2158 to US$1.2012 per C$, what will be the change in the C$ price to an importer of a US$2000 item?

246) A partnership agreement provides that half of the annual profit be distributed in proportion to each partner's investment in the partnership, and that the other half be distributed in proportion to the total number of hours that each partner worked in the business during the year. How should the most recent year's profit of $84,780 be allocated if the amounts invested by Huey, Dewey, and Louie are $70,000, $30,000, and $45,000, and their hours of work for the year were 425, 1680, and 1440, respectively?

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247) A steel company in Hamilton can purchase Alberta coal at C$105 per metric tonne (1000 kg) or West Virginia coal at US$95 per ton (2000 lb) (1 kg = 2.205 lb). How much cheaper in C$ per metric tonne is the less expensive source if US$0.805 = C$1.00?

248) The exchange rate between Currencies X and Y is currently Y0.05614 = X1.00. If X weakens by 1.5% relative to Y, what will be the new values for the exchanges rates per unit of X and per unit of Y? (Maintain 5-figure accuracy)

249) MrsCohen invested $20,000 in bonds, $15,000 in stocks and $12,000 in common shares. What is the ratio of bonds to stocks to common shares in lowest terms?

250) Kristina, Larissa, and Marika invested $50,000, $80,000 and $100,000 respectively in a fashion retail business. What is the ratio of Kristina's to Larissa's to Marika's investment in lowest terms?

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251) Stanford Marketing raised $2.1 million to launch its new product line. Preferred shareholders contributed $600,000, common shareholders $1 million, and the remainder was borrowed. What is the ratio of preferred funds to common funds to debt, in lowest terms?

252) Misha took orders for gift-wrapping packages at Christmas. Of the 2080 orders, 45% of customers preferred red paper and ribbon, 30% preferred green, and 25% preferred blue or white. What is the ratio of sales for red, green and blue or white gift-wrapping packages in lowest terms?

253) Julia's punch recipe consists of ½ ginger ale, ⅓ orange juice, and 1/6 secret ingredient. What is the ratio of ginger ale to orange juice to secret ingredient, in lowest terms?

254) Sam and his sister shared an inheritance from their aunt in the ratio of 4 : 5 respectively. Sam's share was $21,000. What was his sister's share?

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255) Kristina, Larissa, and Marika invested $50,000, $80,000 and $100,000 respectively in a fashion retail business. They decided to expand the store and needed an extra $75,000. How much of the $75,000 should each invest in order to maintain the same proportion? (Round to the nearest dollar)

256) A manufacturing business currently employs 10 managers, 550 assembly line workers, and 140 support staff. The business is expanding, and expects to add 175 assembly line workers. Assuming the same proportions, how many more managers and support staff should be hired? (Round to the nearest whole number)

257) Sam, Sue, and Cliff formed a partnership in the ratio of 1 : 0.80 : 1.25. If Sue's contribution was $32,000, how much did Sam and Cliff contribute?

258) The local college runs 24 classes of Business Mathematics for the 1000 first-year students. Next year, the college is expecting 1300 first-year students. Assuming the same student number-Business Mathematics class ratio, how many additional classes of Business Mathematics should the college plan for? (Round to the nearest whole number)

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259) A three-year magazine subscription costing $120 is cancelled after fifteen months. The company has a policy to refund any remaining monthly issues minus a $25 cancellation fee. What refund should the company pay?

260) Three partners invest in a business in the ratio of 30%, 25%, and 45%. How should the most recent quarter's profit of $73,800 be distributed?

261) The Mississauga plant of a pharmaceutical distribution company handled 2,750,000 cases of products during the last year, while the Brampton plant handled 2,250,000 cases. How will overhead costs of $2,500,000 for the year be allocated between the two plants if based on the number of cases handled?

262) The ownership interests of four partners in a manufacturing business are 20%, 30%, 10%, and 40%. The partner with the 20% interest wants to sell her interest for $125,000. The other partners have agreed to split the 20% interest and to pay the asking price in proportions that will leave them with the same relative ownership as they now possess. How much should each partner contribute towards the $125,000 purchase price?

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263) A company has a profit-sharing plan for each employee according to their job classification. Senior management, supervisors, and other staff, which includes clerical and warehouse workers, split profits in the ratio of 8 : 5 : 3. The company has 350 employees including 10 managers and 25 supervisors. For the current year, the profits are $550,000. What shares of the profits will each senior manager, supervisor, and other staff receive?

264) The CPI rose from 95.3 to 115.1 over ten years. If you earned $27 per hour in the first year, how much would you have to earn after ten years to maintain the same purchasing power?

265) A basket of goods and services cost $2550 when the CPI was 114.1. What was the value of the basket of goods when the CPI was 70.8?

266) Xing has budgeted 12% of his monthly spending to textbooks and internet, 22% to entertainment and 40% to rent and utilities. In lowest terms, what is the ratio of his spending for cell phones and internet to food to rent and utilities?

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267) Sue, Bob, and Ron Maloney's partnership interests in Swiss Machinery Timepieces are in the ratio of their capital contributions of $39,000, $26,000, and $32,5000, respectively. In lowest terms, what is the ratio of Bob's to Ron's to Sue's partnership interest?

268) Heresford Developments has obtained $1.8 million of total capital from three sources. Preferred shareholders contributed $300,000 (preferred equity), common shareholders contributed $1.2 million (common equity), and the remainder was borrowed (debt). What is the firm's ratio of debt to preferred equity to common equity? (Express as a ratio whose smallest term is 1 and round to 2 decimal places)

269) The cost to manufacture a airplane wings consists of $14,000 for materials, $8,000 for direct labour, and $2,500 for overhead. Express the three cost components as a ratio whose smallest term is 1. (Round to 2 decimal places)

270) The Conservative budget forecasts expenditures of $31.2 billion on education, $27.3 billion on health services, and $19.5 billion on social services. Express the three budget items as a ratio in lowest terms.

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271) The amount of aluminum used in an industrial process is 25% by weight. In lowest terms, what is the ratio (by weights) of aluminum to steel in the final product?

272) An industrial kitchen uses a new nitrogen to oxygen mixture for its ovens. The instructions for preparing the mix are to add 250 units of nitrogen to 5000 units of oxygen. In lowest terms, what is the ratio (by volumes) of oxygen to nitrogen in the mix?

273) A lawyer has figure out that for every 18 minutes of work on a real estate file, his legal assistant works 14 minutes on the same file. If the amount of time will increase to 23 minutes per file for the lawyer, how many minutes should he assign his assistant to work on the file? (rounded to the nearest minute)

274) It takes 3 minutes to get a car into the garage, 12 minutes to change the oil and 4 minutes to complete the inspection. During an overhaul, the company wants to drop the entry time to 2 minutes and drop the other processes by the same ratio. How many minutes will they allow for the oil change now?

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275) You wish to change the number of units involved in the manufacturing process. Currently, you use an 88:17 mixture (88 units of A and 17 units of B) You wish to keep an equivalent ratio but want to increase the number of units of B to 45. How many units A will be required for the new mixture. (3-figure accuracy):

276) Solve the following proportion for the unknown quantity (3-figure accuracy): d : 13 = 16 : 97.5

277)

Solve the following proportion to four-figure accuracy: 200 : 800 : 450 = a : 400 : b

278) Mark, Ben, and Tanya wish to purchase a food truck together. Mark has $15,000 to invest, Ben has $9,000 to invest and Tanya has $21,000 to invest. What is the ratio of ownership to its lowest terms.

279) Dakota, John and Kennedy wish to purchase and share a vacation home. The vacation home will cost $250,000CDN and will have annual maintenance costs of $12,000. Dakota invests $100,000, John invests $50,000 with the balance paid by Kennedy. How much will Kennedy have to contribute for annual costs if they pay in the same ratio as the ownership ratio? Version 1

280) A test-market of a new vegetable burger in a representative Canadian city, with a population of 120,000, resulted in sales of 543 units in a 3-month period. If the vegetable burger sells at the same rate in the rest of the country, where 33,000,000 Canadians have access to retail outlets, what 3-month sales may be forecast for the vegetable burger?

281) Three years ago, when the CPI was at 110.2, the members of a union were earning $18.75 per hour. Now, with the current CPI at 120.2, they are negotiating for a new hourly rate that will restore their former purchasing power. What hourly rate are they seeking?

282) The new college in Winnipeg, MB is scheduled to have 436 new students. The ratio of instructors to students to instructional aides for staffing the college is 1 : 29 : 2. How many instructors and aides will need to be hired? (Round to the nearest whole number)

283) You wish to travel to Thailand for one month. You are advised to obtain 6,000 Bath before leaving Canada. If the current exchange rate is $1C for 25.256 Baht, how much will it cost you in Canadian dollars? (round to the nearest cent)

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284) For the last 5 years the rentals of sedans, trucks and convertibles have maintained a relatively stable ratio of 13 : 17 : 21. The truck area is forecasting sales of $478,000 for next year. Based on the past sales ratio, what sales would be expected for sedans and convertibles? (Round to the nearest dollar)

285) If you wish to travel to Japan and the exchange rate for C$1.00 rises from ¥87.94 to ¥89.78, what will be the change in the C$ price to an airline ticket of a ×2,965,000 overseas ticket?

286) The Omni Corporation allocates 35% of its budget to military, 45% to health care, and the rest to transportation. If the dollar amount budgeted for military is $3.7 million, how much is budgeted for health care and for transportation? (Round to the nearest dollar)

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287) Before Mr. and Mrs. Xiang left for Great Britain, they purchased British pounds at an exchange rate of C$1.8924 = £1.00. Due to Brexit, the value of the British pound changed. When they returned to Canada 8 weeks later, they converted their remaining £242 back to Canadian currency at the rate of C$1.8725 = £1.00. How much did they gain or lose in Canadian dollars on the roundtrip transaction involving the £242?

288) You wish to start a new business that rents out office space. You have three spaces, 100sq feet, 125sq feet and 200sq feet. The expenses for the administrative assistant will be assigned based on square footage. If the administrative will cost $200 per day, how much will be allotted to each tenant per day of rental?

289) The United Way collects money and assigns the amounts to expenses and charity work. If the United Way collected $15,562 at one event and had to split the money as follows: 4% to administration, 10% to marketing, 52% to the national charity and the remainder to MB charity. How much money went to MB for charity work? (Round to the nearest dollar)

290) Lei, Alf, and Raia share the costs of their coffee fund based on the number of cups each drink during the week. All waste gets shared equally. How will $50 be allocated among them if Lei drinks 5 cups, Alf drinks 4 cups and Raia drinks 8 cups. Six cups were thrown out by the end of the week.

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291) You are currently planning how split up your estate. You have two siblings and one parent. You wish to leave 25% to your parent, 20% to your older sister, 30% to your younger brother and the rest to charity. How much money will the charity receive if your net worth is $264,000 when you pass away?

292) Mequina Company had two partners, Sunna and Bostwick. Both partners had agree to split all expenses and revenue based on their initial contributions. Sunna placed $195,000 into the company and Bostwick invested $95,000 into the company. If total expenses were $27,500 and total revenue was $196,000, how much did each partner earn in gross profit?

293) Xu, Shu and Xi have started a new consulting company. Xu contributed $25,000, Shu contributed $35,000 and Xi contributed $10,000. The agreement for salaries is Xu earns $40,000, Shu earns $55,000 and Xi earns $25,000. If there is any residual income, it is shared based on their initial investment. If the company earns $252,000 during the year, how much did each partner earn in total?

294) Canuck Inns and Hotel Chain assigns head office costs between each of the hotels it owns plus a 10% premium. It assigns cost based on rooms. Hotel 1 has 252 rooms, Hotel 2 has 139 rooms and Hotel 3 has 323 rooms. If total expenses were $1.2 million, how much did each of the hotels have to contribute to head office costs?

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295) With the legislation of marijuana in Canada, distributors are planning sales based on provincial use. For Western Canada, 20% of the 4.992 million people in B.C. will purchase marijuana. 30% of the 4.3 million people in Alberta will purchase, 12% of the 1.2 million people in Saskatchewan will purchase and 15% of the 1.4 million people in Manitoba will make a purchase. If the distributor is planning on $2.6 million in sales, what is the expected sales per province? (round to the nearest dollar)

296) IG is planning on the bonuses for the four top sales people in Western Canada. The total bonus budget will be $200,000. The bonus will be based on the ratio of all sales that are greater than $250,000. The following are the sales figures: Kailey $322,000, Kit $319,000, Kern $400,000 and Liam $397,000. Based on these sales figures, how much did each salesperson earn in bonus?

297) Oxford Mining operates four different mines. Each year, Oxford Mining offers its common shareholders a dividend payment. For 2019, Oxford Mining will distribute $2.9 million. Each of the four mines must earn enough money to cover the dividend. The amount of money that needs to be collected from each mine will be in ratio to the tonnes of ore processed at each mine. If mine A process 10.6 tonnes, mine B processes 8.6 tonnes, mine C processes 9.2 tonnes and mine D processes 7.6 tonnes of ore. How much will each have to contribute to the $2.9 million in dividends?

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298) Canadian Brewing Restaurants has their servers share their tips with the other staff working during a shift. The total tips collected totaled $352. The ratio for distribution is bartenders, cooks and dishwashers get 4:3:1 respectively. There were two bartenders, four cooks and two dishwashers who worked the shift. How much did each of the staff members earn in tips?

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Answer Key Test name: Chap 04_10ce 1) C 2) B 3) A 4) B 5) B 6) C 7) D 8) D 9) E 10) A 11) B 12) C 13) D 14) E 15) A 16) B 17) C 18) D 19) E 20) A 21) B 22) C 23) D 24) E 25) A 26) B Version 1

27) C 28) D 29) E 30) A 31) B 32) C 33) D 34) E 35) A 36) B 37) C 38) D 39) E 40) A 41) B 42) C 43) D 44) E 45) A 46) B 47) C 48) D 49) E 50) A 51) B 52) C 53) C 54) A 55) B 56) D Version 1

57) E 58) D 59) A 60) D 61) E 62) E 63) C 64) A 65) E 66) E 67) B 68) C 69) C 70) D 71) C 72) D 73) B 74) D 75) C 76) E

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CHAPTER 5 1) An invoice for $5000 dated September 1 with terms 2/10, 1½/20, n/30 is received in the mail on September 3rd. A payment of $2000 is made on September 12th. To the nearest dollar, how much is credited to the account? A) $2030 B) $2000 C) $2040 D) $1970 E) $1930

2) An invoice for $6000 dated September 1 with terms 2/10, 1½/20, n/30 is received in the mail on September 3rd. A payment of $3000 is made on September 12th. To the nearest dollar, what is the outstanding balance? A) $3000 B) $2954 C) $2940 D) $3060 E) $3045

3) An invoice for $7000 dated September 1 with terms 2/10, 1½/20, n/30 is received in the mail on September 3rd. If the company wants to reduce the outstanding balance to $4000, how much should they pay on September 12? A) $3000 B) $2940 C) $2955 D) $3920 E) $3940

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4) An invoice for $8000 dated September 1 with terms 2/10, 1½/20, n/30 is received in the mail on September 3. The company sent a cheque on September 12 for $2500. How much is credited to their account? A) $2462.50 B) $2500 C) $2551.02 D) $2538.07 E) $2450

5) An invoice for $9000 dated September 1 with terms 2/10, 1½/20, n/30 is received in the mail on September 3. The company sent a cheque on September 12 for $5000. What is their outstanding balance? A) $4000.00 B) $3897.96 C) $3900.00 D) $3925.00 E) $3923.86

6) An invoice for $20,000 dated March 15 with terms 3/10, 2/20, n/30 is received in the mail on March 17th. A payment of $10,000 is made on March 26. To the nearest dollar, how much is credited to the account? A) $10,204 B) $10,150 C) $9800 D) $9850 E) $10,000

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7) An invoice for $25,000 dated March 15 with terms 3/10, 2/20, n/30 is received in the mail on March 17. A payment of $15,000 is made on March 26. What is the outstanding balance? A) $9550.00 B) $9700.00 C) $10,000.00 D) $10,300.00 E) $9693.88

8) An invoice for $50,000 dated March 15 with terms 3/10, 2/20, n/30 is received in the mail on March 17. If the company wants to reduce the outstanding balance to $25,000, how much should they pay on March 26? A) $24,250 B) $25,000 C) $24,500 D) $25,500 E) $25,750

9) An invoice for $75,000 dated March 15 with terms 3/10, 2/20, n/30 is received in the mail on March 17. The company sent a cheque on March 26 for $50,000. How much is credited to their account? A) $49,000.00 B) $48,500.00 C) $50,000.00 D) $51,020.41 E) $51,546.39

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10) An invoice for $60,000 dated March 15 with terms 3/10, 2/20, n/30 is received in the mail on March 17. The company sent a cheque on March 26 for $40,000. What is their outstanding balance? A) $20,000.00 B) $18,762.89 C) $19,200.00 D) $18,800.00 E) $19,183.67

11) M Studios buys cameras at a unit cost of $250. Their operating expense is 40% per unit of cost, and their desired unit operating profit is 30% of cost. What selling price should M Studios advertise for the camera? A) $425 B) $350 C) $325 D) $320 E) $375

12) M Studios buys cameras at a unit cost of $200. Their operating expense is 35% per unit of the selling price, and their desired unit operating profit is 25% of the selling price. What selling price should M Studios advertise for the camera? A) $320 B) $500 C) $250 D) $270 E) $425

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13) M Studios buys cameras at a unit cost of $150. Their operating expense is 20% per unit of cost, and their desired unit operating profit is 30% of cost. What is M Studios's rate of markup on cost? A) 33.3% B) 20% C) 50% D) 30% E) 25%

14) M Studios buys cameras at a unit cost of $125. Their operating expense is 45% per unit of cost, and their desired unit operating profit is 25% of cost. To the nearest 1%, what is M Studios' rate of markup on selling price? A) 60% B) 45% C) 25% D) 41% E) 40%

15) M Studios buys cameras at a unit cost of $225. Their operating expense is 30% per unit of the selling price, and their desired unit operating profit is 20% of the selling price. What is M Studios' rate of markup on cost? A) 50% B) 80% C) 60% D) 75% E) 100%

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16) M Studios buys cameras at a unit cost of $140. Their operating expense is 40% per unit of the selling price, and their desired unit operating profit is 25% of the selling price. What is M Studios' rate of markup on selling price? A) 65% B) 22.75% C) 75% D) 25% E) 60%

17) The cost of a sweater is $30. If the retailer wants a rate of markup on selling price of 50%, what is the selling price? A) $45 B) $60 C) $75 D) $40 E) $50

18) The cost of a coat is $80. If the retailer wants a rate of markup on selling price of 40%, what is the amount of markup on cost? A) $32 B) $120 C) $53.33 D) $150 E) $50

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19) A dining room set costs $400, less 30% and 10%. The overhead costs are 25% of cost and operating profit is 30% of cost. What is the selling price of the set? A) $252.00 B) $315.00 C) $327.60 D) $390.60 E) $372.00

20) A dining room set costs $400, less 30% and 10%. The overhead costs are 25% of cost and operating profit is 30% of cost. What is the break-even price of the set? A) $300.00 B) $390.60 C) $200.00 D) $325.00 E) $315.00

21) A dining room set costs $400, less 30% and 10%. The overhead costs are 25% of cost and operating profit is 30% of cost. After three months, the set is reduced to $200. To the nearest 0.1%, what is the rate of markdown of the set? A) 95.3% B) 75.6% C) 36.5% D) 20.6% E) 48.8%

22) A dining room set costs $400, less 30% and 10%. The overhead costs are 25% of cost and operating profit is 30% of cost. After three months, the set is reduced to $200. What was the operating profit or loss of the set at the reduced price? Version 1

A) loss of $52 B) loss of $115 C) loss of $390.60 D) loss of $175 E) loss of $63

23) A product costing $350, less 30%, 20%, and 10%, sells to allow for overhead expenses of 30% of the selling price and profit of 20% of the selling price. What is the single equivalent trade discount? A) 50.4% B) 50% C) 49.6% D) 40% E) 60%

24) A product costing $350, less 30%, 20%, and 10%, sells to allow for overhead expenses of 30% of the selling price and profit of 20% of the selling price. What is the regular selling price? A) $264.60 B) $300.00 C) $315.00 D) $352.80 E) $385.00

25) A product costing $350, less 30%, 20%, and 10%, sells to allow for overhead expenses of 30% of the selling price and profit of 20% of the selling price. During a sale, the product is marked down by 40%. What is the sale price?

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A) $158.76 B) $180.00 C) $252.00 D) $141.12 E) $211.68

26) A product costing $350, less 30%, 20%, and 10%, sells to allow for overhead expenses of 30% of the selling price and profit of 20% of the selling price. What is the break-even price? A) $282.24 B) $255.78 C) $266.40 D) $270.90 E) $291.90

27) A product costing $350, less 30%, 20%, and 10%, sells to allow for overhead expenses of 30% of the selling price and profit of 20% of the selling price. What is the rate of markup on cost? A) 50% B) 75% C) 100% D) 30% E) 20%

28)

A 12.5% discount allowed on an article amounted to $25.50. What was the list price?

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A) $204.00 B) $229.50 C) $3.19 D) $29.14 E) $178.50

29)

What single discount rate is equivalent to multiple discounts of 20%, 5%, 2%? A) 25.52% B) 27% C) 63% D) 74.48% E) 23.97%

30) After discounts of 20% and 10%, an item sold for $115.50. What was the amount of the discount? A) $32.34 B) $385.00 C) $83.16 D) $80.85 E) $44.92

31) An invoice for $620 dated November 5 with payment terms of 3/10, 2/15, n/30, was paid in full on November 15. What was the amount paid?

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A) $18.60 B) $613.80 C) $620.00 D) $607.60 E) $601.40

32) Sally sent a cheque for $8000 on June 15 in response to an invoice for $12,000 dated June 8 with terms 5/10, n/30. What balance did Sally still owe? A) $4000.00 B) $8400.00 C) $3578.95 D) $8421.05 E) $3600.00

33) Roller skates cost a retailer $120.00 less 20%, 10%. The retailer sold them for $150.00. To the nearest 1%, what was the rate of markup on cost? A) 20% B) 44% C) 55% D) 74% E) 42%

34) A pair of shoes listed at $70 less 20% is purchased by a merchant who sells them for $98. To the nearest 1%, what is the merchant's rate of markup on selling price?

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A) 43% B) 75% C) 40% D) 29% E) 67%

35) The rate of markup on selling price is 20% for an item that cost the retailer $84. What is the selling price? A) $67.20 B) $16.80 C) $58.00 D) $105.00 E) $26.00

36) Acme Shoes marked up a pair of shoes from the $43.00 cost to $75.00. To the nearest 0.01%, what is the rate of markup on cost? A) 57.33% B) 42.67% C) 174.42% D) 68.50% E) 74.42%

37) An item regularly priced at $89.00 is marked down to the cost price for a clearance sale. If the item cost the retailer $40.05, what is the rate of markdown?

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A) 45% B) 49% C) 55% D) 22% E) 122%

38) A retailer buys T-shirts for $12.50. They are marked up to cover overhead of 40% of cost and a profit of 10% of cost. To the nearest 0.1%, what is the rate of markdown if the T-shirts are sold at the break-even price? A) 6.7% B) 50.0% C) 26.7% D) 23.3% E) 33.3%

39) A television set which cost a dealer $375 was marked up 140%. This item was then marked down 40% for quick sale. What was the sale price? A) $900.00 B) $210.00 C) $360.00 D) $525.00 E) $540.00

40) An employer will cut his current workforce of 38,000 as follows: 8% now, 6% in one year, and 4% two years from now. To the nearest whole number, how many employees will the employer have after all cuts?

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A) 31,548 B) 29,280 C) 31,160 D) 34,960 E) 6840

41) An employer will cut his current workforce of 38,000 as follows: 8% now, 6% in one year, and 4% two years from now. To the nearest whole number, how many employees will be cut one year from now? A) 6840 B) 1315 C) 2280 D) 3040 E) 2098

42) An invoice for $1865 dated March 16 has terms 2/10, n/30. The goods are received on April 11. When does the discount period end? A) March 26 B) April 15 C) April 16 D) April 21 E) March 20

43) An invoice for $1865 dated March 16 has terms 2/10, n/30. The goods are received on April 11. When does the credit period end?

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A) March 26 B) April 15 C) April 16 D) April 21 E) March 16

44) An invoice for $1865 dated March 16 has terms 2/10, n/30. The goods are received on April 11. If a payment of $900 is made on March 20, what will be the new balance? A) $918.00 B) $900.00 C) $918.37 D) $947.00 E) $946.63

45) A retailer buys shoes from a supplier for $45 per pair less a trade discount of 10%. The retailer sells these shoes at a regular price of $75 per pair. His overhead expenses are 20% of the regular selling price. What is the operating profit per pair? A) $19.50 B) $34.50 C) $24.00 D) $39.00 E) $9.75

46) A retailer buys shoes from a supplier for $45 per pair less a trade discount of 10%. The retailer sells these shoes at a regular price of $75 per pair. His overhead expenses are 20% of the regular selling price. What is the rate of markup on selling price per pair?

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A) 77% B) 26% C) 46% D) 48% E) 54%

47) A retailer buys shoes from a supplier for $45 per pair less a trade discount of 10%. The retailer sells these shoes at a regular price of $75 per pair. His overhead expenses are 20% of the regular selling price. What is the break-even selling price? A) $34.50 B) $54.00 C) $55.50 D) $60.00 E) $48.60

48) AZCO purchased an item for $695 less 30% and 20%, and marked it up 125% of cost. During a special sale, the company sold the item at 40% off. Overhead is 20% of cost. What was the sale price? A) $875.70 B) $868.75 C) $953.54 D) $525.42 E) $521.25

49) AZCO purchased an item for $695 less 30% and 20%, and marked it up 125% of cost. During a special sale, the company sold the item at 40% off. Overhead is 20% of cost. At the sale price, what was the rate of markup on cost?

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A) 19.6% B) 40% C) 125% D) 35% E) 25.9%

50) AZCO purchased an item for $695 less 30% and 20%, and marked it up 125% of cost. During a special sale, the company sold the item at 40% off. Overhead is 20% of cost. What was the profit (loss) at the sale price? A) $136.22 B) ($169.58) C) ($116.76) D) $408.66 E) $58.38

51) Calculate the net price of a snow blower that has a list price of $1,450 and is subject to a trade discount of 27.5%. A) $1,175 B) $2,000 C) $1,137 D) $1,051.25 E) $992.50

52) Calculate the net price of a vacuum cleaner that has a list price of $699 and is subject to a trade discount of 35%.

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A) $245 B) $454.35 C) $664.65 D) $755 E) $944

53) An MP3 player has a list price of $249 and is subject to a trade discount of 35%. Calculate the net price. A) $411 B) $336.25 C) $214 D) $161.85 E) $87

54) Mavis Industries sells industrial fans that have a list price of $587.50. The trade discount that they offer to DonEllis Construction is 37%. To the nearest dollar, what is the net price? A) $217 B) $370 C) $551 D) $625 E) $806

55) The net price of a computer that is subject to a trade discount of 25% is $1,251. What is the list price?

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A) $938 B) $1,276 C) $1,564 D) $1,600 E) $1,668

56) After a trade discount of 37%, a set of patio furniture is sold at a net price of $577. Calculate the list price to the nearest dollar. A) $941 B) $916 C) $790 D) $614 E) $364

57) To the nearest dollar, what is the list price of a sofa that has a net price of $1,119 and a trade discount of 26.7%? A) $1,356 B) $1,418 C) $1,527 D) $1,744 E) $1,939

58) Ace Fasteners Ltd. offers Bob's Hardware a trade discount of 44% on all products. Calculate the total list price, to the nearest dollar, of a shipment for which Bob's is charged $859.

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A) $481 B) $665 C) $1,237 D) $1,340 E) $1,534

59) The list price is $593 and the net price is $318. To the nearest 0.1%, what is the trade discount rate? A) 53.6% B) 27.5% C) 72.5% D) 46.4% E) 86.5%

60) The net price of an item is $327. The list price is $855. To the nearest 0.1%, what is the rate of trade discount? A) 61.8% B) 52.8% C) 44.0% D) 38.2% E) 16.1%

61) Martin Auto Parts charges Sam's Service Centre $386 for a rebuilt transmission that has a list price of $925. To the nearest 0.1%, what is the rate of trade discount?

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A) 22.9% B) 32.2% C) 40.0% D) 58.3% E) 66.7%

62) To the nearest 0.1%, calculate the trade discount rate on an item that is listed for $1,950 and has a net price of $1,433. A) 36.1% B) 73.5% C) 26.5% D) 63.9% E) 51.7%

63)

A 24% trade discount is equal to $365. To the nearest dollar, what is the list price? A) $453 B) $1,156 C) $1,521 D) $993 E) $1,799

64) The difference between the list price and the net price on a motorbike is $772. The rate of trade discount is 27%. To the nearest dollar, what is the list price?

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A) $1,057 B) $2,859 C) $3,187 D) $981 E) $1,833

65) What is the net price, to the nearest dollar, of an item if the 17.5% trade discount is equal to $32.44? A) $381 B) $185 C) $153 D) $217 E) $92

66) The 55% trade discount on an item is equal to $509. To the nearest dollar, what is the net price? A) $355 B) $488 C) $667 D) $789 E) $416

67) A trade discount series of 30%/15%/5% is offered on a product that has a list price of $8,900. To the nearest dollar, what is the net price?

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A) $4,450 B) $5,031 C) $6,555 D) $7,221 E) $7,925

68) The list price of a garden tractor is $2,899. The trade discount series is 20%/12%. To the nearest dollar, calculate the net price of the tractor. A) $2,041 B) $1,971 C) $1,885 D) $1,842 E) $1,627

69) If the trade discount series is 30%/20%/4% and the net price is $377, what is the list price? Round to the nearest dollar. A) $928 B) $1,335 C) $2,027 D) $701 E) $866

70) If the trade discount series is 40%/15%/10% and the net price is $555, what is the list price? Round to the nearest dollar.

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A) $916 B) $1,209 C) $1,421 D) $708 E) $591

71) What single rate of discount would be equivalent to a series of 15%/8%/4%? Round to the nearest 0.1%. A) 48.0% B) 27.0% C) 24.9% D) 10.0% E) 21.4%

72) What single rate of discount would be equivalent to a series of 25%/18%/10%? Round to the nearest 0.1%. A) 55.4% B) 53.0% C) 41.7% D) 34.3% E) 44.7%

73) An invoice for $45,780 has terms of 3/15, n/90. The date of the invoice is March 10. What payment on March 23 would be enough to settle the debt? Round to the nearest dollar.

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A) $44,407 B) $38,913 C) $41,660 D) $45,780 E) $44,219

74) The payment terms on a $2,433 invoice dated May 6 are 2/10, n/30. What payment on May 15 would pay off the debt? Round to the nearest dollar. A) $2,190 B) $2,433 C) $2,384 D) $1,845 E) $2,406

75) A $7,350 invoice dated August 3 has payment terms of 4/10, 2/30, n/60. If the invoice is paid on August 20 how much must the payment be? A) $7,497 B) $6,832 C) $6,615 D) $7,056 E) $7,203

76) An invoice dated January 22 has payment terms of 3/25, n/90. On what date would the cash discount expire?

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A) February 1 B) February 16 C) February 28 D) March 3 E) April 22

77) An invoice dated October 16 has payment terms of 2/20, n/45. On what date would the cash discount expire? A) October 26 B) November 30 C) November 5 D) October 18 E) December 7

78) Parker Transport received a bill for $11,400 dated June 8 with payment terms of 3/15, n/45. What payment on June 22 would reduce the amount owing to $4,000? A) $7,178 B) $7,058 C) $7,400 D) $3,880 E) $9,690

79) Mack the Mover received a bill for $7,490 dated April 17 with payment terms of 4/20, n/90. What payment on May 4 would reduce the amount owing to $2,500? Round to the nearest dollar.

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A) $4,990 B) $5,019 C) $5,992 D) $4,690 E) $4,790

80) Calculate the retail price of an item for which the retailer paid $120 and applied a markup on cost of 30% of cost. A) $150 B) $156 C) $168 D) $171 E) $189

81) If Clarington Sporting Goods has to pay $88 for a pair of skates and then they apply a markup of 40% of cost, what is the selling price? A) $82.20 B) $89 C) $123.20 D) $147.50 E) $176

82) The retailer's cost is $86 and their rate of markup on selling price is 26%. Calculate the selling price.

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A) $99 B) $108.40 C) $112 D) $116.22 E) $129

83) Benson's Super Mart sets retail prices so that the markup on everything they sell is 35% of the selling price. What price would Benson set on an item which costs him $3.28? A) $4.43 B) $5.05 C) $7.30 D) $9.37 E) $3.63

84) What is the cost of an item for which the retail selling price is $860 and the margin is 25% of the selling price? A) $215 B) $688 C) $645 D) $445 E) $1,147

85) If Maury's Work Warehouse sets retail prices so that markups are equal to 20% of cost, what is the cost of a pair of work boots that have a retail price of $129?

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A) $108.00 B) $107.50 C) $101.91 D) $92.00 E) $86.50

86) Fine's Furniture pays the manufacturer $200 for a reclining chair. They set a retail price to cover overhead expenses of 22% of cost plus profit. If they sell the chair for $399 what is their rate of profit expressed as a percentage of cost? A) 28.4% B) 38.8% C) 99.5% D) 49.9% E) 77.5%

87) "Paul's Guitars always sells for Less" is a music store in Acoostic, Alberta. Their overhead expenses are 15% of cost. They recently sold a guitar for $675 and the markup on that guitar was equal to 22% of the selling price. How much net profit did they realize on that sale? A) $47.25 B) $69.53 C) $89.55 D) $148.5 E) $215

88) A shirt costing $30 was marked up by 150% and then reduced by 50%. What was the sale price?

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A) $22.50 B) $60 C) $45 D) $37.50 E) $52.50

89) A shovel costing $8.50 in August was marked up by 200%. In April of the following year, it was reduced by 80%. What was the sale price? A) $3.40 B) $5.00 C) $1.70 D) $10.20 E) $5.10

90) M Studios sells a camera listed at $400, less 25%. Todd's Factory sells the same camera for $325. What rate of markdown would Todd's have to offer to match the reduced price at M Studios? Round to the nearest 0.1%. A) 7.7% B) 8.3% C) 8% D) 7.5% E) 8.5%

91) Rick's sells a motorcycle for $5000, less 10%. Todd's Motors sells the same motorcycle for $4250. What rate of markdown would Rick's have to offer to match the price at Todd's? Round to the nearest 0.1%.

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A) 5.9% B) 5.6% C) 15% D) 10% E) 7.5%

92) An item costing $50 was marked up by 60% of the selling price. During a sale, the item was reduced to $75. What was the rate of markdown during the sale? A) 6.25% B) 60% C) 40% D) 50% E) 33.3%

93) A television set costing $260 was marked up by 35% of the selling price. During a sale, the item was reduced to $300. What was the rate of markdown during the sale? A) 33.3% B) 15.4% C) 13.3% D) 25% E) 35%

94) A retailer sells all goods on a rate of markup on cost of 25%. If she later marks down any unsold products to their cost, what is the rate of markdown?

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A) 25% B) 15% C) 30% D) 17.5% E) 20%

95) A retailer sells all goods on a rate of markup on selling price of 25%. If she later marks down any unsold products to their cost, what is the rate of markdown? A) 25% B) 33.3% C) 20% D) 30% E) 22.5%

96) A retailer marks up all cosmetic products to allow for overhead expenses of 30% of cost and operating profit of 40% of cost. If a product does not sell within two months, the product is marked down to its break-even price. What rate of markdown is the retailer using? A) 40% B) 23.5% C) 30% D) 70% E) 50%

97) A retailer marks up all cosmetic products to allow for overhead expenses of 40% of cost and operating profit of 25% of cost. If a product does not sell within two months, the product is marked down to its break-even price. What rate of markdown is the retailer using?

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A) 25% B) 40% C) 15.2% D) 30% E) 65%

98) An invoice for $2500 dated September 15 with terms 2/10, 1½/20, n/30, EOM is received in the mail on September 18. What payment will settle the invoice on October 11? A) $2450.00 B) $2500.00 C) $2200.00 D) $2462.50 E) $2125.00

99) An invoice for $2500 dated September 15 with terms 2/10, 1½/20, n/30, EOM is received in the mail on September 20. A payment of $1500 is made on October 20. How much is credited to the account? A) $1522.50 B) $1530.61 C) $1560.60 D) $2537.50 E) $1522.84

100) An invoice for $3500 dated September 15 with terms 2/10, 1½/20, n/30, EOM is received in the mail on September 20. If the company wants to reduce the outstanding balance to $2000, how much should they pay on October 10?

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A) $1470.00 B) $1477.50 C) $1530.00 D) $1522.50 E) $1500.00

101) An invoice for $4500 dated September 15 with terms 2/10, 1½/20, n/30, EOM is received in the mail on September 20. What payment would settle the invoice on October 15? A) $4500.00 B) $4432.50 C) $4410.00 D) $4590.00 E) $4567.50

102) An invoice for $7000 dated September 15 with terms 2/10, 1½/20, n/30, EOM is received in the mail on September 25. A payment is sent on October 10 for $3000. What is the outstanding balance? A) $3940.00 B) $3955.00 C) $3938.78 D) $4000.00 E) $3954.31

103) An invoice for $10,000 dated September 10 with terms 3/10, 1½/20, n/30, EOM is received in the mail on September 25. A payment of $4000 is sent on October 11. What is the outstanding balance?

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A) $5940.00 B) $6000.00 C) $5918.37 D) $5939.09 E) $5920.00

104) An invoice for $50,000 dated March 15 with terms 3/10, 2/20, n/30, ROG was received in the mail on March 17. The shipment of goods was received on March 29. What payment would settle the invoice on April 9? A) $48,500 B) $50,000 C) $49,500 D) $48,000 E) $49,000

105) An invoice for $40,000 dated March 15 with terms 3/10, 2/20, n/30, ROG was received in the mail on March 18. The shipment of goods was received on March 28. What payment April 8 would reduce the outstanding balance to $20,000? A) $19,600 B) $20,000 C) $20,400 D) $20,600 E) $19,400

106) An invoice for $30,000 dated March 15 with terms 3/10, 2/20, n/30, ROG was received in the mail on March 18. The shipment of goods was received on April 3. What payment April 14 would reduce the outstanding balance to $15,000?

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A) $14,550 B) $14,700 C) $15,000 D) $15,300 E) $15,450

107) An invoice for $35,000 dated March 15 with terms 3/10, 2/20, n/30, ROG was received in the mail on March 18. The shipment of goods was received on April 3. What payment April 14 would reduce the outstanding balance to $25,000? A) $9700 B) $10,000 C) $9800 D) $10,200 E) $10,300

108) An invoice for $25,000 dated March 15 with terms 3/10, 2/20, n/30, ROG was received in the mail on March 18. The shipment of goods was received on April 3. A payment of $14,000 was made on April 14. How much was credited to the account? A) $14,280.00 B) $14,420.00 C) $14,432.99 D) $14,285.71 E) $14,000.00

109) An invoice for $45,000 dated March 15 with terms 3/10, 2/20, n/30, ROG was received in the mail on March 18. The shipment of goods was received on April 3. A payment of $30,000 was made on April 14. What is the outstanding balance?

Version 1

A) $14,400.00 B) $14,100.00 C) $15,000.00 D) $14,072.16 E) $14,387.76

110) The distributor of Hitachi power tools is offering a trade discount of 29% to hardware stores. What will be the stores' cost to purchase a rotary saw listed at $145? A) $112.40 B) $122.10 C) $102.95 D) $134.71 E) $187.05

111) A 22.5% trade discount on a Samsung laptop represents a discount of $199.57 from the suggested retail price. What is the net price to the buyer? A) $687.41 B) $244.47 C) $162.91 D) $745.35 E) $886.98

112) The net price to a motorcycle dealer of a KWX-4 model is $9,750. If the manufacturer has a list price of $14,599 What trade discount is the dealer being given?

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A) 25.64% B) 31.26% C) 33.21% D) 42.65% E) 66.79%

113) Lucerne Dairies gives convenience stores a trade discount of 42% on milk listed at $72.00 per carton. What rate of discount will Beatrice Milk Products have to give on its list price of $74.50 per carton to match Lucerne's price to convenience stores? A) 43.95% B) 44.00% C) 37.65% D) 40.00% E) 36.75%

114) The net proceeds to the dealership of a used Toyota Corolla after payment of a 4% commission were $12,600. What price did the car sell for? A) $13,100 B) $13,000 C) $13,200 D) $13,125 E) $12,980

115) The morning news reports that the S&P/TSX Main Index dropped 2.4% on the day to close at 16,456 points. Rounded to the nearest integer, how many points did the index fall on the day?

Version 1

A) 405 B) 16,861 C) 415 D) 16,875 E) 395

116) In announcing its fourth-quarter results, New Flyer Manufacturing reported a decline in revenue of $1.45 million representing a 2.55% decrease from the third quarter. Rounded to the nearest dollar, what is the fourth quarter's revenue? A) $56,862,745 B) $55,862,745 C) $57,876,293 D) $56,398,398 E) $55,412,745

117) Ford Motors was selling vehicles to the dealers which included an initial 25% dealer discount, a 10% seasonal discount and a 5% volume discount. If the vehicles initial wholesale value was $25,678, how much did the dealer have to pay? A) $14,666.04 B) $16,466.02 C) $15,567.12 D) $15,406.80 E) $17,332.65

118) A small bakery offers bread to restaurants with a 25% trade discount and a 10% volume discount. The final price to the restaurant is $1.04. What is the value of the 10% discount to the restaurant?

Version 1

A) $.38 B) $.50 C) $42 D) $.12 E) $.07

119) An invoice for $365, dated October 25, has terms of payment 1/20, n/30. What amount on November 5 will pay the invoice in full? A) $361.35 B) $365.00 C) $368.65 D) $363.42 E) $362.76

120) On Aug 29, Sindhu received an invoice for $85.49, dated Aug 27. If the terms of the invoice are 4/10, 2/20, n/60, what amount is required on Sep 15 to pay the invoice in full? A) $85.49 B) $82.65 C) $82.07 D) $87.20 E) $83.78

121) On Feb 25, 2019 Hancock Grocers received an invoice from Tooltown Inc. for $2300. The invoice was dated Feb 22 and offered terms of 2/10, 1/20, n/30. What payment will settle the invoice on Mar 21?

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A) $2300.00 B) $2254.00 C) $2277.00 D) $2530.00 E) $2298.00

122) An invoice for $2200, dated July 26, had terms 3/10, 1.5/20, n/45. What amount was credited for a payment of $1000 on Aug 7? A) $2167.00 B) $1000.00 C) $1015.23 D) $998.50 E) $1,115.00

123) A payment of $4000 on a $7000 invoice qualified for the larger cash discount in 2/10, 1/20, n/30. What additional payment 26 days after the invoice date will settle the invoice? A) $2918.37 B) $4081.63 C) $7142.86 D) $2889.19 E) $2754.67

124) XYZ Industries received an invoice for $2100 with terms 3/10, 1/30, n/45. After one payment within the 10-day discount period, a second payment of $550.11 within the 30-day discount period paid off the balance. What was the amount of the first payment?

Version 1

A) $1502.00 B) $1544.33 C) $1476.00 D) $1498.00 E) $555.67

125) A retailer obtains a product at a unit cost of $21.30 and sells it for $57.90. Determine the rate of markup on cost. A) 171.83% B) 71.83% C) 36.79% D) 63.21% E) 142.56%

126) The Liquor Store purchases Gallo Red Blend wine at $5.80 per bottle and then sells them in their store for $10.50 per bottle. Calculate the rate of markup on cost and rate of markup on selling price of the wine? A) Markup on Cost 44.76% Markup on Selling Price 81.03% B) Markup on Cost 55.24% Markup on Selling Price 44.76% C) Markup on Cost 44.76% Markup on Selling Price 55.24% D) Markup on Cost 81.03% Markup on Selling Price 55.24% E) Markup on Cost 81.03% Markup on Selling Price 44.76%

Version 1

127) A bakery prices fresh bread at four times its cost to the store. Determine the rate of markup on cost? A) 100% B) 200% C) 150% D) 300% E) 400%

128) The markup on Vape units in a specialty store is 175% of the cost. For a Vape unit priced at $24.95 in the specialty store, determine its cost. A) $15.88 B) $9.07 C) $14.26 D) $12.56 E) $13.29

129) The price of a new couch is set by a furniture store to cover operating expenses at 30% of cost, and to generate an operating profit of 55% of cost. What is the rate of markup on selling price for a couch selling for $1729? A) $1469.65 B) $606.67 C) $934.59 D) $305.12 E) $545.69

130) Hertz Power Tools purchased five chainsaws from a local manufacturer for $75.75 each. If the rate of markup on selling price is 45% what is the selling price of each chainsaw?

Version 1

A) $168.33 B) $152.24 C) $127.99 D) $135.99 E) $148.99

131) The rate of markup on the cost of vaping pens in a retailer is 125% because of the large losses from theft. What is the rate of markup on selling price? A) 45.55% B) 33.33% C) 62.50% D) 55.55% E) 100%

132) At the Village Restaurant employs a 325% rate of markup on the cost of all soft drinks. The restaurant's overhead averages out to 40% of sales each month. What is the operating profit on one soft drink for which the wholesale cost is $.25? A) $.39 B) $.81 C) $.52 D) $.42 E) $.61

133) An item was marked up from $8.50 to $15.00, then later marked down by 40% during a spring sale. Determine the price during the spring sale.

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A) $6.50 B) $9.00 C) $8.00 D) $7.50 E) $10.00

134) The manager of a local garage buys winter tires for $125 each and marks them up by 90% of cost. In late April, he clears out remaining inventory at a 30% markdown. Determine the clearance price of one tire. A) $237.50 B) $112.50 C) $175.00 D) $166.25 E) $665.00

135) Canadian Tire purchases microwaves from a wholesaler for $49 and marks them up by 25% of selling price. At the end of the summer, a floor-display model's price is reduced to 12% above cost. What percentage price reduction should the price tag show? A) 12% B) 17% C) 16% D) 12.5% E) 33%

136) Calculate the reduced selling price on an item that is marked down 35%, an amount equivalent to a discount of $45.

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A) $83.57 B) $128.57 C) $60.75 D) $33.33 E) $105.99

137) A small ice cream store marks up its springtime shipment of ice-cream bars to provide for overhead expenses of 120% of cost and a profit of 100% of cost. At the end of the summer, what rate of markdown can the ice cream store apply to the remaining inventory of ice-cream bars and still break even on sales at this level? A) 68.75% B) 75.00% C) 50.00% D) 45.00% E) 60.50%

138) The rate of markup on cost on a line of cosmetics is 85%. If the markup on an eye shadow kit is $14: a) What is the retail selling price of the kit? b) To the nearest 0.01%, what is the rate of markup on selling price?

139) A hardware store's rate of markup on selling price on a line of electric power tools is 27%. If the markup on a drill is $12.50: a) What is the cost of the drill to the store? b) To the nearest 0.01%, what is the rate of markup on cost of the drill? Version 1

140)

Calculate the missing values. Round to 2 decimal places.

Cost ($)

185.00

141)

Markdown Rate of Reduced price ($) markdown (%) ($) ?

60.00

Calculate the missing values. Round to 2 decimal places.

Cost ($)

24.99

142)

Rate of Rate of markup Selling markup on on selling price price ($) cost (%) (%)

Rate of Rate of markup on markup on cost (%) selling price (%) ?

Selling price ($)

Markdown ($)

49.98

Rate of markdown (%)

Markdown ($)

Rate of markdown (%)

Reduced price ($)

24.99

Calculate the missing values. Round to 2 decimal places.

Cost ($)

580.00

Version 1

Rate of Rate of markup on markup on cost (%) selling price (%) 30

Selling price ($)

Reduced price ($)

143)

Calculate the missing values. Round to 2 decimal places.

Cost ($)

19.25

144)

249.00

Markdown ($)

Rate of markdown (%)

Markdown ($)

Rate of markdown (%)

Reduced price ($)

Rate of Rate of markup on markup on cost (%) selling price (%) ?

Selling price ($)

Reduced price ($)

249.00

Calculate the missing values. Round to 2 decimal places.

Cost (C)

$37.25

146)

Selling price ($)

Calculate the missing values. Round to 2 decimal places.

Cost ($)

145)

Rate of Rate of markup on markup on cost (%) selling price (%)

Overhead (E) Markup (M)

20% of C

Selling price (S)

60% of C

Rate of markdown ?

Sale Price, S(reduced) ?

Reduced Profit, P(reduced)

$41.72

Calculate the missing values. Round to 2 decimal places.

Cost (C) Overhead (E) Markup (M)

Version 1

Selling

Rate of

Sale Price,

Reduced

price (S) $7.92

147)

70% of C

Overhead (E) Markup (M) Selling price (S)

$98.00

20%

Profit, P(reduced) ?

18% of S

?% of S

$147.00

Rate of markdown

Sale Price, S(reduced)

16.67%

Reduced Profit, P(reduced) ?

Calculate the missing values. Round to 2 decimal places.

Cost (C)

$115.70

149)

$19.80

S(reduced)

Calculate the missing values. Round to 2 decimal places.

Cost (C)

148)

markdown

Overhead (E) Markup (M)

20% of S

Selling price (S)

35% of S

Rate of markdown ?

Sale Price, S(reduced) ?

Reduced Profit, P(reduced)

$133.50

Calculate the missing values. Round to 2 decimal places.

Cost (C) Overhead (E) Markup (M)

Version 1

50% of C

Selling price (S)

Rate of markdown ?

33.33%

Sale Price, S(reduced)

Reduced Profit, P(reduced)

$111.80

150) The net proceeds to the vendor of a house after payment of a 4.5% real estate commission were $275,995. At what price did the house sell?

151) Calculate the missing values (assume that the payment is made within the discount period): Invoice Amount $3765.25

Credit Terms 1&frac13;/15, n/45

Payment

Amount Credited

Balance Owed

$2042.28

152) Calculate the missing values (assume that the payment is made within the discount period): Invoice Amount $775.50

153)

Credit Terms

Payment

1&frac14;/15, n/60

Amount Credited ?

Balance Owed $293.98

Calculate the missing values:

List Price ($) 249.00

Version 1

Discount Rate (%) 33 1/3

Discount Amount ($)

Net Price ($) ?

154)

Calculate the missing values:

List Price ($)

Discount Rate (%)

995.00

155)

16 2/3

Discount Rate (%)

127.98

Discount Amount ($) ?

Net Price ($) ?

106.65

Calculate the missing values:

List Price ($)

Discount Rate (%)

49.95

157)

Net Price ($)

Calculate the missing values:

List Price ($)

156)

Discount Amount ($)

Discount Amount ($) ?

Net Price ($) ?

34.97

Calculate the missing values:

List Price ($)

Discount Rate (%) ?

Version 1

Discount Amount ($) 35

Net Price ($)

612.50

158)

Calculate the missing values:

List Price ($)

Discount Rate (%) ?

159)

Discount Rate (%) ?

Discount Amount ($) ?

Discount Rate (%) ?

Net Price ($)

12.33

15.07

Discount Amount ($) ?

Net Price ($)

258.75

891.25

Calculate the missing values:

List Price ($)

Discount Rate (%) ?

162)

7.99

Calculate the missing values:

List Price ($)

161)

Net Price ($)

Calculate the missing values:

List Price ($)

160)

Discount Amount ($)

Discount Amount ($) 12.5

Net Price ($) ?

2849.00

Calculate the missing values:

List Price ($)

Discount Rate (%) ?

Version 1

16 ⅔

Discount Amount ($)

Net Price ($) ?

413.05

163)

Calculate the missing values:

List Price ($)

Discount Rate (%)

99.00

164)

Discount Rate (%)

595.00

Discount Amount ($)

20, 12 1/2, 8 1/3

Net Price ($) ?

Calculate the missing values:

List Price ($)

Discount Rate (%) ?

166)

30, 16 2/3

Net Price ($)

Calculate the missing values:

List Price ($)

165)

Discount Amount ($)

25, 10, 7 1/2

Net Price ($) ?

93.03

Calculate the missing values

List Price ($)

Discount Rate (%) ?

Version 1

20, 8

Discount Amount ($)

Net Price ($) ?

989.00

167) The distributor of Nikita power tools is offering a trade discount of 38% to hardware stores. What will be their cost to purchase a rotary saw listed at $135?

168) Best Buy Entertainment can obtain Panasonic MP3 players for $134 less a trade discount of 35%. A comparable Samsung model is available for $127 less a discount of 30%. Which MP3 player has the lower net cost? How much lower?

169) A 37.5% trade discount on a camera represents a discount of $223.14 from the suggested retail price. What is the net price to the buyer?

170) After a trade discount of 27.5%, a jeweller can obtain 0.50 carat (Empress Cut, F Colour) Canadian Polar Bear diamonds for $2138.75. What is the dollar amount of the trade discount?

171) The net price to a car dealer of a model with a manufacturer's list price of $34,900 is $28,687.80. What trade discount rate is the dealer being given? Version 1

172) Green Thumb Nursery sells spreading junipers to the gardening departments of local grocery and building supply stores. The net price per tree is $27.06 after a trade discount of $22.14. What rate of trade discount is the nursery giving to retailers?

173) Niagara Dairies gives convenience stores a trade discount of 24% on butter listed at $72.00 per case. What rate of discount will Silverwood Milk Products have to give on its list price of $74.50 per case to match Niagara's price to convenience stores? (Round to the nearest 0.01%)

174) A college bookstore buys back good-condition student textbooks for 45% off the retail price of new books. What will a student receive for a book currently selling at $104.50 new?

175) The net proceeds to the vendor of a house after payment of a 5.5% real estate commission were $321,111. At what price did the house sell?

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176)

A merchant pays a 3.5% fee to the BMO Bank of Montreal on all MasterCard sales.

a) What amount will she pay on sales of $17,564 for a month? b) What were her gross sales for a month in which the bank charged total fees of $732.88?

177) Cynthia and Byron sell mutual funds for Syndicated Investors. Purchasers of mutual funds from agents of Syndicated Investors pay a front-end commission of 5.5%. The commission is paid on the total amount paid to Syndicated Investors, not on just the net amount actually invested in mutual funds. a) Mr. and Mrs. Stevens placed $5500 through Cynthia. What (net) amount was actually invested in mutual funds after the commission was paid? b) If the net amount invested in mutual funds as a result of Byron's sale to Mrs. Stocker was $6426, what (dollar) amount of commission was paid on the sale?

178) a) Mirabai's income tax rate on additional income is 42%. She has just received a wage increase of $1.25 per hour. What is her after-tax increase in hourly pay? Round to 3 decimal places. b) Shira's tax rate on additional income is 47%. How much extra must he earn to keep an additional $1000 after tax?

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179) The evening news reports that the S&P/TSX Composite Index dropped 1.7% on the day to close at 13,646 points. Rounded to the nearest integer, how many points did the Index fall on the day?

180) At its current price of $0.80 per share, the price of Golden Egg Resources stock is down 73% from its price one year ago. What was that price?

181) Office Outlet offers a standard 7% discount on all orders and a special 5.5% volume discount if the purchaser orders at least 1000 units. South District High School is placing an order for pens costing $1.69 each. How much money could they save by placing an order for 1000 pens instead of just ordering the 950 pens they need?

182) A manufacturer of snowmobiles sells through distributors in some regions of the country, through wholesalers in other regions, and directly to retailers in its home province. The manufacturer gives a 25% trade discount to retailers, an additional 10% discount to wholesalers, and a further 7.5% discount to distributors. What net price does the manufacturer receive from each buying level on a snowmobile listed at $9800?

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183) Holiday Paws Kennel offers a standard 20% coupon discount, a 15% multi-pet discount and a further 10% discount for boarding pets longer than 7 days. If their daily rate for boarding is $55 per pet, how much would it cost to board 2 cats for 8 days compared to 3 dogs for 5 days?

184) An invoice shows a net price of $176.72 after discounts of 30%, 10%, and 2% have been deducted. a) What was the list price of the goods? b) What single discount would be equivalent to the discount series?

185) a) In announcing its third quarter results, Prime Manufacturing reported a decline in revenue of $26.43 million representing a 3.65% decrease from the second quarter. Rounded to the nearest $0.01 million, what is the third quarter's revenue? b) Prime also announced that, over the next six months, it will reduce its workforce by 4.5% to 8500 through attrition and retirement incentives. What will be the actual number of people leaving? Round to the nearest whole number.

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186) A retailer is offered a regular discount of 25%, a further discount of 7.5% if she places an order exceeding $10,000 (at list prices), and another 5% promotional allowance (discount) for participating in a joint promotion with the distributor. a) If the retailer is eligible for all three discounts, what will be the net price of an order totalling $11,500? b) What is the dollar amount of the saving from the quantity discount (assuming that she does not participate in the joint promotion)? c) What is the dollar amount of the promotional allowance?

187) A wholesaler lists an item for $48.75 less 20%. What additional "special promotion" discount must be offered to retailers to get the net price down to $36.66?

188) The representative for a European ski manufacturer offers Snow 'n Surf Sporting Goods a regular discount of 25%, a volume discount of 10% for an order of at least 100 pairs of skis, and an early booking discount of 5% for orders placed before July 1. a) If Snow 'n Surf is eligible for all three discounts on skis listed at a suggested retail price of $890, what is the net price per pair of skis? b) Assuming that Snow 'n Surf qualifies for the volume discount, what is the dollar amount of the early-order discount per pair of skis? c) The net price after all three discounts on a less expensive model of skis is $410.40. What is the suggested retail price? d) What single trade discount rate would be equivalent to the three trade discounts? (Round to the nearest 0.01%)

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189) In addition to the basic trade discount of 20%, an outboard motor manufacturer gives a boat dealer an additional discount of 12.5% for providing follow-up warranty service, and a 5% discount for cooperative advertising and boat-show promotions. a) After the basic trade discount, what further price reduction (in dollars) does the 12.5% discount represent on a $1000 list price motor? b) After the first two discounts, what price reduction does the 5% discount give on the $1000 motor?

190) Everest sells its mattresses for $960 less 25%. Posture-Perfect mattresses are listed at $880 less 20% and 5%. What second discount would Everest need to offer to match PosturePerfect's net price? Round to the nearest 0.01%

191) An invoice for $2365, dated September 25, has terms of payment 2/20, n/30. What amount on October 5 will pay the invoice in full?

192) The terms of payment on a $2365 invoice dated October 25 were 1½/15, n/45. What amount will settle the invoice on November 10?

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193) On June 29, Josef received an invoice for $815.49, dated June 27. If the terms of the invoice are 2/10, 1/20, n/60, what amount is required on July 7 to pay the invoice in full?

194) On March 26, Silke received an invoice in the amount of $5445, dated March 23, with terms 3/10, 1½/20, n/60. What payment on April 13 will settle the invoice?

195) On May 25, Morris Hardware received an invoice from Precision Tools Inc. for $5076.64. The invoice was dated May 22 and offered terms of 2/10, 1/20, n/30. What payment will settle the invoice on: a) June 1? b) June 2? c) June 5?

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196) White's Photography received an e-invoice from Fuji Canada dated February 27 of a leap year. The amount of the invoice is $2896.77 with terms 2½/10, 1/30, n/60. a) What is the last date on which White's is eligible for the 2½% discount? b) What amount will be required on that date to settle the invoice? c) Instead of the payment in (b), what amount must be paid on March 29 to settle the invoice?

197) An invoice for $2365.00 has terms 2/10, n/30. The amount credited on a payment made within the discount period was $1365.00. What was the amount of the payment?

198) The terms of payment on an invoice for $2835.49 are 2/15, n/45. The balance owed after a payment within the discount period is $1135.49. What was the amount of the payment?

199) On June 3, Josh made a payment of $500 on an invoice for $1283.50, dated May 25. The terms of payment were 3/10, n/30. What amount was credited to Josh's account?

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200) An invoice for $3868, dated June 26, had terms 2/10, 1/20, n/45. What amount was credited for: a) A payment of $1000 on July 5? b) A payment of $1000 on July 16? c) A payment of $1000 on August 10?

201) Contemporary Furnishings received an invoice on April 18 from Palliser Furniture. The invoice for $18,976.45 was dated April 16 with terms 2/15, 1/30, n/45. a) What is the balance after a payment of $10,000 on May 1? b) What additional payment on May 15 will settle the account?

202) Mayfair Distributors sent Bed 'n Bath an invoice dated December 23 for $5344.90 with terms 2/10, 1/20, n/30. The penalty on overdue accounts is 1% of the overdue balance. a) What is the balance after a payment of $3000 on January 3? b) What additional payment on January 30 will settle the account?

203) Payments of $1000 on January 5 and $800 on January 16 were made on a $2500 invoice dated December 27. The terms on the invoice were 4/10, 2/20, n/45. What was the balance owed after the second payment?

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204) On March 25, Hannah received an invoice in the mail from Carpet Country for $4235. The invoiced was dated March 22 and had terms 3/15, 1½/30, n/60. If she made payments of $1000 on each of April 2, April 9, and April 22, how much did Hannah still owe?

205) Ristorante Italiano made payments of $5000 on March 29 and $3000 on April 7 to General Restaurant Supplies on an invoice for $11,870. The invoice was dated March 21 and carried terms of 1/10, n/30. a) What is the balance after the second payment? b) On what date is the balance due?

206) Northern Outfitters' invoice to Rico's Menswear for $2463.80 was dated October 22 with terms 2/10, n/30. Late payments are charged a 1% penalty on the overdue balance. Rico made payments of $1000 on October 31 and $800 on November 20. What amount will pay off the balance on December 8?

207) A payment of $3000 on a $6000 invoice qualified for the larger cash discount in 3/10, 1/20, n/30. What additional payment 18 days after the invoice date will settle the invoice? Version 1

208) The Simcoe School Board has three invoices from Johnston Transport, all with terms 2/10, 1/20, n/60. Invoice 277, dated October 22, is for $14,200; Invoice 327, dated November 2, is for $8600; and Invoice 341, dated November 3, is for $11,500. What total payment to Johnston on November 12 will settle all three invoices?

209) What total amount must be paid on July 4 to settle invoices dated June 20 for $485, June 24 for $367, and June 30 for $722, all with terms 1½/10, n/30?

210) Jake received an invoice for $2500 with terms 5/10, 2/30, n/60. After one payment within the 10-day discount period, a second payment of $1057.37 within the 30-day discount period paid off the balance. What was the amount of the first payment?

211) Ballard Jewellers received an invoice dated August 22 from Safeguard Security Systems for $2856.57 with terms 2½/10, 1/20, n/45. Ballard made payments of $900 on September 1, $850 on September 10, and $700 on September 30. What amount was still owed on October 1?

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212) Peak Roofing sent Jensen Builders an invoice dated July 12 for $5400 with terms 3/10, 1½/20, n/45. Jensen made a payment of $2000 on July 20, and a second payment on August 1 that reduced the balance owed to $1000. What was the size of the second payment?

213) On August 6, A&B Construction has three outstanding invoices payable to Excel Builder's Supply. Invoice 535, dated July 16, is for $3228.56; Invoice 598, dated July 24, is for $2945.31; and Invoice 678, dated August 3, is for $6217.69. All invoices have terms 4/10, 2/20, n/60. If A&B makes a $10,000 payment to Excel on August 6, what further payment on August 15 will settle the account? Note that Excel applies payments to the oldest invoices first.

214) Sutton Trucking made two equal payments, on June 25 and July 15, on an invoice for $6350 dated June 15 with terms 3/10, 1/30, n/60. The payments reduced the balance owed on the invoice to $1043.33. What was the amount of each payment?

215) An invoice for $2956.60, dated February 2, has terms 2/15, 1/30, n/90. What three equal payments on February 17, March 2, and May 2 will settle the account?

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216)

An item that costs a store $152.50 is marked up by $47.45. Determine:

a) The rate of markup on cost, to the nearest 0.1%. b) The rate of markup on selling price, to the nearest 0.1%.

217)

A retailer obtains a product at a unit cost of $51.30 and sells it for $79.90. Determine:

a) The rate of markup on cost, to the nearest 0.1%. b) The rate of markup on selling price, to the nearest 0.1%.

218) Omega Restaurant buys Shiraz wine at $16.95 per bottle, and sells it to customers at $34.95 per bottle. Calculate Omega's rate of markup on cost and rate of markup on selling price of the wine. Round to the nearest 0.01%.

219) Loblaws purchases raisins at $85.75 per 25-kg box and then sells them in its bulk foods department for $0.59 per 100 g. What are Loblaws' rate of markup on cost and rate of markup on selling price of the raisins? Round to the nearest 0.1%.

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220) Unit operating expenses for an item costing $30 are estimated at 40% of cost, and the desired operating profit is 25% of cost. Determine: a) The selling price b) The rate of markup on cost, to the nearest 0.1% c) The rate of markup on selling price, to the nearest 0.1%

221) A retailer prices her goods to cover operating expenses at 30% of cost and to generate a profit of 20% of cost. For an item she buys from her wholesaler at $49, determine: a) Its selling price b) The rate of markup on cost, to the nearest 0.1% c) The rate of markup on selling price, to the nearest 0.1%

222) A merchant prices his inventory to allow for operating expenses at 30% of selling price and an operating profit of 20% of selling price. If an item is priced at $49.95, determine: a) The rate of markup on selling price, to the nearest 0.1% b) Its cost c) The rate of markup on cost, to the nearest 0.1%

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223) The price structure in a store is such that, for every $100 of sales, $40 is the cost the goods sold and $45 goes to overhead costs. For an item with a wholesale cost of $119, determine: a) Its selling price b) The rate of markup on cost, to the nearest 0.1% c) The rate of markup on selling price, to the nearest 0.1% d) The operating profit on the item

224) A men's clothing store marks up suits by 75% of cost. This provides an operating profit of 15% of the selling price. If a suit's cost to the store is $132, determine: a) Its selling price b) The rate of markup on selling price, to the nearest 0.1% c) The operating profit

225)

A grocery store prices fresh produce at twice its cost to the store. Determine:

a) The rate of markup on cost b) The rate of markup on selling price

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226) The markup on greeting cards in a drug store is 65% of the selling price. For a card priced at $4.95, determine: a) Its cost b) The rate of markup on cost, to the nearest 0.1%

227) The markup on desserts in a restaurant is 70% of the menu price. The restaurant is adding key lime pie to its dessert list. The cost to the restaurant works out to $1.25 per slice. Determine: a) The menu price of the pie b) The rate of markup on cost, to the nearest 1%

228) Bath 'n Bedroom sets its prices to allow for overhead expenses that average 50% of unit cost and a normal profit of 30% of cost. For towel sets priced at $39.89, determine: a) The wholesale cost b) The rate of markup on selling price, to the nearest 0.1%

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229) The price of tools is set by Ace Hardware to cover operating expenses at 40% of cost, and to generate an operating profit of 25% of cost. What is the rate of markup on selling price for a rotary saw selling for $129? Round to the nearest 0.1%

230) Just Desserts buys cheesecakes from General Bakeries at $33.60 per cheesecake. It then cuts each cheesecake into 16 slices and sells them to customers at $6.50 per slice. Calculate the rate of markup on cost and the rate of markup on selling price. Round to the nearest 0.1%

231) The Annapolis Rotary Club sells hot dogs for $1.95 each at the annual Annapolis Fall Fair. The Rotary Club buys wieners at $3.95 per package of 10 wieners, and hot dog buns at $2.90 per dozen. It costs $78 for enough condiments for 1000 hot dogs. What are the Rotary Club's rate of markup on selling price and rate of markup on cost? Round to the nearest 1%

232) Maritime Cellular purchases a BlackBerry smart-phone model for $395 less trade discounts of 20% and 10%. Maritime's overhead expenses are $59 per unit. a) What should be the selling price to generate a profit of $40 per phone? b) What is the rate of markup on cost, to the nearest 0.1%? c) What is the rate of markup on selling price, to the nearest 0.1%? d) What would be the break-even selling price for the Annual Clear-Out Sale?

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233) Damsels clothing store orders a line of jeans at a suggested retail price of $58 less trade discounts of 30% and 7%. The manager intends to sell the jeans at the suggested retail price. If overhead expenses are 25% of the selling price: a) What will be the operating profit on each pair of jeans? b) What is the rate of markup on cost, to the nearest 0.1%? c) What is the rate of markup on selling price, to the nearest 0.1%? d) What would be the break-even selling price for an inventory clearance sale?

234)

The rate of markup on the cost of a toaster selling at $54.95 is 45%.

a) What was the cost of the toaster to the retailer? b) What is the rate of markup on selling price, to the nearest 0.1%?

235) Pet Mart purchased a litter of six puppies from a reputable breeder for $121 each. If the rate of markup on selling price is 45%: a) What is the selling price of each puppy? b) What is the rate of markup on cost, to the nearest 0.1%?

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236) If the rate of markup on selling price of lettuce in a grocery store is 60%, what is the rate of markup on cost?

237) The rate of markup on cost of fresh peaches in a grocery store is 125%, what is the rate of markup on selling price? Round to the nearest 0.1%

238) Worker's World bought 250 pairs of rubber boots at $15 per pair. The manager applies a 90% rate of markup on cost when pricing footwear. What is the operating profit per pair if overhead expenses work out on average to be 20% of the selling price?

239) A florist buys potted poinsettias from a nursery at $15 each less 40% and 10%. The florist prices her stock to allow for overhead of 55% of cost and an operating profit of 20% of the selling price. At what price should she sell the poinsettias?

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240) Beaver Building Supply obtains 4- by 8-ft sheets of half-inch plywood from Macmillan Forest Products at $54 per sheet less 30% and 5%. The price is to be set to cover Beaver's overhead of 20% of the selling price and to provide an operating profit of 12% of the selling price. What should be the retail price per sheet?

241) Village Foods employs a 35% rate of markup on cost of all dairy products. The store's overhead averages out to 20% of sales each month. What is the operating profit on a 4-litre pail of ice cream for which the wholesale cost is $4.65?

242) Prestige Clothiers' regular prices for menswear are set to provide a rate of markup on selling price of 40%. Overhead expenses are 30% of cost on average. What is the operating profit on a suit that sells for $495?

243) Digital Devices sets its retail prices on computers, monitors, and printers to generate a rate of markup on selling price of 30%. Overhead expenses normally work out to be 30% of cost. What is the operating profit on a monitor that costs $345?

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244) An item costing $185 was marked up by 50% of cost and subsequently marked down by $60 during a sale. Determine: a) The regular selling price b) The rate of markdown, to the nearest 0.1%

245) An item was marked up from $58.50 to $95.00, then later marked down by 30% during a Spring Sale. Determine: a) The original rate of markup on selling price, to the nearest 0.1% b) The price during the Spring Sale

246) An item was marked up from $24.99 to $49.98 before it was marked down to $24.99 and sold at cost. Determine: a) The rate of markup on cost b) The rate of markdown

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247) The manager of a home and garden store buys patio furniture sets for $580 each and marks them up by 50% of cost. In late August, he clears out remaining inventory at a 30% markdown. Determine: a) The clearance price b) The rate of markdown (from the regular price) to sell the floor display set at cost. Round to the nearest 0.1%

248) Calculate the reduced price, if an item costing $19.25 is marked up by 35% of the selling price and then marked down by 25%.

249) Garden Centre purchases lawnmowers from a wholesaler for $249 and marks them up by 25% of selling price. At the end of the summer, a scratched floor-display mower's price is reduced to 10% above cost. To the nearest 0.1%, what percentage price reduction should the price tag show?

250) Digital Devices plans to stop carrying the Casio FC-100 calculator. It normally marks up the calculator from the $71.50 wholesale cost to the regular selling price of $99.95. To the nearest 0.1%: a) What is the normal rate of markup on selling price? b) What rate of markdown can be advertised if Digital Devices wishes to clear out the stock at the wholesale cost?

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251) a) Merchant A operates on a rate of markup on cost of 45%. If she later marks the price of a few items down to their cost price in order to attract additional customers to the store, to the nearest %, what rate of markdown can she advertise? b) Merchant B operates on a rate of markup on selling price of 45%. If he later marks the price of a few items down to their cost price in order to attract additional customers to the store, to the nearest %, what rate of markdown can he advertise?

252) Poles Apart obtains Nitro T1 snowboards at a cost of $345 and marks them up by 35% of the selling price. For its Annual Spring Sale, Poles Apart marks down prices by 25%. What is the sale price of the Nitro T1 snowboards?

253) The sign on a rack of sport coats reads: "All prices already marked down 30%!" What is the regular selling price of a coat marked at: a) $100? b) $196.49?

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254) Merchants C and D sell the same article at $69.95 and $64.95, respectively. They both advertise that they will match the price offered by any other store on any product that they stock. To the nearest 0.1%: a) What discount rate must C give to match D's price marked down by 20% during a sale? b) What discount rate must D give to match C's price marked down by 20% during a sale?

255) Morgan's Department Store mailed out 15%-off coupons for its 20th Anniversary Sale. The coupons may be used for any products in the store. For items already on sale, the coupon applies to the sale price. a) What price would a coupon-holder pay for a bedspread (regular price $295) already on sale at 20% off? b) What single rate of markdown, to the nearest %, would have the same effect as the two price reductions?

256) Workwear Station uses a markup on cost of 60% to establish its retail prices. This pricing rule builds in a profit of 25% of cost. To the nearest 0.1%, what rate of markdown can Workwear Station offer and just break even on the reduced price?

257) A pharmacy marks up its springtime shipment of sunglasses to provide for overhead expenses of 40% of cost and a profit of 70% of cost. At the end of the summer, what rate of markdown can the pharmacy apply to the remaining inventory of sunglasses and still break even on sales at this level? Round to the nearest 0.1% Version 1

258) An item that cost $37.25 was marked up by 60% of cost. Later, the retail price was reduced to $41.72. If unit overhead expenses were 20% of cost, what was the unit operating profit at the reduced price?

259) A retailer marked up an item from its $7.92 cost to the regular selling price of $19.80. During the store's Anniversary Sale, the item was offered at 20% off. On a sale at this price, what was the (reduced) operating profit if unit overhead expenses were 70% of cost?

260) Elite Sports sells Kevlar-graphite shaft hockey sticks for $147 each. Elite's wholesale cost is $98. For the Spring Clearance Sale, the prices are marked down by 20%. If overhead expenses are 15% of the regular selling price, what is the unit operating profit at the sale price?

261) Morgan Photography's markup on its antique picture frames is 35% of selling price. Its cost on the medium-size antique frame is $115.70. For portrait photos shot by Morgan's, this frame's price is reduced to $133.50. What is Morgan's operating profit or loss at this price if overhead expenses are 20% of the regular selling price?

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262) Hi-Lites Inc. purchased a ceiling light fixture for $480 less 40% and 25%. The fixture was then marked up by 120% of cost. Overhead expenses are 55% of cost. In a clearance sale, Hi-Lites offered the fixture at 40% off. Determine: a) The net cost of the fixture. b) The amount of the markup. c) The overhead expenses per fixture. d) The regular selling price. e) The sale price (reduced selling price). f) The rate of markup on cost at the sale price, to the nearest %. g) The operating profit or loss at the sale price.

263) In February, Long Lake Nursery ordered lawn fertilizer at $18.60 less 33⅓%, 12½%, and 5% per 20-kg bag. The fertilizer is normally priced to provide a 55% rate of markup on selling price. Operating (overhead) expenses are 30% of cost. To clear out the remaining bags of fertilizer in July, they were marked down by 45%. Calculate: a) The net cost per bag. b) The operating expenses per bag. c) The regular selling price. d) The sale price (reduced selling price). e) The reduced markup at the sale price. f) The operating profit or loss at the sale price. g) The rate of markup on the sale price, to the nearest %.

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264) A retailer pays $81 to a wholesaler for an article. The retail price is set using a rate of markup on selling price of 40%. To increase traffic to his store, the retailer marks the article down 20% during a sale. What is the sale price?

265) A bedroom suite costs Town & Country Furniture $5000 less 30% and 15%. The normal rate of markup on cost is 90%. The suite is marked down 30% in a Mid-Summer sale. What is the sale price?

266) Comfort Shoes' normal rate of markup on selling price is 45%. What rate of markdown can the store offer on a pair of shoes normally priced at $140, and still realize a 20% rate of markup on cost at the sale price? Round to the nearest %.

267) Just Dresses sets its regular prices based on overhead expenses at 50% of cost and an operating profit of 40% of cost. What will be the operating profit (as a percent of cost) for dresses sold at a 20% discount?

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268) Water Sports Ltd. pays $360 less 25% for a backyard above-ground pool kit. Overhead expenses are 16⅔% of the regular selling price, and the operating profit is 15% of the selling price. a) What is the maximum rate of markdown the store can offer and still break even? b) What is the profit or loss per unit if Water Sports clears out its remaining stock at 20% off in a Hot August Bargains sale?

269) A lawn mower retails for $349. The dealer's overhead is 25% of cost, and normal operating profit is 16⅔% of cost. a) What is the largest dollar amount of markdown that will allow the dealer to break even? b) To the nearest 0.1%, what rate of markdown will price the lawn mower at cost?

270) Rainbow Paints is discontinuing a line of paint that it purchased at $30 less 45% and 10% per 4-litre pail. The store's overhead is 50% of cost, and normal operating profit is 30% of cost. If the manager of the store is prepared to accept a loss of one-quarter of the overhead expenses, what markdown rate can the store offer in order to clear out the paint? Round to the nearest 0.1%

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271) United Furniture buys reclining rocking chairs at $550 less 40% and 10%. The price is marked up to allow for overhead of 50% of cost and profit of 35% of cost. The unit on display in the store acquired a stain. What rate of markdown from the regular price can the store offer if it is to recover only half of the unit overhead costs? Round to the nearest 0.1%

272) Fashion Master purchased men's sweaters for $72 less 40% and 15%. The normal rate of markup on selling price is 40%, and overhead is 25% of the selling price. The sweaters were reduced to $45.90 for the store's Boxing Day Blowout. a) To the nearest %, what was the rate of markdown for the sale? b) What was the profit or loss on each sweater at the sale price? c) At the sale price, what was the rate of markup on cost (to the nearest %)?

273) Mr. Vacuum obtains vacuum cleaners for $720 less 33⅓% and 15%. A demonstration unit regularly priced at $750 was sold for $450. The shop's overhead is 22% of the regular selling price. a) To the nearest %, what was the markdown rate on the vacuum cleaner? b) What was the profit or loss on the sale of the demonstrator? c) To the nearest %, what rate of markup on cost was realized at the reduced price?

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274) A discount furniture store bought a waterbed at the wholesale price of $665. The "regular price" of the waterbed is set so that, in a "20% off" sale, the rate of markup on selling price is 30%. a) What is the price of the waterbed in a "20% off" sale? b) What is the "regular price" of the waterbed?

275) A jewellery store purchased a diamond ring for $2500 less 40% and 5%. The store's average unit overhead expenses are 30% of cost. The "regular price" of the ring is established so that, if it is sold in a "20% off" sale, the unit operating profit at the reduced price will be 20% of cost. a) What is the reduced price of the ring in a "20% off" sale? b) What is the "regular price" of the ring?

276) Sonic Boom obtained a surround sound system for $2400 less 30% and 15%. The store's pricing is based on overhead expenses of 40% of cost. The "regular price" of the surround sound system is set so that, if it is sold in a "20% off" sale, the store's operating profit will be 25% of cost. a) What is the "regular price"? b) In a Midnight Madness Special, the system was sold at a "1/3 off" special price. What was the profit or loss at the special price?

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277) Furniture Warehouse bought upright freezers for $1800 less 33⅓% and 5%. The store's overhead works out to 30% of cost. The freezers are initially priced so that a profit of 16⅔% of cost will be realized when a freezer is sold at a "15% off" price. a) Rounded to the nearest %, what is the initial full rate of markup on cost? b) During its Scratch-and-Save sale, customers qualify for an extra discount of either 5%, 7%, or 10%. This extra discount appears when the customer scratches a ticket at the time of a purchase. It is added to the basic 15% discount, making the combined discount 20%, 22%, or 25%, respectively. What is the store's profit or loss per freezer at each of these discounts?

278) Specialty Builders Supply has two sources for the same power saw. Source A sells the saw at $196.00 less 20%, and Source B offers it at $186.60 less 16⅔%. Which source is less expensive?

279) A trade discount of 22.5% from the suggested selling price for a line of personal computers translates to a $337.05 discount. What net price will a retailer pay?

280) A 28% trade discount on a DVD recorder represents a discount of $136.92 from the suggested retail price. What is the net price to the buyer?

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281) The net price of an item after a discount of 22% is $155.61. What is the (dollar) amount of the discount?

282) Mr. and Mrs. Ogrodnik want to list their house at a price that will let them a minimum of $320,000 after a real estate commission of 5.5% of the selling price. Rounded to the nearest $100, what is the lowest offer they could accept on their home?

283) Chicken Little Farms gives convenience stores a discount of 25% on eggs listed at $43.00 per case. What trade discount will Sunnyside Farms have to give on its list price of $44.50 per case to match Chicken Little's price to convenience stores? Round to the nearest 0.1%

284)

A merchant pays a 2.9% fee to the Royal Bank on all Visa sales.

a) What amount will he pay on sales for a month of $28,476? b) What were his gross sales for a month in which the bank charged fees totalling $981.71?

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285) At its current price of $1.10 per share, the price of Apex Resources stock is down 78% from its price 1 year ago. What was that price?

286) An invoice shows a net price of $199.16 after discounts of 22%, 7%, and 5% are deducted. a) What was the list price of the goods? b) What single discount, to the nearest 0.01%, would be equivalent to the discount series?

287) Custom Kitchens received an invoice dated November 17 from Idea Cabinets Ltd. for $7260 with terms 3/15, 1½/30, n/60. If Custom Kitchens made a payment of $4000 on December 2, what further payment on December 16 will settle the account?

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288) In addition to the regular trade discount of 25% and a volume purchase discount of 8⅓% from the manufacturer, Appliance Warehouse is offered a further 5% discount for orders placed in January. a) What is the net price after all three discounts on refrigerators listed at $1195? b) What is the list price on an electric range whose net price works out to be $470.25? c) What single trade discount, to the nearest 0.01%, is equivalent to the three trade discounts? d) After the regular and volume discounts are both taken, what dollar amount of savings does the extra discount for January orders represent on a $1000 list price item?

289) A payment of $500 on an invoice for $887 reduced the balance owed to $378.09. What cash discount rate was allowed on the $500 payment? Round to the nearest 0.01%

290) In three successive years the price of the common shares of Bedrock Resources Ltd. fell 40%, 60%, and 70%, ending the third year at 50 cents. a) What was the share price at the beginning of the three-year skid? b) How much (in dollars and cents) did the share price drop in the second year?

291) The evening news reports that the S&P/TSX Index dropped 0.9% on the day to close at 13,123 points. To the nearest point, how many points did the index fall?

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292) If a grocery store's rate of markup on selling price of tomatoes is 55%, what is the rate of markup on cost of the tomatoes? Round to the nearest 0.01%

293) Omega Restaurant received an invoice dated July 22 from Industrial Kitchen Equipment for $3691, with terms 2/10, 1/20, n/45. Omega made payments of $1100 on August 1, $900 on August 10, and $800 on August 31. What amount was still owed on September 1?

294)

What is the cost of an item that sells for $87.49 if:

a) The rate of markup on cost is 30%? b) The rate of markup on selling price is 30%?

295) What total amount must be paid on May 4 to settle invoices dated April 20 for $650, April 24 for $790, and April 30 for $465, all with terms 1½/10, n/30?

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296) Bosley's Pet Foods buys dog kibble for $19.50 per bag less 40%. The store's overhead is 33⅓% of the selling price, and the desired profit is 10% of the selling price. a) At what price per bag should the dog food be sold? b) At this price, what is the rate of markup on cost? Round to the nearest 0.1% c) What is the break-even price?

297) A uranium mining town reported population declines of 3.2%, 5.2%, and 4.7% for the three successive 5-year periods 1985-89, 1990-94, and 1995-99. If the population at the end of 1999 was 9320: a) To the nearest person, how many lived in the town at the beginning of 1985? b) To the nearest person, what was the population loss in each of the 5-year periods?

298) The Pro Shop at Sunny Lake Golf and Country Club prices its golf club sets to allow for overhead of 33⅓% of cost and profit of 20% of cost. a) What is the regular selling price as a percentage of cost? b) What discount rate can the Pro Shop offer to club members if it will accept half of the normal profit on member purchases? Round both answers to 2 decimal places.

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299) Central Ski and Cycle purchased 50 pairs of ski boots for $360 per pair less 33⅓% and 10%. The regular rate of markup on selling price of the boots is 40%. The store's overhead is 22% of the selling price. During a January clearance sale, the price was reduced to $270 per pair. a) What was the rate of markdown for the sale? b) What was the profit or loss on each pair of boots at the sale price? c) At the sale price, what was the rate of markup on cost?

300) Sunrise Building Supply obtains 4- by 8-ft sheets of wallboard from Canadian Gypsum at $30 per sheet less 30% and 10%. The price is to be set to cover Sunrise's overhead of 20% of the selling price and to provide an operating profit of 18% of the selling price. What should be the retail price per sheet?

301) Nelson Hardware ordered a shipment of gas barbecues at a suggested retail price of $459 less trade discounts of 25% and 10%. The manager intends to sell the barbecues at the suggested retail price. If overhead expenses are 20% of the selling price: a) What will be the unit operating profit? b) To the nearest 0.01%, what is the rate of markup on cost? c) To the nearest 0.01%, what is the rate of markup on selling price? d) What would be the break-even selling price for an inventory clearance sale?

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302) Ski 'n Cycle purchased Elan 200 skis for $492 per pair and priced them to give a rate of markup on selling price of 40%. When this model was discontinued, the store marked down its remaining stock by 30%. What was the sale price after the markdown?

303) A pharmacy marked up its sunscreen to provide for overhead expenses of 40% of cost and a profit of 45% of cost. At the end of the summer, what rate of markdown can the pharmacy apply to the remaining inventory of sunscreen and still break even on sales at the reduced price? Round to the nearest 0.01%

304) A snowblower retails for $489. The dealer's overhead is 20% of cost, and normal operating profit is 16⅔% of cost. a) What is the largest dollar amount of markdown that will allow the dealer to break even? b) What rate of markdown, to the nearest 0.01%, will price the snowblower at cost?

305)

Determine the payment required to settle the invoice on the indicated payment date.

Invoice Amount $3765.25

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Credit Terms

Invoice Date

1⅓/15, n/30, EOM Dec 24

Date Goods Received Jan 2

Payment Date Jan 17

306)

Determine the payment required to settle the invoice on the indicated payment date.

Invoice Amount $775.50

307)

2/10, EOM

Invoice Date Aug 4

Date Goods Received July 30

Payment Date Sep 5

Determine the payment required to settle the invoice on the indicated payment date.

Invoice Amount $1450.61

308)

Credit Terms

Credit Terms 2/10, ROG

Invoice Date May 23

Date Goods Received May 28

Payment Date Jun 8

Determine the payment required to settle the invoice on the indicated payment date.

Invoice Amount $995.00

Credit Terms 1½/15, n/60, ROG

Invoice Date Nov 19

Date Goods Received Dec 2

Payment Date Dec 16

309) An invoice for $2365 was dated February 25 and had terms of payment 1½/10, EOM. A payment on March 9 resulted in a credit to the account of $1421.32. What was the amount of the payment?

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310) On October 26, Sandor received an invoice dated October 24. The amount billed was $815.49 with terms 2/20, n/45, ROG. The goods were received on November 4. On November 21, Sandor paid $500 on the account. Calculate the balance after the payment.

311) A payment of $500 within the discount period reduced the balance owed on an invoice from $1450.61 to $943.00. What was the discount rate for prompt payment? Round to the nearest 0.1%

312) On April 1, Hakim received an invoice for $4535.50 dated March 28. The terms of payment were 3/10, 1/20, n/30, EOM. Hakim made four payments of $1000 each on April 5, April 10, April 15, and April 20. What was the balance after the fourth payment?

313)

An invoice for $2678.50 dated April 15 has terms 1½/15, EOM

a) When does the discount period end? b) When does the credit period end? c) What payment on April 30 will reduce the outstanding balance by $800? d) If an additional payment of $800 is made on May 5, what will be the new balance? e) What further payment on May 10 will reduce the outstanding balance to $800?

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314)

An invoice for $13,600 dated May 18 has terms 2/10, ROG

a) When does the discount period end? b) When does the credit period end? c) What payment on May 30 will reduce the outstanding balance by $5000? d) Instead of the payment in Part c), $5000 is paid on May 30. What will be the balance owed? e) Instead of the payment in Part c) and d), what payment on June 5 will reduce the outstanding balance to $5000?

315) Burlingame Carpets received a cheque for $8000 on December 10 from Sorenson Flooring as a partial payment of Burlingame's invoice. The invoice, dated November 20, was for $14,772 with terms 2/10, 1/20, n/45, EOM. a) How much should Burlingame credit Sorenson's account? b) What is the balance still owed?

316) Lakeside Marine received an invoice from Osborne Boats dated March 26 with terms 1½/15, n/45, ROG for four 19-foot Barracuda boats at $23,500 each less 20%, 5%. The boats arrived on April 27. Lakeside made a payment of $60,000 on the account on May 10. How much does Lakeside still owe?

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317) McAfee Furniture received an invoice dated September 14 from Pallisade Manufacturing with terms 2½/10, EOM for the following items: four Prestige bedroom suites at $3900 each less 20%, 7%, and six Oak Traditional dining room suites at $4880 each less 25%, 5%. What amount paid on October 10 will cut the amount owed in half?

318) A wholesaler advertises a 25% discount on all clothing. You buy several sweaters for $48.75 each for your retail boutique. What was the wholesaler's list price per sweater?

319) The list price of a coat is $125.00. A retailer is able to purchase the coat for $106.25. What is the rate of trade discount?

320) A wholesaler offers discounts of 10%, 8%, and 5%. What is the single equivalent discount rate? Round to the nearest 0.01%

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321) Larissa sells coats for $200 less 30%. Kristina sells coats for $196 less 25% and 5%. What second discount would Larissa need to offer to match Kristina's net price?

322) M studios received an invoice for photography equipment for $500 dated May 5, with terms 2/10, n/30. What payment will settle the invoice on: a) May 15? b) May 16?

323) What total amount must be paid on June 19 to settle invoices dated June 1 for $600, June 5 for $300, and June 9 for $400, all with terms 3/10, 2/15, n/30?

324) A payment of $727.50 was made on May 7 on an invoice totaling $3000.00 dated April 27 with terms 3/10, 1/15, n/30. What amount is still owed?

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325) What payment must be made on April 5 on an invoice for $2250, dated March 16 with terms 2/10, 1/20, n/30 in order to reduce the outstanding balance to $1500?

326) M Studios is ordering a new type of camera, which costs $315. M Studios allows 35% of cost for operating expenses and 20% of cost for profit. What selling price should M Studios advertise the camera at?

327) What is the profit on a unit, which costs $21.60 and sells for $49.95, when operating expenses are expected to be 25% of cost?

328) An item sells for $85. The cost of the item is $50 and overhead expenses are estimated to be 25% of the selling price. To the nearest 0.1%, what is the rate of markup on selling price of the item?

329) An item costs $63. The selling price is set to include a profit of 25% of the selling price and estimated overhead expenses of 30% of the selling price. To the nearest 0.1%, what is the rate of markup on cost?

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330) M Studios sells a camera lens for $300. During their annual August sale, the camera lens is reduced by 15%. What is the sale price?

331) Larissa bought summer dresses for her boutique at a cost of $80 each. The dresses were marked up by 50% of the selling price. At the end of August, three of the dresses were unsold, and Larissa reduced the price to $90 each. What was the rate of markdown for the remaining dresses?

332) Cliff sells memberships at his karate club for $500 per year. His nearest competitor is offering a special price during the last two weeks of December of $425 per year. What rate of markdown will Cliff have to offer to match his competitor's price?

333) An item costing $50 was marked up 40% of the cost price and then reduced for a quick sale by 40% of the selling price. What was the sale price?

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334) M. Studios buys cameras for $750, less 10%, plus an additional volume discount of 8% on orders of 200 or more. The list price of the cameras is based on operating expenses of 20% of cost and a desired profit of 15% of cost. The store manager has 10 cameras remaining from an order of 250, and has decided to sell them at the break-even price. To the nearest 0.01%, what will be the rate of markdown?

335) An item is purchased for $300, less 35%, 20%, and 10%. The selling price is set so that estimated overhead expenses are 30% of the selling price, and operating profit is 25% of the selling price. What is the break-even price of the item?

336) A sweater sells for $130.50. Overhead expenses are 25% of cost and operating profit is 20% of cost. To the nearest 0.01%, what rate of markdown will price the sweater at the breakeven price?

337) An item purchased for $150, less 25%, was marked up by 40% of cost. The item was then reduced 30%. What was the sale price?

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338) An invoice dated March 15 for $400 with terms 2/10, 1/20, EOM, was received on March 20. By what date should the invoice be paid to qualify for the 2% discount?

339) Stanford Marketing Inc. received an invoice for $3500 on August 19, with terms 1/10, n/30, EOM. What amount will reduce the outstanding balance to $2000 if paid on September 9?

340) Stanford Marketing Inc. received an invoice for $7500 on April 10, with terms 3/10, n/30, EOM. Stanford submitted a payment of $5000 on May 10. What is the outstanding balance on the invoice after the payment is made?

341) An invoice dated March 15 for $400 with terms 2/10, 1/20, ROG, was received on March 20. The goods were delivered on April 28. By what date should the invoice be paid to qualify for the 2% discount?

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342) Stanford Marketing Inc. received an invoice for $3500 on August 19, with terms 2/10, n/30, ROG, for goods received October 15. What amount will reduce the outstanding balance to $2000 if paid on October 25th?

343) Lucerne Dairies gives convenience stores a trade discount of 42% on milk listed at $72.00 per carton. What rate of discount will Beatrice Milk Products have to give on its list price of $74.50 per carton to match Lucerne's price to convenience stores?

344) The net proceeds to the dealership of a used Toyota Corolla after payment of a 4% commission were $12,600. What price did the car sell for?

345) The net price to a motorcycle dealer of a KWX-4 model is $9,750. If the manufacturer has a list price of $14,599 What trade discount is the dealer being given?

346) A 22.5% trade discount on a Samsung laptop represents a discount of $199.57 from the suggested retail price. What is the net price to the buyer?

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347) The morning news reports that the S&P/TSX Main Index dropped 2.4% on the day to close at 16,456 points. Rounded to the nearest integer, how many points did the index fall on the day?

348) In announcing its fourth-quarter results, New Flyer Manufacturing reported a decline in revenue of $1.45 million representing a 2.55% decrease from the third quarter. Rounded to the nearest dollar, what is the fourth quarter's revenue?

349) Ford Motors was selling vehicles to the dealers which included an initial 25% dealer discount, a 10% seasonal discount and a 5% volume discount. If the vehicles initial wholesale value was $25,678, how much did the dealer have to pay?

350) A small bakery offers bread to restaurants with a 25% trade discount and a 10% volume discount. The final price to the restaurant is $1.04. What is the value of the 10% discount to the restaurant?

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351) An invoice for $365, dated October 25, has terms of payment 1/20, n/30. What amount on November 5 will pay the invoice in full?

352) On Aug 29, Sindhu received an invoice for $85.49, dated Aug 27. If the terms of the invoice are 4/10, 2/20, n/60, what amount is required on Sep 15 to pay the invoice in full?

353) On Feb 25, 2019 Hancock Grocers received an invoice from Tooltown Inc. for $2300. The invoice was dated Feb 22 and offered terms of 2/10, 1/20, n/30. What payment will settle the invoice on Mar 21?

354) An invoice for $2200, dated July 26, had terms 3/10, 1.5/20, n/45. What amount was credited for a payment of $1000 on Aug 7?

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355) A payment of $4000 on a $7000 invoice qualified for the larger cash discount in 2/10, 1/20, n/30. What additional payment 26 days after the invoice date will settle the invoice?

356) XYZ Industries received an invoice for $2100 with terms 3/10, 1/30, n/45. After one payment within the 10-day discount period, a second payment of $550.11 within the 30-day discount period paid off the balance. What was the amount of the first payment?

357) A retailer obtains a product at a unit cost of $21.30 and sells it for $57.90. Determine the rate of markup on cost.

358) The Liquor Store purchases Gallo Red Blend wine at $5.80 per bottle and then sells them in their store for $10.50 per bottle. Calculate the rate of markup on cost and rate of markup on selling price of the wine?

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359) A bakery prices fresh bread at four times its cost to the store. Determine the rate of markup on cost?

360) The markup on Vape units in a specialty store is 175% of the cost. For a Vape unit priced at $24.95 in the specialty store, determine its cost.

361) The price of a new couch is set by a furniture store to cover operating expenses at 30% of cost, and to generate an operating profit of 55% of cost. What is the rate of markup on selling price for a couch selling for $1729?

362) Hertz Power Tools purchased five chainsaws from a local manufacturer for $75.75 each. If the rate of markup on selling price is 45% what is the selling price of each chainsaw?

363) The rate of markup on the cost of vaping pens in a retailer is 125% because of the large losses from theft. What is the rate of markup on selling price?

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364) At the Village Restaurant employs a 325% rate of markup on the cost of all soft drinks. The restaurant's overhead averages out to 40% of sales each month. What is the operating profit on one soft drink for which the wholesale cost is $.25?

365) An item was marked up from $8.50 to $15.00, then later marked down by 40% during a spring sale. Determine the price during the spring sale.

366) The manager of a local garage buys winter tires for $125 each and marks them up by 90% of cost. In late April, he clears out remaining inventory at a 30% markdown. Determine the clearance price of one tire.

367) Canadian Tire purchases microwaves from a wholesaler for $49 and marks them up by 25% of selling price. At the end of the summer, a floor-display model's price is reduced to 12% above cost. What percentage price reduction should the price tag show?

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368) Calculate the reduced selling price on an item that is marked down 35%, an amount equivalent to a discount of $45.

369) A small ice cream store marks up its springtime shipment of ice-cream bars to provide for overhead expenses of 120% of cost and a profit of 100% of cost. At the end of the summer, what rate of markdown can the ice cream store apply to the remaining inventory of ice-cream bars and still break even on sales at this level?

370) An item that cost $42 was marked up by 40% of cost. Later, the retail price was reduced to $39.99. If unit overhead expenses were 20% of cost, what was the unit operating profit at the reduced price?

371) A retailer marked up an item from its $12.52 cost to the regular selling price of $49.80. During the store's Boxing Day sale, the item was offered at 20% off. On a sale at this price, what was the (reduced) operating profit if unit overhead expenses were 30% of cost?

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372) Treasure Hills Golf Course sells Titleist R1 Golf clubs for $547 per set. Treasure Hills' wholesale cost is $198. For a Spring clearance sale, the prices are marked down by 10%. If overhead expenses are 5% of the regular selling price, what is the unit operating profit at the sale price?

373) Western Airlines' markup on its Las Vegas flights is 35% of selling price. Its cost per ticket is $97. For Christmas flights, the ticket price is reduced to $99. What is Morgan's operating profit or loss at this price if overhead expenses are 10% of the regular selling price?

374) In early April, Peter's Nursery ordered ornamental flower pots at $5.60 less 33%, 12.5%, and 5% per pot. The pots are normally priced to provide a 155% rate of markup on cost. Operating (overhead) expenses are 25% of cost. To clear out the remaining pots in September, they were marked down by 45%. Calculate the change in profit from regular price to sale price?

375) A new laptop costs The New Age Networks $400 less 20% and 8%. The normal rate of markup on cost is 90%. If the sale price is $399, what will be the advertised markdown?

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376) Just Clocks sets its regular prices based on overhead expenses at 22% of cost and an operating profit of 90% of cost. What will be the operating profit (as a percent of cost) for dresses sold at a 20% discount?

377) Keico Pools and Hot Tubs pays $2600 less 64% for a backyard above-ground pool kit. Overhead expenses are 22% of the regular selling price, and the operating profit is 45% of the selling price. What is the maximum rate of markdown the store can offer and still break even?

378) Acadian College Bookstore buys student math textbooks at $120 less 40%, 10% and 5%. The price is marked up to allow for overhead of 30% of cost and profit of 87% of cost. At the end of the term, what rate of markdown from the regular price can the bookstore offer on the remaining textbooks if it is to recover only half of the unit overhead costs?

379) Red River Board Games obtained a new board game for $18 less 30% and 15%. The store's pricing is based on overhead expenses of 30% of cost. The "regular price" of the board game is set so that, if it is sold in a "20% off" sale, the store's operating profit will be 25% of cost. What is the "regular price"?

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380) Joe's Good Eats bought chicken wings for $.75 less 40% and 25%. The restaurant's overhead works out to 25% of cost. The chicken wings are initially priced so that a profit of 21% of cost will be realized when a chicken wing is sold at a "50% off" price. What is the initial full rate of markup on cost? (round to the nearest full percent)

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Answer Key Test name: Chap 05_10ce 1) A 2) B 3) C 4) D 5) E 6) A 7) E 8) C 9) D 10) E 11) A 12) B 13) C 14) D 15) E 16) A 17) B 18) C 19) D 20) E 21) E 22) B 23) C 24) D 25) E 26) A Version 1

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27) C 28) D 29) A 30) E 31) E 32) C 33) D 34) A 35) D 36) E 37) C 38) A 39) E 40) A 41) E 42) A 43) B 44) E 45) A 46) C 47) C 48) D 49) D 50) E 51) D 52) B 53) D 54) B 55) E 56) B Version 1

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57) C 58) E 59) D 60) A 61) D 62) C 63) C 64) B 65) C 66) E 67) B 68) A 69) D 70) B 71) C 72) E 73) A 74) C 75) E 76) B 77) C 78) A 79) E 80) B 81) C 82) D 83) B 84) C 85) B 86) E Version 1

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87) B 88) D 89) E 90) A 91) B 92) C 93) D 94) E 95) A 96) B 97) C 98) D 99) E 100) A 101) B 102) C 103) D 104) E 105) A 106) B 107) C 108) D 109) E 110) C 111) A 112) C 113) A 114) D 115) A 116) E Version 1

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117) B 118) D 119) A 120) E 121) A 122) C 123) A 124) D 125) A 126) E 127) D 128) B 129) C 130) A 131) D 132) A 133) B 134) D 135) C 136) A 137) A

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CHAPTER 6 1) Kuldip's factory manufactures toys that sell for $29.95 each. The variable cost per toy is $11, and the total fixed costs for the month are $45,000. Calculate the unit contribution margin. A) $18.95 B) $17.95 C) $19.00 D) $17.50 E) $11.00

2) Kuldip's factory manufactures toys that sell for $29.95 each. The variable cost per toy is $11, and the total fixed costs for the month are $45,000. What is the break-even point in units per month? A) 2100 units B) 2375 units C) 2300 units D) 2450 units E) 2575 units

3) Kuldip's factory manufactures toys that sell for $29.95 each. The variable cost per toy is $11, and the total fixed costs for the month are $45,000. To the nearest dollar, what is the breakeven point in revenue per month? A) $70,000 B) $75,480 C) $71,121 D) $73,215 E) $71,500

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4) Kuldip's factory manufactures toys that sell for $29.95 each. The variable cost per toy is $11, and the total fixed costs for the month are $45,000. What would unit sales have to be to attain a net income over $8000? A) 2700 units B) 2650 units C) 2756 units D) 2797 units E) 2765 units

5) Kuldip's factory manufactures toys that sell for $29.95 each. The variable cost per toy is $11, and the total fixed costs for the month are $45,000. What would unit sales have to be to attain a net income over $12,000? A) 3050 units B) 2900 units C) 2950 units D) 2996 units E) 3008 units

6) A manufacturing company is considering producing a new product. The variable cost of the new product is $60 per unit, and the total fixed costs are $75,000 for a month. The company could produce 1500 units per month, and sell the product for $125 each. Calculate the unit contribution margin. A) $65 B) $50 C) $60 D) $125 E) $80

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7) A manufacturing company is considering producing a new product. The variable cost of the new product is $60 per unit, and the total fixed costs are $75,000 for a month. The company could produce 1500 units per month, and sell the product for $125 each. To the nearest 0.1%, what is the break-even point as a percent of capacity? A) 81.2% B) 76.9% C) 75.0% D) 72.4% E) 63.0%

8) A manufacturing company is considering producing a new product. The variable cost of the new product is $60 per unit, and the total fixed costs are $75,000 for a month. The company could produce 1500 units per month, and sell the product for $125 each. What would be the net income at 90% capacity? A) $10,000 B) $15,000 C) $12,750 D) $12,225 E) $16,000

9) A manufacturing company is considering producing a new product. The variable cost of the new product is $60 per unit, and the total fixed costs are $75,000 for a month. The company could produce 1500 units per month, and sell the product for $125 each. What would be the net income at 75% capacity? A) A loss of $3500 B) A loss of $250 C) A loss of $1800 D) A loss of $1875 E) A loss of $2025

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10) A manufacturing company is considering producing a new product. The variable cost of the new product is $60 per unit, and the total fixed costs are $75,000 for a month. The company could produce 1500 units per month, and sell the product for $125 each. What unit sales would result in a net income of $16,000? A) 1200 units B) 1250 units C) 1300 units D) 1375 units E) 1400 units

11) M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. Calculate the contribution margin per camera. A) $275 B) $250 C) $225 D) $300 E) $325

12) M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. To the nearest 0.1%, calculate the break-even point as a percentage of capacity.

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A) 34.5% B) 65.5% C) 50.0% D) 60.0% E) 62.5%

13) M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. How many cameras must be sold per month to have a net income of $40,000? A) 850 B) 900 C) 800 D) 750 E) 825

14) M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. If fixed costs increase by 10%, what will be the net income at full capacity? A) $85,000 B) $75,000 C) $80,000 D) $77,000 E) $75,500

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15) M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. If fixed costs increase by 10%, how many cameras per month would have to be sold to maintain a net income of $49,500? A) 950 B) 875 C) 850 D) 925 E) 900

16) A manufacturer produces a product which it sells for $60 per unit. The variable cost per unit is $20 and the fixed cost per month is $10,000. How many units must be sold per month to break even? A) 167 B) 500 C) 400 D) 250 E) 300

17) A manufacturer produces a product which it sells for $60 per unit. The variable cost per unit is $20 and the fixed cost per month is $10,000. Determine the monthly profit (loss) if it sells 325 units per month. A) $1500 B) ($1500) C) $3000 D) $0 E) ($3000)

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18) A manufacturer produces a product which it sells for $60 per unit. The variable cost per unit is $20 and the fixed cost per month is $10,000. How many units must be sold per month to earn a profit of $7000? A) 342 B) 425 C) 675 D) 575 E) 525

19) The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the contribution margin per unit. A) $24 B) $9 C) $8 D) $6 E) $5

20) The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the break-even point in units per month. A) 320 B) 533 C) 800 D) 200 E) 400

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21) The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the revenue per month required to break-even. A) $4,800 B) $7,200 C) $12,000 D) $14,400 E) $16,000

22) The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the contribution margin rate. A) 30% B) 40% C) 50% D) 60% E) 70%

23) The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the number of units that must be sold to return a net income of $2,100 per month. A) 1,400 B) 1,150 C) 767 D) 533 E) 350

24) The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the net income on sales of 850 units per month.

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A) $12,750 B) $7,950 C) $5,100 D) $1,150 E) $300

25) The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the net income on revenue of $10,000 per month. A) $4,000 profit B) $5,200 profit C) $1,200 profit D) $800 loss E) $1,200 loss

26) The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate the contribution rate. A) 20% B) 40% C) 50% D) 70% E) 80%

27) The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate the budgeted net income.

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A) $6,400,000 profit B) $2,400,000 profit C) $1,200.000 profit D) $800,000 profit E) $4,000,000 loss

28) The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate break-even revenue per year. A) $7,200,000 B) $7,000,000 C) $5,600,000 D) $3,200,000 E) $8,000,000

29) The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate the net income if total revenue for the year exceeds the budget by $1,000,000. A) $2,400,000 B) $2,200,000 C) $2,000,000 D) $1,800,000 E) $1,600,000

30) The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate the net income if total revenue for the year falls below the budget by $1,000,000.

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A) $400,000 profit B) $0 C) $200,000 loss D) $220,000 loss E) $800,000 loss

31) The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate the total sales revenue for the year that would be needed for a profit of $2,750,000. A) $10,437,500 B) $9,387,500 C) $8,250,000 D) $9,750,000 E) $10,750,000

32) Ace Corporation's variable costs are equal to 43% of sales revenue. Their fixed costs per month are $600,000. Calculate the contribution rate. A) 22% B) 34% C) 43% D) 53% E) 57%

33) Ace Corporation's variable costs are equal to 43% of sales revenue. Their fixed costs per month are $600,000. To the nearest dollar, calculate total revenue at the break-even point.

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A) $1,395,349 B) $858,000 C) $942,000 D) $1,052,632 E) $1,355,400

34) Ace Corporation's variable costs are equal to 43% of sales revenue. Their fixed costs per month are $600,000. Calculate the net income on sales of $2,000,000 per month. A) $540,000 B) $260,000 C) $798,000 D) $1,140,000 E) $280,000

35) Weiner's Hot Dog Stand sells hot dogs for $2.50 each. The variable cost per hot dog is $1.75 and fixed costs per month are $1,800. How many hot dogs must Weiner sell in a month to break even? A) 1,800 B) 2,000 C) 2,400 D) 2,750 E) 720

36) Weiner's Hot Dog Stand sells hot dogs for $2.50 each. The variable cost per hot dog is $1.75 and fixed costs per month are $1,800. How much profit should Weiner realize on the sale of 3000 hot dogs?

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A) $7,500 B) $1,500 C) $1,016 D) $850 E) $450

37) Weiner's Hot Dog Stand sells hot dogs for $2.50 each. The variable cost per hot dog is $1.75 and fixed costs per month are $1,800. If Weiner's fixed cost per month was to increase to $2,880, to what level would he have to reduce his variable cost per hot dog in order to maintain the current break-even point in units? A) $1.20 B) $1.30 C) $1.40 D) $1.50 E) $1.60

38) At this time, Weiner's Hot Dog Stand sells hot dogs for $2.50 each. The variable cost per hot dog is $1.75 and fixed costs per month are $1,800. Weiner is considering some changes. If Weiner increases his selling price to $2.75 per hot dog, and reduces his variable cost per hot dog to $1.15, what level of fixed cost per month would reduce his break-even point in units by 50% from what it is now? A) $900 B) $1,050 C) $1,450 D) $1,920 E) $2,400

39)

What is the range of y for x in the range x = -3 to x = 5 for the equation -3x + y = 15

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A) 0 to 24 B) 6 to 30 C) 24 to 30 D) -6 to -3.3 E) 0 to 30

40) A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9000 per week. What is the break-even point expressed in dollars of revenue? A) $12,000 B) $10,000 C) $15,000 D) $12,500 E) $14,750

41) A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9000 per week. What is the break-even point expressed as a percent of capacity? A) 75% B) 80% C) 70% D) 85% E) 65%

42) A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9000 per week. How many dolls must be sold each week to produce a net income of $1125?

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A) 400 dolls B) 425 dolls C) 450 dolls D) 475 dolls E) 375 dolls

43) A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9000 per week. How many dolls must be sold each week to produce a net income of $2250? A) 375 dolls B) 400 dolls C) 425 dolls D) 500 dolls E) 525 dolls

44) A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9000 per week. If fixed costs are increased by 10% per week, by how much will this lower the net income? A) $750 B) $1000 C) $1250 D) $800 E) $900

45) Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2000 meals per month. At full capacity, what is Cliff's net income?

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A) $12,000 B) $10,000 C) $15,000 D) $7,500 E) $14,500

46) Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2000 meals per month. At 75% capacity, what is Cliff's net income? A) $4800 B) $6000 C) $7200 D) $7800 E) $8400

47) Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2000 meals per month. What is the break-even point expressed as a percent of capacity? A) 75% B) 80% C) 50% D) 60% E) 70%

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48) Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2000 meals per month. What number of meals must be sold to break-even? A) 1200 meals B) 1400 meals C) 1500 meals D) 1000 meals E) 1250 meals

49) Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2000 meals per month. What number of meals must be sold to generate a net income of $7800? A) 1550 meals B) 1600 meals C) 1700 meals D) 1750 meals E) 1650 meals

50) Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2000 lamps per month. What is the break-even volume per month? A) 750 lamps B) 800 lamps C) 900 lamps D) 1000 lamps E) 600 lamps

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51) Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2000 lamps per month. What is the monthly net income at a volume of 1800 lamps per month? A) $76,000 B) $84,000 C) $80,000 D) $88,000 E) $72,000

52) Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2000 lamps per month. What is the monthly net income if Cando operates at 60% capacity? A) $44,000 B) $84,000 C) $36,000 D) $52,000 E) $28,000

53) Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2000 lamps per month. At what percent utilization would the monthly net income be $44,000? A) 60% B) 55% C) 50% D) 65% E) 70%

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54) Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2000 lamps per month. At what percent utilization would the monthly net income be $52,000? A) 55% B) 65% C) 75% D) 80% E) 70%

55) Solve: x + y = 40 -x + y = -20 A) x = 30; y = 10 B) x = -10; y = 30 C) x = -30; y = -10 D) x = -60; y = 20 E) x = -60; y = -20

56) Solve: 2x + 3y = 7 3x - y = 5 A) x = 6; y = 2 B) x = -2; y = 1 C) x = -2; y = -1 D) x = 2; y = 1 E) x = 2; y = -1

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57) The difference between two numbers is 42. If one-half of the larger number is three more than twice the smaller number, what are the two numbers? A) -12 and -54 B) 12 and 54 C) 16 and 58 D) 11 and 31 E) -12.5 and 29.5

58) Solve: y = -0.2x + 4.2 x - 0.5y = 10 A) x = 11; y = 2 B) x = 2; y = 11 C) x = 11; y = 6.4 D) x = 6.45; y = 2.9 E) x = 6.4; y = 11

59) Stavros sells gold and green fabric in his drapery store. Each quarter he buys the same quantities from his supplier. On his last order he paid $18 per metre for the gold fabric and $20 per metre for the green fabric, totalling $2290. The supplier has advised Stavros that the price of the gold fabric will increase by 20% and the price of the green fabric will increase by 25%. His new order total will become $2813. How many metres of gold fabric does Stavros order each quarter?

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A) 65m B) 56m C) 85m D) 55m E) 25m

60) Graph the following equation: -2x + y = 0 over the range x = -3 to x = 6

61) Graph the following equation: -2x + y = 4 over the range x = -3 to x = 6

62) Graph the following equation: 2x + y = 4 over the range x = -3 to x = 6

63) Graph the following equation: y = 4 over the range x = -3 to x = 6

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64) Graph the following equation: 3x - 4y + 12 = 0 over the range x = -8 to x = 12

65) Graph the following equation: y = 60x + 6000 over the range x = 0 to x = 50

66) Graph the following equation: y = 4.5x + 5000 over the range x = 0 to x = 6000

67) Determine the slope and y-intercept of each of the following equations. a) 2x = 3y + 4 b) 8 - 3x = 2y c) 8x - 2y - 3 = 0 d) 6x = 9y

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68) Determine the slope and b-intercept of each of the following equations. a) 2b + 3 = 5a b) 3a - 4b = 12 c) 0 = 2400 - 4a - 5b d) 7a = -8b

69) An electrician charges a flat $75 for a home service call plus $30 per half hour of labour. Write an equation for calculating the total charges, C, in terms of the hours of labour, H. If you were to plot a graph of C vs. H, what would be the slope and C-intercept of the line?

70) In his bartending job for weddings, Jacob earns a base salary of $2000 per month plus a gratuity of 15% on sales revenue. Write an equation for calculating his gross earnings, E, for a month in terms of his sales revenue, R. If you were to plot a graph of E vs. R, what would be the slope and E-intercept of the line?

71)

The formula for converting from Celsius temperatures, C, to Fahrenheit temperatures, F,

is a) If you were to plot a graph of F vs. C, what would be the slope and F-intercept of the line? b) The slope represents the change in F per unit change in C. Use the value of the slope to determine the increase in Fahrenheit temperature corresponding to a 10 Celsius-degree rise. c) Rearrange the given formula to obtain a formula for converting from Fahrenheit temperatures to Celsius temperatures. What would be the slope and C-intercept if C vs. F were plotted on a graph?

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72) Xuruns a computer repair business and charges a service call fee of $100 plus $30 per half hour for his labour. Write an equation for calculating the total charges, C, in terms of hours of labour, H. Plot the graph of C vs. H and define the slope and C-intercept of the line.

73) Use the graphical method to solve the following pair of equations. x+y=2 x=5

74) Use the graphical method to solve the following pair of equations. x - 3y = 3 y = -2

75) Use the graphical method to solve the following pair of equations. 6x = 3y 3x - y = 1

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76) Use the graphical method to solve the following pair of equations. x - 3y = 0 x + 2y = -5

77) Use the graphical method to solve the following pair of equations. x+y=4 2x - y = 8

78) Use the graphical method to solve the following pair of equations. y - 3x = 11 5x + 30 = 4y

79) Use the graphical method to solve the following pair of equations. 4a - 3b = -3 5a - b = 10

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80) Use the graphical method to solve the following pair of equations. 7p - 3q = 23 -2p - 3q = 5

81) Below is a list of costs. Classify each of them as variable, fixed, or mixed (a combination of variable and fixed components.) a) Employment Insurance for part-time employees. b) Annual elevator permit. c) Wages of sales staff paid on a salary plus commission basis. d) Wages of hourly paid production-line workers. e) Site licence for software. f) Leasing costs for a delivery truck ($600 per month) g) Monthly water bill. h) Insurance.

82) Xing Paper Cups Corp. produced 2,500,000 cups at a total cost of $1,600,000 (including $1,400,000 of fixed costs) in the fiscal year just completed. If fixed costs and unit variable costs do not change next year, how much will it cost to produce 3,600,000 paper cups?

83) TriCan Ltd. manufactured 1,000,000 units of product last year and identified the following manufacturing and overhead costs. (V denotes "variable cost" and F denotes "fixed cost.") Materials used in manufacturing (V)

$5,400,000

Wages paid to production workers (V)

9,300,000

Wages paid to management and salaried employees

2,200,000

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(F) Other materials and supplies (V)

1,600,000

Other utilities (F)

1,900,000

Depreciation (straight line) on plant and equipment (F)

960,000

If unit variable costs and fixed costs remain unchanged, calculate the total cost to produce 20% more units this year.

84) Use the graphical approach to CVP analysis to solve the following problem. CD Solutions Ltd. manufactures and replicates CDs for software and music recording companies. CD Solutions sells each disc for $2.50. The variable costs per disc are $1.00. a) To just break even, how many CDs must be sold per month if the fixed costs are $60,000 per month? b) What must unit sales be in order to have a profit of $7500 per month?

85) Classy Lamps assembles and sells personalized lamps from high-end components. Its lamps are assembled from components costing $25 per system and sells for $120. Labour costs for assembly are $15 per lamp. This product line's share of overhead costs is $4,000 per month. a) How many lamps must be sold each month to break even on this product line? b) What will be the profit or loss for a month in which 85 lamps are sold?

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86) Use the graphical approach to CVP analysis to solve the following problem. Huntsville Office Supplies (HOS) is evaluating the profitability of leasing a photocopier for its customers to use on a self-serve basis at 10ʹ per copy. The copier may be leased for $300 per month plus 1.5ʹ per copy on a full-service contract. HOS can purchase paper at $5 per 500-sheet ream. Toner costs $100 per bottle, which in normal use will last for 5000 pages. HOS is allowing for additional costs (including electricity) of 0.5ʹ per copy. a) How many copies per month must be sold in order to break even? b) What will be the increase in monthly profit for each 1000 copies sold above the break-even point?

87) Phillip is developing a business plan for a residential building management service he may start. Rent and utilities for a part-time office would cost $700 per month. The fixed costs for a vehicle would be $900 per month. He estimates that the variable office costs (word processing and supplies) will be $10 per residential building and variable vehicle costs will be $50 per residential building. Phillip would also spend $240 per month to lease a computer. a) If he charges $1,000 per residential building, how many residential buildings per month are required before he can "pay himself?" b) How many residential buildings per month are required for Phillip to be able to draw a salary of $6000 per month?

88) Use the graphical approach to CVP analysis to solve the following problem. A small manufacturing operation can produce up to 250 units per week of a product that it sells for $20 per unit. The variable cost per unit is $12, and the fixed cost per week is $1200. a) How many units must it sell per week to break even? b) Determine the firm's weekly profit or loss if it sells: (i) 120 units per week (ii) 250 units per week c) At what level of unit sales will the net income be $400 per week?

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89) Rosebud Gardening Centre sells bags of goat manure for $10 per bag. Variable costs are $7.50 per bag and annual fixed costs are $100,000. a) How many bags of goat manure must be sold to break even? b) What will be the net income for a year in which 60,000 bags of goat manure are sold? c) How many bags must be sold for a net income of $60,000 in a year? d) What volume of unit sales would produce a loss of $10,000 in a year?

90) Use the graphical approach to CVP analysis to solve the following problem. Reflex Manufacturing Corp. manufactures composters at a unit variable cost of $43. It sells them for $70 each. It can produce a maximum of 3200 composters per month. Annual fixed costs total $648,000. a) What is the break-even volume per month? b) What is the monthly net income at a volume of 2500 composters per month? c) What is the monthly net income if Reflex operates at 50% of capacity during a recession?

91) Toys-4-U manufactures a toy that it sells for $30 each. The variable cost per toy is $10 and the fixed costs for this product line are $100,000 per year. They estimate they can produce 8000 toys per production period. a) What is the break-even point in units? b) What is the breakeven sales revenue? c) What is the break-even volume as a percent of capacity? d) What would their net income be if they sold 6200 toys? e) What level of unit sales is required to have a net income of $10,000?

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92) Glacier Ice produces bags of crushed ice for convenience stores. One bag of ice sells for $1.50 each. Its fixed costs for this product are $5,000 per month and the variable cost per unit is $1.10 a) What is the break-even point in units? b) What is the break-even sales revenue?

93) Ingrid processes and bottles jam in her home-based business. Her fixed costs are $250 per month and the variable cost per jar is $1.20. She sells the jam to local grocery stores for $3.20 each. a) How many jars must she sell per year to break even? b) What will be her profit if she sells 3000 jars in a year? c) How many jars must she sell per year to have a loss of no more than $1200?

94) Hitachi Corporation manufactures 3D televisions that it sells to retailers for $900 each. The costs to manufacture each additional television are $540 and the monthly fixed costs are $18,000. a) How many televisions must be sold per year to break even? b) What will Hitachi's loss be if it sells 500 televisions in a year?

95) CD Solutions Ltd. manufactures and replicates CDs for software and music recording companies. CD Solutions sells each disc for $2.50. The variable costs per disc are $1.00. a) To just break even, how many CDs must be sold per month if the fixed costs are $60,000 per month? b) What must unit sales be in order to have a profit of $7500 per month? c) What will their profit be if they have total revenue of $130,000 per month? d) How many CDs would have to be sold per month to break even if they increased their selling price to $3.50 each?

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96) Clone Computers assembles and packages personal computer systems from brand-name components. Its Home Office PC System is assembled from components costing $1400 per system and sells for $2000. Labour costs for assembly are $100 per system. This product line's share of overhead costs is $10,000 per month. a) How many Home Office Systems must be sold each month to break even on this product line? b) What will be the profit or loss for a month in which 15 Home Office Systems are sold?

97) Jacobs Manufacturing is currently paying $12,000 per month to have a lawyer on staff. In order to cut costs, they are looking to hire a lawyer when required, but on retainer. The fixed cost per month for the retainer fee is $1,000 and an hourly billing rate of $400. How many hours per month can Jacobs Manufacturing use the lawyer in comparison to having a in-house lawyer and break-even? If on average Jacobs Manufacturing required 20 hours per month of legal services, what would be the annual savings?

98) Jordan is developing a business plan for a residential building inspection service he may start. Rent and utilities for an office would cost $1000 per month. The fixed costs for a vehicle would be $450 per month. He estimates that the variable office costs (word processing and supplies) will be $50 per inspection and variable vehicle costs will be $25 per inspection. Jordan would also spend $200 per month to lease a computer, and $350 per month for advertising. a) If he charges $275 per inspection, how many inspections per month are required before he can "pay himself?" b) How many inspections per month are required for Jordan to be able to draw a salary of $4000 per month?

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99) A small manufacturing operation can produce up to 250 units per week of a product that it sells for $20 per unit. The variable cost per unit is $12, and the fixed cost per week is $1200. a) How many units must it sell per week to break even? b) Determine the firm's weekly profit or loss if it sells: (i) 120 units per week (ii) 250 units per week c) Determine the firm's weekly profit or loss if it has revenue of: (i) $4900 per week (ii) $1960 per week d) At what level of unit sales will the net income be $400 per week?

100) Beta Inc. has based its budget forecast for next year on the assumption it will operate at 90% of capacity. The budget is: Sales revenue

$18,000,000

Fixed costs

$10,000,000

Total variable costs

$6,000,000

Total costs

$16,000,000

Net income

$2,000,000

a) At what percentage of capacity would Beta break even? b) What would be Beta's net income, to the nearest dollar, if it operates at 70% of capacity?

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101) Valley Peat Ltd. sells peat moss for $10 per bag. Variable costs are $7.50 per bag and annual fixed costs are $100,000. a) How many bags of peat must be sold to break even? b) What will be the net income for a year in which 60,000 bags of peat are sold? c) How many bags must be sold for a net income of $60,000 in a year? d) What annual sales in terms of bags and in terms of dollars would produce a loss of $10,000? e) How much do the break-even unit sales and break-even revenue increase per $1000 increase in annual fixed costs?

102) Constant Movement manufactures yoga mats at a unit variable cost of $.50. It sells them for $7.00 each. It can produce a maximum of 4,000 mats per month. Annual fixed costs total $78,000. a) What is the break-even volume per month? b) What is the monthly net income at a volume of 2500 mats per month? c) What is the monthly net income if Constant Movement operates at 50% of capacity during a recession? e) If fixed and variable costs remain the same, how much do the monthly break-even unit sales change for a $1 increase in the selling price?

103) Bentley Plastics Ltd. has annual fixed costs of $450,000 and variable costs of $15 per unit. The selling price per unit is $25. a) What annual revenue is required to break even? b) What annual unit sales are required to break even? c) What will be the annual net income at annual sales of: (i) 50,000 units? (ii) $1,000,000? d) What minimum annual unit sales are required to limit the annual loss to $20,000? e) If the unit selling price and fixed costs remain the same, what are the changes in break-even unit sales and break-even revenue for a $1 increase in variable costs?

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104) The Kelowna division of Windstream RVs builds the Wanderer model. The division had total revenue of $4,785,000 and a profit of $520,000 on the sale of 165 units in the first half of its financial year. Sales declined to 117 units in the second half of the year, resulting in a profit of only $136,000. Determine the selling price per unit, the total revenue in the second half, the unit variable costs, and the annual fixed costs.

105) In the past year, the Greenwood Corporation had sales of $1,200,000, fixed costs of $400,000, and total variable costs of $600,000. a) At what sales figure would Greenwood have broken even last year? b) If sales increase by 15% in the year ahead (but all prices remain the same), how much (in $) will the net income increase? c) If fixed costs are 10% lower in the year ahead (but sales and variable costs remain the same as last year), how much (in $) will the net income increase? d) If variable costs are 10% higher in the year ahead (but sales and fixed costs remain the same as last year), how much (in $) will the net income decrease?

106) The Morgan Company produces two products, G and H, with the following characteristics: Product G

Product H

Selling price per unit

Variable costs per unit

Forecast sales (units)

100,000

150,000

Total fixed costs for the year are expected to be $700,000. a) What will be the net income if the forecast sales are realized? b) Determine the break-even volumes of the two products. Assume that the product mix (that is, the ratio of the unit sales for the two products) remains the same at the break-even point. c) If it turns out that Morgan sells twice as many units of H as of G, what will be the break-even volumes of the two products?

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107) A college ski club is planning a weekend package for its members. The members will each be charged $270. For a group of 15 or more, the club can purchase a 2-day downhill pass and 2 nights' accommodation for $220 per person. A 36-passenger capacity bus can be chartered for $1400. a) How many must sign up for the package for all costs to be covered? b) If the bus is filled, how much profit will the club make? c) If the student government agrees to cover any loss up to $400, what is the minimum number of participants required?

108)

Genifax reported the following information for September:

Sales revenue

$180,000

Fixed manufacturing costs

22,000

Fixed marketing and overhead costs

14,000

Total variable costs

120,000

Unit price

a) Determine the unit sales required to break even. b) What unit sales would generate a net income of $30,000? c) What unit sales would generate a profit of 20% of the sales dollars? d) What sales dollars are required to produce a profit of $20,000? e) If unit variable costs are reduced by 10% with no change in the fixed costs, what will the break-even point become (in unit sales)?

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109) A new and upcoming rock band looking at producing a new release is planning an inaugural concert, with a cold late lunch. The preferred caterer can be signed for $800 plus 20% of ticket revenues. A nightclub can be rented for $3000. Liquor regulations limit the nightclub to 500 guests plus the band and caterers. The band thinks that the event will be a sellout if ticket prices are set at $20 per person. Some of the band members are in favour of less crowding at the nightclub and argue for a ticket price of $30. They estimate that 300 will attend at the higher price. a) Calculate the number of tickets that need to be sold at each price to break even. b) What will the profit be at the predicted sales at each ticket price?

110) In the year just ended, a small appliance manufacturer sold its griddle at the wholesale price of $37.50. The unit variable costs were $13.25, and the monthly fixed costs were $5600. a) If unit variable costs are expected to rise to $15.00 and fixed costs to $6000 per month for the next year, at what amount should the griddle be priced in order to have the same break-even volume as last year? b) What should be the griddle's price in order to have the same profit as last year on sales of 300 griddles per month in both years?

111) Mickey's Restaurant had a net income last year of $40,000 after fixed costs of $130,000 and total variable costs of $80,000. a) What was the restaurant's break-even point in sales dollars? Round to the nearest dollar. b) If fixed costs in the current year rise to $140,000 and variable costs remain at the same percentage of sales as for last year, what will be the break-even point in sales dollars? Round to the nearest dollar. c) What sales in the current year will result in a profit of $50,000? Round to the nearest dollar.

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112) A lawyer is trying to decide whether to rent some farmland to raise cows. The lawyer is looking to lose money so he can write off a loss against his income for the year. The land can be rented for $6,000 per month. Each calf will cost $200 and will cost $20 per month to raise. After one year, the lawyer can sell the calves for $500 each to a feedlot. How many cows can be raised before a profit is realized? If the lawyer purchases and sells 800 cows, how much can he write off against his professional income as a lawyer?

113) A sporting goods manufacturer lost $400,000 on sales of $3 million in a year during the last recession. The production lines operated at only 60% of capacity during the year. Variable costs represent one-third of the sales dollars. a) At what percent of capacity must the firm operate in order to break even? b) To the nearest dollar, what would its net income be at 80% of capacity? c) What dollar sales would generate a net income of $700,000?

114) Solve the following problem using the Contribution Margin Approach. Toys-4-U manufactures a toy that it sells for$30 each. The variable cost per toy is $10 and the fixed costs for this product line are $100,000 per year. They estimate they can produce 8000 toys per production period. a) What is the break-even point in units? b) What is the break-even sales revenue? c) What is the break-even volume as a percent of capacity? d) What would their net income if they sold 6200 toys? e) What level of unit sales is required to have a net income of $10,000?

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115) Solve the following problem using the Contribution Margin Approach. Reliable Plastics makes containers that it sells for $2.55 each. Its fixed costs for this product are $2000 per month and the variable cost per unit is $1.30. a) What is the break-even point in units? b) What is the break-even sales revenue?

116) Astrid purchases fresh honey and bottles it in her home. Her fixed costs are $400 per month and the variable cost per bottle is $1.20. She sells the honey to local grocery stores for $4.00 each. a) How many jars must she sell per year to break even? b) What will be her profit if she sells 3,000 jars in a year? c) How many jars must she sell per year to have a loss of no more than $2,000?

117) Solve the following problem using the Contribution Margin Approach. ChildCare Industries manufactures infant car seats that it sells to retailers for $155 each. The costs to manufacture each additional seat are $65, and the monthly fixed costs are $18,000. a) How many seats must be sold per year to breakeven? b) What will ChildCare's loss be if it sells 2000 seats in a year?

118) JJ Convenience Store is thinking about leasing a soft ice-cream machine. The cost of the machine is $1,000 per month and the cost of each ice-cream cone will be $1.30. They plan on selling the ice-cream cones for $2.50 each. a) To just break even for a six-month period, how many ice-cream cones must be sold? b) How many fewer ice-cream cones would have to be sold per six-month period to break-even their selling price is $3.00 each?

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119) Solve the following problem using the Contribution Margin Approach. Clone Computers assembles and packages personal computer systems from brand-name components. Its Home Office PC System is assembled from components costing $1400 per system and sells for $2000. Labour costs for assembly are $100 per system. This product line's share of overhead costs is $10,000 per month. a) How many Home Office Systems must be sold each month to break even on this product line? b) What will be the profit or loss for a month in which 15 Home Office Systems are sold?

120) Solve the following problem using the Contribution Margin Approach. Huntsville Office Supplies (HOS) is evaluating the profitability of leasing a photocopier for its customers to use on a self-serve basis at 10ʹ per copy. The copier may be leased for $300 per month plus 1.5ʹ per copy on a full-service contract. HOS can purchase paper at $5 per 500-sheet ream. Toner costs $100 per bottle, which in normal use will last for 5000 pages. HOS is allowing for additional costs (including electricity) of 0.5ʹ per copy. a) How many copies per month must be sold in order to break even? b) What will be the increase in monthly profit for each 1000 copies sold above the break-even point?

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121) Solve the following problem using the Contribution Margin Approach. Jordan is developing a business plan for a residential building inspection service he may start. Rent and utilities for an office would cost $1000 per month. The fixed costs for a vehicle would be $450 per month. He estimates that the variable office costs (word processing and supplies) will be $50 per inspection and variable vehicle costs will be $25 per inspection. Jordan would also spend $200 per month to lease a computer, and $350 per month for advertising. a) If he charges $275 per inspection, how many inspections per month are required before he can "pay himself?" b) How many inspections per month are required for Jordan to be able to draw a salary of $4000 per month?

122) A small cardboard factory can produce up to 250 boxes per day (five days a week) that it sells for $1 per unit. The variable cost per unit is $.20, and the fixed cost per week is $1200. a) How many units must it sell per week to break even? b) Determine the firm's current profit or loss, c) At what level of unit sales will the net income be $400 per week?

123) Solve the following problem using the Contribution Margin Approach. Alpha Corp. expects to operate at 80% of capacity next year. Its forecast operating budget is: Sales revenue

$1,200,000

Fixed costs

$300,000

Total variable costs

$800,000

Total costs

$1,100,000

Net income

$100,000

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a) What is Alpha's break-even revenue? b) What would be Alpha's net income if it operates at full capacity?

124) Solve the following problem using the Contribution Margin Approach. Beta Inc. has based its budget forecast for next year on the assumption it will operate at 90% of capacity. The budget is: Sales revenue

$18,000,000

Fixed costs

$10,000,000

Total variable costs

$6,000,000

Total costs

$16,000,000

Net income

$2,000,000

a) At what percentage of capacity would Beta break even? b) What would be Beta's net income, to the nearest dollar, if it operates at 70% of capacity?

125) Solve the following problem using the Contribution Margin Approach. Bentley Plastics Ltd. has annual fixed costs of $450,000 and variable costs of $15 per unit. The selling price per unit is $25. a) What annual revenue is required to break even? b) What annual unit sales are required to break even? c) What will be the annual net income at annual sales of: (i) 50,000 units? (ii) $1,000,000? d) What minimum annual unit sales are required to limit the annual loss to $20,000? e) If the unit selling price and fixed costs remain the same, what are the changes in break-even unit sales and break-even revenue for a $1 increase in variable costs?

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126) Solve the following problem using the Contribution Margin Approach. The Woodstock plant of Goodstone Tires manufactures a single line of automobile tires. In its first fiscal quarter, the plant had total revenue of $4,500,000 and net income of $900,000 from the production and sale of 60,000 tires. In the subsequent quarter, the net income was $700,000 from the production and sale of 50,000 tires. Calculate the unit selling price, the total revenue in the second quarter, the variable costs per tire, and the total fixed costs per calendar quarter.

127) Solve the following problem using the Contribution Margin Approach. The Kelowna division of Windstream RVs builds the Wanderer model. The division had total revenue of $4,785,000 and a profit of $520,000 on the sale of 165 units in the first half of its financial year. Sales declined to 117 units in the second half of the year, resulting in a profit of only $136,000. Determine the selling price per unit, the total revenue in the second half, the unit variable costs, and the annual fixed costs.

128) In the past year, the Greenwood Hotel had room sales of $1,600,000, fixed costs of $400,000, and total variable costs of $800,000. a) At what sales figure would Greenwood have broken even last year? b) If room prices increase by 15% in the year ahead (but all variable and fixed costs remain the same), how much (in $) will the net income increase? c) If fixed costs are 10% lower in the year ahead (but sales and variable costs remain the same as last year), how much (in $) will the net income increase? d) If variable costs are 10% higher in the year ahead (but sales and fixed costs remain the same as last year), how much (in $) will the net income decrease?

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129) Solve the following problem using the Contribution Margin Approach. The Morgan Company produces two products, G and H, with the following characteristics: Product G

Product H

Selling price per unit

Variable costs per unit

Forecast sales (units)

100,000

150,000

130) The Hash House Harriers Running Club is planning a weekend run for its members. The members will each be charged $400. For a group of 10 or more, the club can purchase a 1-day marathon pass and 2 nights' accommodation for $200 per person. A 36-passenger capacity bus can be chartered for $1600. a) How many must sign up for the package for all costs to be covered? b) If the bus is filled, how much profit will the club make?

131)

Continental Corporation reported the following information for September:

Sales revenue

$200,000

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Fixed manufacturing costs

20,000

Fixed marketing and overhead costs

10,000

Total variable costs

120,000

Unit selling price

a) Determine the unit sales required to break even. b) What unit sales would generate a net income of $30,000? c) If unit variable costs are reduced by 10% with no change in the fixed costs, what will the break-even point become (in unit sales)?

132) Solve the following problem using the Contribution Margin Approach. The social committee of a college's student government is planning the annual graduation dinner and dance. The preferred band can be signed for $1000 plus 10% of ticket revenues. A hall can be rented for $4400. Fire regulations limit the hall to 400 guests plus the band and caterers. A food caterer has quoted a price of $24 per person for the dinner. The committee thinks that the event will be a sellout if ticket prices are set at $46 per person. Some on the committee are in favour of less crowding at the dance and argue for a ticket price of $56. They estimate that 300 will attend at the higher price. a) Calculate the number of tickets that need to be sold at each price to break even. b) What will the profit be at the predicted sales at each ticket price?

133) Solve the following problem using the Contribution Margin Approach. A farmer is trying to decide whether to rent his neighbour's land to grow additional hay for sale to feedlots at $180 per delivered tonne. The land can be rented at $400 per hectare for the season. Cultivation and planting will cost $600 per hectare; spraying and fertilizer will cost $450 per hectare. It will cost $42 per tonne to cut, condition, and bale the hay, and $24 per tonne to transport it to the feedlots. a) How many tonnes per hectare must be produced to break even? Round to the nearest 0.01 tonne. b) How much is the break-even tonnage lowered if the selling price is $10 per tonne higher? Round to the nearest 0.01 tonne. c) What is the profit or loss at the $180 per tonne price if the crop yield is: (i) 15 tonnes per hectare? (ii) 10 tonnes per hectare? Version 1

134) Solve the following problem using the Contribution Margin Approach. A sporting goods manufacturer lost $400,000 on sales of $3 million in a year during the last recession. The production lines operated at only 60% of capacity during the year. Variable costs represent onethird of the sales dollars. a) At what percent of capacity must the firm operate in order to break even? b) To the nearest dollar, what would its net income be at 80% of capacity? c) What dollar sales would generate a net income of $700,000?

135) Memex Corp. manufactures memory expansion boards for microcomputers. The average selling price of its finished product is $180 per unit. The average variable cost per unit is $110. Memex incurs fixed costs of $1,260,000 per year. a) What is the break-even point in unit sales? b) What sales revenue must Memex achieve in order to break even? c) What will be the company's profit or loss at the following levels of sales for a year: (i) 20,000 units? (ii) 17,500 units? d) How many units must they sell to have a net profit of $315,000? e) What level of output would they have to sustain a loss of no more than $124,250? f) What would be the new break even number of units if fixed costs were reduced by 10%?

136) The Armour Company had the following revenue and costs in the most recently completed fiscal year: Total revenue

$10,000,000

Total fixed costs

$2,000,000

Total variable costs

$6,000,000

Total units produced and sold

1,000,000

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a) What is the unit sales volume at the break-even point? b) How many units must be produced and sold for the company to have a net income of $1,000,000 for the year?

137) Fisher Publishing Inc. is doing a financial feasibility analysis for a new book. Editing and preproduction costs are estimated at $45,000. The printing costs are a flat $7000 for setup plus $8.00 per book. The author's royalty is 8% of the publisher's net price to bookstores. Advertising and promotion costs are budgeted at $8000. a) If the price to bookstores is set at $35, to the nearest book, how many books must be sold to break even? b) The marketing department is forecasting sales of 4800 books at the $35 price. What will be the net income from the project at this volume of sales? c) The marketing department is also forecasting that, if the price is reduced by 10%, unit sales will be 15% higher. Which price should be selected? d) In a highest cost scenario, fixed costs might be $5000 higher and the printing costs might be $9.00 per book. By how many books would the break-even volume be raised?

138) Durable Toys Inc. wants to calculate from recent production data the monthly fixed costs and unit variable costs on its Mountain Trike product line. In the most recent month, it produced 530 Trikes at a total cost of $24,190. In the previous month, it produced 365 Trikes at a total cost of $18,745. What are the fixed costs per month and the unit variable costs? Hint: Recall that Total costs = Fixed costs + (Unit variable costs) × (Number of units produced)

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139) During an economic slowdown, an airplane engine manufacturer lost $12,000,000 on the production and sale of 9000 engines. Total revenue for the year was $270,000,000. If the breakeven volume for the plant is 10,000 engines per year, calculate: a) The plant's total fixed costs for a year. b) The net income if unit sales for the year had been equal to the 5-year average of 12,000.

140) Norwood Industries has annual fixed costs of $1.8 million. Unit variable costs are currently 55% of the unit selling price. a) What annual revenue is required to break even? b) What revenue would result in a loss of $100,000 in a year? Round to the nearest dollar. c) What annual revenue would produce an operating profit of $300,000? Round to the nearest dollar.

141) Cambridge Manufacturing is evaluating the introduction of a new product that would have a unit selling price of $100. The total annual fixed costs are estimated to be $200,000 and the unit variable costs are projected at $60. Forecast sales volume for the first year is 8000 units. a) What sales volume (in units) is required to break even? b) What volume is required to generate a net income of $100,000? c) What would be the net income at the forecast sales volume? d) At the forecast sales volume, what will be the change in the net income if fixed costs are: (i) 5% higher than expected? (ii) 10% lower than expected?

142) Kodak Mountaineering estimates that it can sell 1,500 canoe trips at $350 each. Total fixed costs are $100,000, and variable costs are $80 per canoe trip. What unit sales are required to break even? What is the profit generated if all trips are sold?

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143) A company expects to sell 3,000 canned beers at the next festival. Each can will be sold for $7 (inclusive of $.40 in taxes). The estimated variable cost of each can is $1.90 and the cost to set up a tent at the festival is a one-time fee of $1,000 and $200 for labour. All serving staff will be volunteers. Calculate the contribution margin per can and the break-even point in sales.

144) Enrique is studying the feasibility of producing a new product. His existing facilities could be expanded to manufacture 2000 new units per month. The unit cost is $75. Estimated fixed costs are $3.36 million per year and variable costs are $25 per unit. Competitors sell a similar product for $350 each. a) What is the break-even point as a percent of capacity? b) What would the net income be at 80% capacity? c) What would unit sales have to be to attain a net income of $100,000? d) If sales dropped to 60% of capacity, what would the resulting net income be?

145) Michael manufactures small clay flower pots which sell in his boutique for $6 each. The material cost is $1.50 each, and estimated fixed costs are $900. How many pots must Michael sell to break-even?

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146) A company makes skateboard stickers selling for $10 each. For 10,000 stickers, the total cost is $4,000, and the estimated fixed costs are $12,000. What is the break-even volume and revenue?

147) Sam manufactures a product that is selling so well, he has decided to expand his operation to 50,000 units per month. The unit cost is $7, estimated fixed costs are $1.8 mil per year and variable costs are $5 per unit. The product currently sells for $20. a) What is the breakeven point as a percent of capacity? b) What would the net income be at 75% capacity? c) What would unit sales have to be to attain a net income of $100,000? d) If sales dropped to 50% of capacity, what would the resulting net income be?

148) Solve the following set of equations graphically: x + 1.5y = 6 x-y=1

149) Solve the following set of equations graphically: 3x - 3y = -15 -x + y = 5

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150) Solve the following set of equations graphically: 3x - 3y = 9 x + y = -7

151) Solve the following set of equations graphically: y = 2x + 11 5x + 3y = 0

152) Solve the following set of equations graphically: x = -y - 4 y = -5x - 4

153) Solve the following set of equations graphically: 3x - 2y = 9 x=3

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154) Solve the following set of equations graphically: 4x + 3y = -2 y = -2

155) Using the chart below, calculate the break-even point in units and revenue. Use the graphical approach to CVP analysis to solve.

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156) Enrique is studying the feasibility of producing a new product. His existing facilities could be expanded to manufacture 2000 new units per month. The unit cost is $75. Estimated fixed costs are $3.36 million per year and variable costs are $25 per unit. Competitors sell a similar product for $350 each. Use the graphical approach to CVP analysis to solve the following: a) What would the net income be at 80% capacity? b) What would unit sales have to be to attain a net income of $100,000? c) If sales dropped to 60% of capacity, what would the resulting net income be?

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157) Larissa manufactures rings which sell in her boutique for $60 each. For 100 rings, the material cost is $15 each, and estimated fixed costs are $900. How many rings must Larissa sell to break even? Use the graphical approach to CVP analysis to solve.

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158) Using the chart below, draw a vertical line to identify the break-even volume and revenue? Also provide the break-even point in units and revenue in dollars as identified by the vertical line. Use the graphical approach to CVP analysis to solve.

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159) Sam manufactures a product that is selling so well, he has decided to expand his operation to 50,000 units per month. The unit cost is $7, estimated fixed costs are $1.8 million per year and variable costs are $5 per unit. The product currently sells for $20. Use the graphical approach to CVP analysis to solve the following: a) What is the break-even point as a percent of capacity? b) What would the net income be at 75% capacity? c) What would unit sales have to be to attain a net income of $100,000? d) If sales dropped to 50% of capacity, what would the resulting net income be?

160) Jim and Amanda paid $1050 for a three-day pass to Splash Mountain Water Kingdom, including all meals and drinks. This included themselves and their three kids. Mr. Watson paid $610 for himself and two children for the same three-day pass. What were the three-day passes per adult and per child?

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161) Omni Rentals offers specialty copier rentals consisting of a daily rate plus a per-poster print charge. Vitnew paid $54.45 for a two-day rental during which he printed 47 posters. Vichney paid $127.55 for five days and printed 93 posters. What rate did Omi charge per day and per poster?

162) Colby inherited a small savings-bond portfolio consisting of four $1000 face-value Canada Savings Bonds and six $1000 face-value Ontario Savings Bonds. In the first year, the portfolio earned $438 interest. At the end of the first year, Colby cashed in one of the Canada Savings Bonds and two of the Ontario Savings Bonds. In the following year, the remaining bonds earned $306 interest. What annual rate of interest did each type of bond earn?

163) Mr. Liu and Ms. Byne own adjacent businesses. They have just received their property tax notices providing the following assessment and tax information: Owner

Assessment on parking Assessment on buildings lot

Total property tax

Mr. Liu

$400,000

$300,000

$3870

Ms. Byne

$350,000

$380,000

$3774

The regional government applies one tax rate to residences, and a lower tax rate to land with farm buildings. What are these property tax rates (expressed in percent to the nearest 0.01%)?

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164) Jonathon bought 5 litres of red wine and 4 dozen beer for $126. Patricia purchased 9 litres of red wine and 3 dozen beer for $126. What were the prices for a litre of wine and a dozen beer?

165) TinyTot School purchases the same amount of milk and orange juice each week. After price increases from $1.50 to $1.60 per litre of milk and from $1.30 to $1.37 per can of frozen orange juice, the weekly bill rose from $57.00 to $60.55. How many litres of milk and cans of orange juice are purchased every week?

166) In the month of July, Julia's Pizza and Subs sold 600 pizzas and 350 subs for total sales of $4,400. In August, the net revenue was $3,700 from the sale of 500 pizzas and 300 subs. What was the price of one pizza and one sub?

167) A partnership in a public accounting practice has 7 partners and 12 accounting technicians. Each partner draws the same salary, and each technician is paid the same salary. The partners calculate that if they give the technicians a raise of 8% and if they increase their own salaries by 5%, the gross annual salaries for all accounting personnel will rise from the current $1,629,000 to $1,734,750. What are the current annual salaries of a partner and an accounting technician?

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168) A manufacturing firm pays monthly salaries of $5100 to each production worker and $4200 to each assembly worker. As the economy drops into a recession, the firm decides to reduce its total monthly manufacturing payroll from $380,700 to $297,000 by laying off 20% of its production workers and 25% of its assembly workers. How many layoffs will there be from each of the assembly and production divisions?

169) Solve the following pair of equations. x-y=2 3x + 4y = 20

170) Solve the following pair of equations. y - 3x = 11 -4y + 5x = -30

171) Solve the following pair of equations. y = 2x 7x - y = 35

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172)

Solve the following pair of equations.

173) Solve the following pair of equations. d = 3c - 500 0.7c + 0.2d = 550

174) Solve the following pair of equations. 0.03x + 0.05y = 51 0.8x - 0.7y = 140

175) Solve the following pair of equations to three-figure accuracy. 2v + 6w = 1 -9w + 10v = 18

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176) Solve the following pair of equations to three-figure accuracy. 2.5a + 2b = 11 8a + 3.5b = 13

177) Solve the following pair of equations to three-figure accuracy. 37x - 63y = 235 18x + 26y = 468

178) Solve the following pair of equations to three-figure accuracy. 68.9n - 38.5m = 57 45.1n - 79.4m = -658

179) Solve the following pair of equations to three-figure accuracy. 0.33e + 1.67f = 292 1.2e + 0.61f = 377

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180) Solve the following pair of equations to three-figure accuracy. 318j - 451k = 7.22 -249j + 193k = -18.79

181) Solve the following pair of equations. 3x + 5y = 11 2x - y = 16

182) Solve the following pair of equations. 4a - 5b = 30 2a - 6b = 22

183) Solve the following pair of equations. 2x + 7y = -8 5x - 2y = 19

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184) Solve the following pair of equations. 0.07x + 0.38y = 0.294 -0.3x + 0.7y = 0.37

185) Solve the following pair of equations. 2y = 5x 3y - 5x = 0

186) Nguyen is an actor and works as an extra to make some extra income. In one week, he received $355 for 10 hours of acting and 10 hours as an extra. The following week, as production was increasing, he received$910 for 30 hours of acting and 20 hours as an extra. As a contract worker, he receives no overtime rate. How much does Nguyen get paid per hour for acting and for being an extra?

187) Xindu is paid a base salary plus commission for a high-end sales position. On sales of $25,000 and $35,000 in two successive weeks, Xindu's gross pay was $5,500 and $6,500 respectively. What are Xindu's base salary and commission rate (in percent)?

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188) Mehzou invested a total of $7,000 in shares of a diamond company (Bertshine) and in an oil and gas company (Burner Fuels). One year later the investment was worth $8250, after the shares of Bertshine had increased in value by 15% and the shares of Burner Fuels were up 20%. How much did Mehzou invest in each company?

189) A soccer stadium has 2500 seats in the visitor sections and 4500 seats in the home section. At regular season prices, a sell-out would generate ticket revenue of $50,250 for a single game. Ticket prices are raised by 20% for the visitors seats and 30% for the home seats for the playoffs. Ticket revenue from a playoff sell-out would be $62,400. What are the ticket prices for the playoffs for the visitor seats and home seats?

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Answer Key Test name: Chap 06_10ce 1) A 2) B 3) C 4) D 5) E 6) A 7) B 8) C 9) D 10) E 11) A 12) B 13) C 14) D 15) E 16) D 17) C 18) B 19) D 20) C 21) C 22) B 23) B 24) E 25) D 26) E Version 1

27) D 28) B 29) E 30) B 31) A 32) E 33) D 34) A 35) C 36) E 37) B 38) D 39) B 40) A 41) B 42) C 43) D 44) E 45) A 46) B 47) C 48) D 49) E 50) A 51) B 52) C 53) D 54) E 55) A 56) D Version 1

57) B 58) A 59) D

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CHAPTER 7 1) How much interest will be earned on $8000 over a period of four months if the interest rate is 6.5%? A) $7830.34 B) $173.33 C) $169.66 D) $130.00 E) $26.00

2) How much must be placed in a two-month term deposit earning 4.8% in order to earn $275 interest? A) $12,500.00 B) $5729.17 C) $23,333.33 D) $34,375.00 E) $53,333.33

In how many months will $6000 earn interest of $2700 at 15%? A) 3 months B) 36 months C) 4 months D) 60 months E) 1 month

4) A principal of $2680 is invested for 2.5 years at a rate of 12%. What amount of interest will be earned?

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A) $321.60 B) $3001.60 C) $3484.00 D) $290.33 E) $804.00

How many days will it take for an investment of $5500 to earn $602.74 interest at 16%? A) 68 B) 22 C) 230 D) 250 E) 4564

6) Fred puts $5475 into a term deposit on May 15th. The deposit earns a simple interest rate of 4%. If the term deposit will mature on August 14th, how much interest will Fred earn? A) $35.40 B) $24.80 C) $36.00 D) $36.60 E) $54.60

7) A deposit of $659 earns $15.10 interest at a rate of 4.5%. For how many days was this money on deposit?

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A) 186 B) 51 C) 183 D) 191 E) 190

8) A $10,000 90-day term deposit earns 4.5% interest. How much will the depositor have at maturity? A) $11,825.00 B) $10,110.96 C) $10,112.50 D) $112.50 E) $110.96

9) John borrowed $1500 at 9.5% on October 10, 2004. On what date did the amount owed first exceed $1565? A) March 19, 2005 B) March 23, 2005 C) March 26, 2005 D) March 30, 2005 E) March 17, 2005

10) A principal of $790 grew to $1000 in 14 months. What annual rate of simple interest was earned?

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A) 1.89% B) 15.23% C) 9.67% D) 18.00% E) 22.78%

11)

What principal will grow to $12,031.25 at 7.5% interest in 15 months? A) $10,000.00 B) $11,000.00 C) $15,000.00 D) $20,000.00 E) $21,000.00

12) After how many days will a loan of $888 at 15% amount to $1554 (including accrued interest)? A) 1825 days B) 365 days C) 100 days D) 2025 days E) 525 days

13) Susan wants a 120-day extension on a payment of $2000. If she and her creditor agree that money can now earn 6%, what amount should she pay at the later date?

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A) $1961.31 B) $2038.69 C) $2079.95 D) $2039.45 E) $2080.55

14) A loan of $1580 bearing interest at 15% is due nine months from now. What single payment three months before the loan is due will put the lender in the same financial position as the scheduled payment at maturity? Assume that money can earn 12%. A) $1658.25 B) $1533.98 C) $1706.55 D) $1490.57 E) $1642.38

15) Payments of $700 due three months ago and $1000 six months from now are to be replaced by one equivalent payment four months from now. What is the size of this payment if money can earn 7%? A) $1661.01 B) $1700.72 C) $1708.72 D) $1717.05 E) $1740.25

16) Payments of $1400 and $2500 were due 90 days ago and 120 days ago, respectively. What is the combined economic value today of these payments if money can earn 9%?

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A) $3943.58 B) $3859.22 C) $4005.04 D) $4111.11 E) $3797.76

17) Two debt payments of $2000 each are due now and nine months from now. If money is worth 8%, what single payment six months from now is required to settle the debt? A) $4042.34 B) $7177.27 C) $6127.48 D) $3600.00 E) $4040.78

18) What single payment one year from now will satisfy two obligations: $4000 due today and $6000 due 18 months from now? Assume that money can earn 14%. A) $5083.74 B) $5000.00 C) $10,980.00 D) $10,167.48 E) $5490.00

19) A contract was signed eight months ago requiring the payment of $13,000 plus interest at 8% after one year. What two equal payments made today and four months from today are equivalent to the original contract? Assume that money is now worth 5%. Use four months from today as the focal date.

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A) $7020.00 B) $6961.98 C) $6446.28 D) $13,809.84 E) $7078.02

20) A $3000 obligation due eight months from now is settled by two equal payments, one five months from now and the other nine months from now. If money can earn interest at 16%, what is the size of each payment? Use a focal date five months from now. A) $3038.46 B) $1723.64 C) $861.82 D) $1479.77 E) $2959.54

21) Determine the amount of (simple) interest that would be earned over eight months at 26% on an investment of $43,500. A) $11,309.99 B) $2,352.48 C) $7,540.00 D) $6,786.00 E) $5,367.03

22)

How many days would it take for an investment of $9,000 to grow to $10,000 at 17%?

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A) 214 B) 239 C) 126 D) 53 E) 66

23) Calculate the amount of interest (to the nearest dollar) that would be earned on an account of $47,500 if it earned 6.4% for 293 days. A) $89,072 B) $3,040 C) $2,440 D) $17,442 E) $11,298

24) Calculate the amount of interest (to the nearest dollar) that would be earned on an account of $59,500 at 7.2% for 133 days. A) $4,284 B) $1,561 C) $1,013 D) $2,229 E) $3,771

25) To the nearest dollar, calculate the amount of interest that would be earned on an account of $216,000 if it earned 5.15% for 27 days.

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A) $11,298 B) $11,124 C) $823 D) $1,744 E) $2,110

26) To the nearest dollar, calculate the amount of interest that would be earned on an account of $344,000 if it earned 4.95% for 37 days. A) $17,028 B) $11,124 C) $991 D) $1,726 E) $2,110

27) To the nearest dollar, how much interest could you earn over 7 months on an investment of $49,000 at 14.75%? A) $28,583 B) $422 C) $5,059 D) $508 E) $4,216

28) To the nearest dollar, how much interest could you earn over 5 months on an investment of $94,000 at 17.75%?

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A) $39,167 B) $6,952 C) $8,342 D) $993 E) $4,216

29) To the nearest dollar, how much interest could you earn over 2 months on an investment of $82,500 at 23.5%? A) $3,231 B) $9,694 C) $6,942 D) $714 E) $4,216

30) To the nearest dollar, how much money would I have to invest at 6½% to earn interest of $4,500 per month? A) $830,769 B) $692,308 C) $462,963 D) $777,667 E) $103,772

31) To the nearest dollar, how much money would I have to invest at 9½% to earn interest of $9,200 per month?

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A) $1,830,769 B) $2,306,224 C) $1,162,105 D) $5,777,667 E) $1,903,772

32)

How many months would it take to earn $1,650 on a deposit of $44,000 at 7½%? A) 4.5 months B) 12 months C) 6 months D) 5 months E) ½ month

33)

How many months would it take to earn $3,570 on a deposit of $84,000 earning 8½%? A) 7.5 months B) 12 months C) ¾ month D) 9 months E) 6 months

34)

How many months would it take to earn $3,300 on a deposit of $84,000 at 9½%?

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A) 4.14 months B) 4.96 months C) 11.2 months D) 15.3 months E) 25.4 months

35) Grandma Jones has $300,000 in a bank account, which pays her interest at 3%. What is the largest amount of money that she could take out now and still leave enough in the account so that she can earn $600 per month in interest? A) $60,000 B) $100,000 C) $280,000 D) $240,000 E) $9,000

36) Grandpa Smith has $200,000 in a bank account, which pays him interest at 4%. What is the largest amount of money that he could take out now and still leave enough in the account so that he can earn $500 per month in interest? A) $60,000 B) $50,000 C) $120,000 D) $150,000 E) $30,000

37) Calculate the simple interest rate at which one can earn $1,500 per day interest on an investment of $7,500,000.

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A) 2.00% B) 9.67% C) 5.00% D) 6.67% E) 7.30%

38) Calculate the simple interest rate at which one can earn $2,200 per day interest on an investment of $8,500,000. A) 9.45% B) 25.86% C) 3.86% D) 13.61% E) 7.30%

39) Calculate the simple interest rate at which one can earn $500 per day interest on an investment of $1,800,000. A) 9.45% B) 28.00% C) 10.14% D) 12.91% E) 25.30%

40) After 4 months how much interest would I have to pay on a loan of $500 if the rate of interest was 22%?

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A) $11.25 B) $27.50 C) $36.67 D) $110.00 E) $39.74

41) After 7 months how much interest would I have to pay on a loan of $300 if the rate of interest was 32%? A) $96.00 B) $47.50 C) $36.67 D) $56.00 E) $69.74

42) What simple interest rate was used if Rocco charged Squirrell $350 interest on a loan of $2,000 for 41 days? A) 70% B) 156% C) 14.35% D) 15.58% E) 175%

43) What simple interest rate was used if Eddie charged Meatball $700 interest on a loan of $5,000 for 26 days?

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A) 217% B) 156% C) 14% D) 88% E) 197%

44) To the nearest day, how long would it take for a $25,000 investment to earn $2,000 interest at 13.5%? A) 271 days B) 125 days C) 59 days D) 216 days E) 169 days

45) To the nearest day, how long would it take for a $45,000 investment to earn $6,000 interest at 17.5%? A) 115 days B) 77 days C) 95 days D) 377 days E) 278 days

46) Cindy borrowed $750 from Clare on April 17 at an interest rate of 15%. On June 30 of the same year, Cindy repaid the loan with interest. How much interest should she have paid?

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A) $22.81 B) $21.63 C) $28.13 D) $112.50 E) $90.87

47) Ethel invested $3,450 of Fred's money on February 3. Lucy had promised Ethel that the investment would earn an interest rate of 55%. On February 27 of the same year, Ethel cashed in her investment and received the interest as Lucy had promised. How much interest had she earned? A) $124.77 B) $189.75 C) $218.63 D) $64.98 E) $90.87

48) Carly borrowed $2,500 from Clare on July 18 at an interest rate of 8%. On March 7 of the following year (not a leap year), Carly repaid the loan with interest. How much interest should she have paid? A) $72.88 B) $21.63 C) $127.12 D) $112.50 E) $90.87

49) Carly borrowed $450 from Jenn on August 24 at an interest rate of 11%. On January 11 of the following year, Carly repaid the loan with interest. How much interest should she have paid?

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A) $22.81 B) $12.38 C) $21.63 D) $18.99 E) $90.87

50) On September 4 Fred made a $25,000 loan to Ricky for an investment that was guaranteed to earn an interest rate of 40%. On March 11 of the following year (not a leap year), Ricky cashed in his investment and received the interest as had been promised. To the nearest dollar, how much interest had he earned? A) $2,965 B) $5,151 C) $2,186 D) $4,849 E) $16,083

51) If, on March 11, $12,000 was placed in an investment earning an interest rate of 16%, on what day will the amount of interest earned reach $1,000? A) Jul. 10 B) Jan. 19 C) Apr. 13 D) Nov. 1 E) Sept. 18

52) On what day will the amount of interest earned reach $5,000 if $250,000 was invested at an interest rate of 11% on June 23?

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A) Mar. 8 B) Jul. 10 C) Aug. 29 D) Nov.1 E) Dec. 18

53) On April 3 Artie invested $75,000 and by October 27 he had earned interest of $10,500. What simple interest rate had he earned? A) 86.00% B) 32.34% C) 71.42% D) 14.00% E) 24.69%

54) Dalton loaned $550,000 to Doc Holliday on August 24. On February 8 of the following year, Doc paid to Dalton the $65,000 interest that had accumulated on the debt up to that time. What simple rate of interest was Dalton charging on this loan? A) 21.90% B) 25.68% C) 21.79% D) 74.32% E) 24.69%

55) Albert loaned $850,000 to Batman on March 17. On January 9 of the following year, Batman paid to Albert the $49,000 of interest that had accumulated on the debt up to that time. What simple rate of interest was Albert charging on this loan?

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A) 7.06% B) 25.68% C) 31.40% D) 9.65% E) 17.34%

56) To the nearest dollar, how much money would have to be invested from June 4 until December 22 at 13%, in order to earn $750 in interest? A) $12,840 B) $5,769 C) $2,186 D) $10,476 E) $5,151

57) To the nearest dollar, how much money would have to be invested from December 22 until June 4 of the following year at 12% in order to earn $750 in interest? A) $12,840 B) $13,910 C) $6,250 D) $10,477 E) $15,151

58) To the nearest dollar, how much money would have to be invested from November 22 until June 29 of the following year at 19%, in order to earn $950 in interest?

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A) $8,333 B) $12,500 C) $5,000 D) $11,351 E) $6,306

59) If $20,000 was invested 82 days ago at an interest rate of 13.75%, what would be the value of the investment today? Round to the nearest dollar. A) $19,401 B) $20,618 C) $22,750 D) $20,000 E) $26,306

60)

Calculate the maturity value of an investment of $22,500 after 9 months at 13.45%. A) $20,438.29 B) $4,736.25 C) $2,269.69 D) $27,236.25 E) $24,769.69

61)

Calculate the maturity value of a loan of $6,875 after 239 days at 18.3%.

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A) $7,698.81 B) $7,991.81 C) $6,051.19 D) $8,238.13 E) $8,769.81

62) Robert placed $7,000 in a 10-month term deposit paying 6.25%. How much will the term deposit be worth when it matures? A) $3,645.83 B) $7,991.81 C) $7,364.58 D) $6,653.46 E) $7,769.89

63) Seven months ago Julie received some money for her birthday and she immediately deposited it into an account earning 6.5%. Today the value of that deposit has reached $4,259.88. How much did she deposit 7 months ago? A) $1,556.20 B) $4,104.26 C) $4,098.36 D) $3,982.99 E) $2,646.45

64) How much money would have to be deposited on March 11 into an account earning a simple interest rate of 9.5% if the goal is to have the deposit grow to $12,000 by November 1?

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A) $10,860.00 B) $11,175.45 C) $14,098.36 D) $11,308.33 E) $11,497.44

65)

At what simple annual interest rate would $835 grow to $900 in 5 months? A) 16.7% B) 4.5% C) 7.8% D) 18.7% E) 17.3%

66)

At what simple annual interest rate would $1,896 grow to $2000 in 300 days? A) 6.7% B) 8.5% C) 7.8% D) 5.5% E) 6.3%

67) An investment of $19,250 grew to $20,000 between March 26 and October 10. What simple annual interest rate did the investment earn?

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A) 3.9% B) 8.5% C) 6.9% D) 5.5% E) 7.2%

68)

How many months would it take for $3,500 to grow to $4,000 at 15%? A) 9.5 B) 11.4 C) 348 D) 10.0 E) 6.6

69)

To the nearest day, how many days would it take for $9,500 to grow to $10,000 at 7%? A) 75 B) 188 C) 261 D) 365 E) 274

70) On December 19 Jerry's $800 deposit matured at $848.22. It had been earning 8%. What was the date that he made the deposit?

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A) Oct. 2 B) Jan. 1 C) Mar. 19 D) Sept. 20 E) Apr. 1

71) Barkley's Bookkeeper is accounting for a cheque that was written for $29,674. It represents full payment of principal plus interest for a loan that was taken out for 128 days at 8.5%. How much of the $29,674 was interest? A) $2,881.51 B) $884.52 C) $1,768.33 D) $858.93 E) $726.98

72) If the maturity value of an investment which paid 13.9% was $400,000 after 7 months, how much of that amount was interest? Round to the nearest dollar. A) $30,001 B) $55,600 C) $32,433 D) $67,888 E) $27,999

73) Ace Furniture will give you 8 months, interest free, before you have to pay for a $2,000 sofa. Based on the fact that Ace pays 14% on its short term debt, what would be a reasonable amount of cash for you to offer them at the time of purchase? Round to the nearest dollar.

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A) $2,187 B) $1,829 C) $1,720 D) $1,813 E) $2,000

74) If you pay your $3,000 tuition 3 months before it is due, the local college will give you a $250 "scholarship" reducing your tuition payment to $2,750. What is the annual simple interest rate to which this incentive is equal? A) 36.4% B) 9.1% C) 8.3% D) 33.3% E) 27.3%

75) If money is worth 14%, what payment on August 29 would be equal in value to a payment of $86,900 due on January 31 of the following year? Round to the nearest dollar. A) $74,734 B) $92,066 C) $81,734 D) $76,519 E) $82,024

76) What payment 5 months from now would be equivalent in value to a $4,000 payment due today and a $3000 payment due 7 months from now? Money can earn 6.5%.

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A) $7,455.01 B) $6,923.82 C) $7,189.58 D) $7,076.18 E) $6,544.98

77) Payments of $100,000 and $150,000 are due to be paid in 45 days and 75 days respectively. If money is worth 7.3%, what is the combined economic value today of the two payments? Round to the nearest dollar. A) $574,734 B) $246,891 C) $249,452 D) $276,519 E) $229,567

78) How much money would one have to invest today at 18.75% in order to have a total of $20,000 in 9 months? Round to the nearest dollar. A) $16,250 B) $23,750 C) $22,813 D) $17,534 E) $19,122

79)

How long will it take to earn $542.40 interest on an investment of $6,400 at 11.3%?

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A) 7.5 months B) 8.0 months C) 8.5 months D) 9.0 months E) 9.5 months

80) What simple annual interest rate would you need to earn $2,000 interest in 147 days on an investment of $49,000? A) 19.33% B) 40.82% C) 10.13% D) 21.44% E) 7.85%

81)

If $59,200 grows to $60,000 in 41 days what simple annual interest rate was earned? A) 12.03% B) 11.87% C) 13.51% D) 17.48% E) 10.16%

82) Calculate the amount of money that would have to be invested at 8.5% to earn monthly interest of $3,000? Round to the nearest dollar.

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A) $255,000 B) $352,941 C) $355,491 D) $423,529 E) $521.449

83) How much interest would one earn over 200 days on an investment of $95,000 at an interest rate of 14%? Round to the nearest dollar. A) $1,023 B) $5,889 C) $7,021 D) $7,288 E) $13,300

84) To the nearest day, how long will it take for an investment of $9,000 at 3.75% to earn interest of $250? A) 74 days B) 163 days C) 218 days D) 270 days E) 741 days

85)

On March 14 Lisa invested in a 200-day term deposit. On what date will it mature?

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A) January 16 B) March 23 C) August 24 D) September 30 E) November 7

86) Morton purchased a 165-day Guaranteed Investment Certificate on October 11. On what date will it mature? (Assume the relevant February has 28 days) A) January 11 of the following year. B) March 25 of the following year. C) May 5 of the following year. D) July 3 of the following year. E) October 11 of the following year.

87) What was the simple interest rate if an investment of $35,000 earned interest of $250 between April 4 and May 23? A) 2.66% B) 5.32% C) 7.14% D) 8.00% E) 9.89%

88) If $450,000 is invested on June 3 at 7.75%, what will be the value of the investment on December 11? Round to the nearest dollar.

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A) $468,250 B) $466,625 C) $632,497 D) $432,461 E) $484,875

89) A 9-month term deposit, earning interest at 7%, was worth $72,559 when it reached maturity today. How much had been invested at the beginning of the term? Round to the nearest dollar. A) $76,368 B) $68,940 C) $72,552 D) $67,480 E) $70,000

90) What annual simple interest rate would be needed for $55,000 to grow to $60,000 over a term of 295 days? A) 12.34% B) 10.31% C) 11.25% D) 9.09% E) 8.33%

91) After 7 months at an interest rate of 13%, an investment matured today at a value of $80,000. How much of the $80,000 is interest? Round to the nearest dollar.

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A) $12,065 B) $10,400 C) $6,067 D) $7,436 E) $5,639

92) On May 27, Kristina made an investment that earned an interest rate of 9.4%. By November 6 the investment's value had increased to $77,000. What amount of interest had Kristina earned? Round to the nearest dollar. A) $3,619 B) $3,102 C) $3,232 D) $5,112 E) $7,238

93) Patrick has a contract that will pay him $3,500 in 11 months. If money can earn 15%, what will be the value of that contract three months from now? Round to the nearest dollar. A) $2,975 B) $3,077 C) $3,150 D) $3,182 E) $3,355

94) Frankie's Furniture Mart has contracts from one customer who will pay $4,695 in 5 months and another customer who will pay $7,830 in 7 months. Frankie can sell the contracts today to Vinnie's finance company at a discount rate of 23.5%. How much money will Vinnie pay to Frankie today for the two contracts? Round to the nearest dollar.

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A) $11,162 B) $11,208 C) $12,525 D) $13,705 E) $14,058

95) A payment of $590 is now 93 days overdue. A second payment of $955 will be due and payable in 200 days. If money can earn an interest rate of 11%, what single amount, paid in 30 days, will be an equivalent replacement payment? Round to the nearest dollar. A) $1,507 B) $1,520 C) $1,545 D) $1,629 E) $1,783

96) How much interest was paid on a $900 payday loan for five months at an annual interest rate of 6.9%? A) $25.88 B) $24.97 C) $26.55 D) $23.42 E) $22.93

97) Jeannette loaned $1000 to a friend for college textbooks. If her friend paid her back in eight months and paid interest at a rate of 4.4%, how much interest did Jeannette receive?

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A) $30.22 B) $29.33 C) $28.99 D) $27.33 E) $24.56

98) A $10,000 investment earned a dividend of 0.5% per month simple interest for sixmonths. What total amount of interest was earned? A) $290 B) $280 C) $300 D) $310 E) $315

99) Aidan cashed in a two-year term deposit after only eight months had elapsed. In order to do so, he accepted an interest rate penalty—a reduction from the scheduled 3.2% rate of simple interest. If he was paid $36 interest on the $2,000 term deposit, what reduction was made in the per annum rate of simple interest? A) 5.0% B) 5.5% C) 1.5% D) 0.5% E) 2.0%

100) Potter loaned his brother $2,500 to purchase a used car. If Potter's brother paid a simple interest rate of 0.2% per month. What was the term of the loan if the total interest came to $45?

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A) 7 months B) 6 months C) 11 months D) 13 months E) 9 months

101) Ocean Salmon Farms paid interest charges of $307.73 on a $10,257.62 invoice that was three months overdue. What monthly rate of simple interest was she charged? A) 1% per month B) 2% per month C) 6% per annum D) 8% per annum E) 3% per month

102) An eighteen-month GIC of $1,000 at Western Bank earned $45 in interest. What annual rate of simple interest did the deposit earn? A) 2.0% B) 3.0% C) 2.1% D) 3.5% E) 4.0%

103) How much money must be placed in a nine-month high-interest savings account earning 2.5% simple interest in order to earn $93.75 interest?

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A) $4,700 B) $3,500 C) $5,000 D) $4,500 E) $6,000

104) The interest owed on a loan after fourteen months was $302.40. If the simple interest rate charged on the loan was 0.9% per month, what was the amount borrowed? A) $2,000 B) $2,200 C) $3,000 D) $2,400 E) $3,600

105) An invoice states that interest will be charged on overdue accounts at the rate of 1.25% per month. What will the interest charges be on a $10,612.50 billing that is three months overdue? A) $401.83 B) $399.97 C) $389.99 D) $402.84 E) $397.97

106) You invest $1,000 in the Canadian Small Cap Index Fund. After six months your balance in the account is $1,045. What annual rate of simple interest was earned?

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A) 9% B) 11% C) 8% D) 7% E) 12%

107) A small business loan was issued for $5,000 for eight months. If the Small Business Bank says you will them $5,083.33 after the eight-month term, what was the simple interest rate on the loan? A) 1.25% B) 2.5% C) 3.75% D) 4.25% E) 5.00%

108) The local newspaper says you can pay your annual subscription fee late. The normal charge is $45 per year. If you can pay $47.70 due to an interest rate of 2% monthly, how many months late did you pay? A) 1 month B) 5 months C) 3 months D) 4 months E) 6 months

109) Your investment of $5,000 grew to $5,200, which included a simple interest rate of 12%. How many months did you hold this investment?

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A) 3 months B) 2 months C) 6 months D) 4 months E) 8 months

110) You attend the local payday store and ask how much a two-month loan would cost. You wish to borrow $500 and are advised they charge an administration fee of $25. If the total amount owed after two months is $545.83, what simple interest rate was charged? (There is no interest charged on the $25 administration fee.) A) 12.5% B) 17.5% C) 22.5% D) 27.5% E) 25.0%

111) Your college will charge you a late fee of $25 if you pay your tuition one month late. If your tuition fees are $4,500, what simple interest rate is the college charging? A) 6.67% B) 7.12% C) 8.96% D) 5.58% E) 4.99%

112) Sindhu invested $10,000 in a six-month GIC at Laurentian Bank of Canada. The simple interest rate was 1.2%. Sindhu then invested the original principal and interest in a six-month high interest savings account at CIBC, earning a simple interest rate of 1.1928%. How much interest was earned at each institution?

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A) $60 at Laurentian 50 at CIBC B) $60 at Laurentian $60 at CIBC C) $60 at Laurentian $65 at CIBC D) $50 at Laurentian $50 at CIBC E) $55 at Laurentian $50 at CIBC

113) A $200 loan at 4.5% was advanced on August 17, 2019. How much interest was due when the loan was repaid on September 1, 2019? A) $.42 B) $.57 C) $.86 D) $.37 E) $1.02

114) How much interest accrued from November 30, 2018, to October 24, 2019, on a $2350 loan at 3.5%? A) $68.55 B) $79.62 C) $72.99 D) $74.55 E) $73.91

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115) A $5,000 GIC earned a 1.9% rate of simple interest from October 15, 2019, to January 30, 2020. How much interest was earned? A) $27.85 B) $28.75 C) $27.00 D) $26.55 E) $26.90

116) An invoice for $850 dated February 17, 2019, was repaid with interest at an annual rate of 2.3% on July 1, 2019. What was total amount paid back? A) $847.52 B) $857.18 C) $912.62 D) $845.52 E) $855.00

117) The interest rate on $13,000 borrowed against a line of credit on October 16, 2019, was 4.5%. How much interest was owed on the April 15, 2021, repayment date? A) $847.52 B) $857.18 C) $876.70 D) $845.52 E) $855.00

118) A $14,400 line of credit taken out on June 19, 2018, was repaid with interest at 6% per annum on July 19, 2019. How much was the payment to settle the full amount if a $25 administrative fee was added on top of the interest?

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A) $14,296.99 B) $15,373.99 C) $15,266.37 D) $15,126.26 E) $15,923.83

119) If $42.58 interest accrued on a $1,000 payday loan from October 15, 2019, to January 7, 2020, what rate of simple interest did the payday company charge? A) 17.0% B) 17.5% C) 16.0% D) 19.5% E) 18.5%

120) What was the principal amount of a loan at 5.5% if $83.06 of interest accrued from September 28, 2018, to January 12, 2019? A) $5,200 B) $4,800 C) $5,500 D) $5,300 E) $4,900

121) To save for a house, Xi put $20,750 into a term deposit until October 31, 2019. If Xi can earn 3.2% per annum simple interest, how much interest will be earned if the money was deposited on April 1, 2017.

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A) $1,686.98 B) $1,715.48 C) $1,787.90 D) $1,760.99 E) $1,678.99

122) Diana borrowed $10,000 from her mother on August 30 and agreed to repay the debt with simple interest at the rate of 4.5% on August 10. How much money was owed on May 10 to fully repay the debt and interest? Assume that February has 28 days. A) $11,343.99 B) $10,584.99 C) $10,311.92 D) $10,987.98 E) $11,489.97

123) A client had $1,263 in a daily interest savings account for the entire month of June. The account was credited with interest of $0.52 on June 30 (for the exact number of days in June). What annual rate of simple interest did her balance earn? A) 0.9% B) 0.1% C) 1.2% D) 0.5% E) 1.1%

124) Maia's missed her student loan payment on October 21, 2019. The credit institution charged her interest of $49.23 on a $4,264.50 balance starting September 2, 2019. What annual rate of simple interest was charged?

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A) 9.4% B) 8.2% C) 7.8% D) 6.8% E) 8.6%

125) In 2018, a Canadian citizen overpaid their income taxes by $1,300 due to a calculation error. Canada Revenue Agency does pay interest on overpayments using a simple interest rate of 1% per annum. If interest of $3.92 was paid in interest, how many days of interest were paid? A) 110 days B) 132 days C) 100 days D) 98 days E) 105 days

126) Apple Orchards was charged $186.41 interest on an overdue invoice for the period August 2 to November 18. If the rate of interest on the invoice is 12% per annum, what was the outstanding principal balance on the loan during the period? A) $5,300 B) $5,250 C) $5,400 D) $5,350 E) $5,500

127) On April 5, 2019, $2,000 was borrowed at an interest rate of 2.65%. On what date was the loan repaid if the amount of accrued interest was $26.43?

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A) October 01, 2019 B) October 8, 2019 C) October04, 2019 D) November 04, 2019 E) September 04, 2019

128) $2,000 was invested on May 12, 2019, in a TSX Index Account that earned 10.7% per annum. On its maturity date, the account had a value of $2,071.53, including interest and initial investment. On what date was this value calculated? A) October 01, 2019 B) October 8, 2019 C) October 04, 2019 D) September 11, 2019 E) September 04, 2019

129) On what date was a $1,500 line of credit opened if the interest accrued as of August 21, 2019, was $24.91. The interest rate on the loan was 6.25% A) June 17, 2019 B) May 31, 2019 C) May 01, 2019 D) June 19, 2019 E) May 17, 2019

130) Odell borrowed $2,000 from his parents on December 22, 2018. He borrowed an additional $4,000 on February 18, 2019. If Odell wishes to pay back his parents on August 31, 2019, how much did Odell pay if his parents charged him 1.7% per annum?

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A) $6,059.61 B) $6, 099.55 C) $6,198.99 D) $6,787.87 E) $6,895.99

131) $2,900 was invested in a 365-day term deposit earning 1.24%. What was its maturity value? A) $2,854.99 B) $2.935.96 C) $2.987.76 D) $2,987.77 E) $2.658.89

132) Augustus invested $17,000 in a 360-day savings bond earning 2.58%. How much will the bank pay Augustus on the maturity date? A) $17,987.45 B) $17,876.98 C) $17,432.59 D) $16,379.99 E) $16,985.74

133) The amount owed on a line of credit after 123 days was $757.89. If the institution charges 5.5% per annum, what amount was originally drawn against the line of credit?

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A) $447.10 B) $689.10 C) $750.00 D) $744.10 E) $749.00

134) $7,040.58 was the amount required to pay off a payday loan after 92 days. If the loan was at 2.3% per annum simple interest, how much of the total was interest? A) $42.87 B) $39.78 C) $40.99 D) $41.55 E) $40.58

135) A $1,500 income tax refund was invested in a 60-day term deposit. If the investment grew to $1,503.08, what annual rate of simple interest did it earn? A) 1.25% B) 1.50% C) 0.75% D) 0.50% E) 1.75%

136) If Tabitha owed $550 to her friend after borrowing an original amount of $495, what was the rate of simple interest if the term of the loan was eight months?

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A) 15.90% B) 16.67% C) 15.75% D) 14.99% E) 17.10%

137) You won a contest and can choose $25,000 today or $27,500 two years from now. What is the simple rate of interest earned if you wait two years? A) 3% B) 2% C) 5% D) 7% E) 8%

138) The interest rate on an $2,500 debt was 2.5%. For how many months was the loan outstanding if it was settled with a payment of $2,546.88? A) 7 months B) 6 months C) 5 months D) 9 months E) 11 months

139) The accountant for Chicken Farms is trying to allocate, the amount of an invoice and interest that was paid. A store manager left a note that stated the $4,256 cheque was for principal and interest on an eight-month invoice at an interest rate of 4.5%. What was the original invoice amount and interest components of the payment?

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A) Invoice $123.96 Interest $4,132.04 B) Invoice $4,200.99 Interest $123.96 C) Invoice $4,132.04 Interest $125.97 D) Invoice $4,765.04 Interest $124.96 E) Invoice $4,132.04 Interest $123.96

140) You are planning to buy a new computer next Boxing Day (December 26). You are told the price will be $599.99 plus 12% in provincial and federal taxes. On October 1, you can put money into a savings account that can earn 2.3%. How much money will you have to invest on October 1 to have the full amount of the purchase? A) $668.37 B) $735.98 C) $669.45 D) $708.00 E) $650.99

141) Your line of credit advanced three amounts to you—$300 on July 23, $400 on September 5, and $1300 on October 31. Simple interest at 5.5% was charged on all three loans. What total amount was required to pay off the loans on December 31? A) $1,985.77 B) $2,026.28 C) $2.058.99 D) $2,896.65 E) $1,998.95

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142) Gary has a $955 loan payment due today but he would like to defer the payment for nine months. How much is the equivalent payment nine months from today if the interest on the loan is 5.5% per annum? A) $987.39 B) $976.39 C) $994.39 D) $996.99 E) $999.99

143) What amount should be accepted as equivalent 180 days before an obligation of $815.47 is due if money can earn 3.92%? A) $790 B) $810 C) $820 D) $800 E) $825

144) What amount received on September 12 is equivalent to $800 received on the preceding July 21 if money can earn 4.2%? A) $800.99 B) $800.00 C) $806.68 D) $807.99 E) $804.88

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145) Brescia owes his best friend $200, which is scheduled to be paid on April 15. Brescia has extra money due to a tax refund. What payment on March 1 is equivalent to the full payment on April 15 if money can earn 1.75%? A) $199.57 B) $297.99 C) $397.99 D) $178.34 E) $196.55

146) Myron can purchase a magazine subscription today for a price of $425. He can also wait 90 days and pay $434.43. What annual rate of return would money have to earn for the two options to be economically equivalent? A) 7% B) 9% C) 5% D) 6% E) 11%

147) What is the time interval (in months) separating equivalent payments of $1,900 and $1,931.67 if money is can earn 4.0% per annum? A) 1 month B) 3 months C) 5 months D) 7 months E) 9 months

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148) During a Spring Sale, K2 Mountain Equipment will sell its merchandise for 75% down, with the balance payable in one year. No interest is charged for the first year. What 100% cash price should Marpole accept on a $500 tent if K2 Mountain Equipment can earn a 8% rate of return on its funds? A) $598.99 B) $498.55 C) $489.75 D) $456.89 E) $490.74

149) What interest rate must money earn for a payment of $1,590.56 on December 31 to be equivalent to a payment of $1,580 on the previous August 31? A) 2% B) 3% C) 1% D) 4% E) 0.5%

150) A payment stream consists of $800 payable now and $700 payable five months from now. What is the equivalent value of the payment stream seven months from now if money is worth 4.3%? A) $1,498.99 B) $1,525.09 C) $1,500.20 D) $1,500.99 E) $1,588.72

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151) What is the equivalent value 60 days from now, of a payment stream comprised of $200 due 70 days from now and $400 due 20 days from now? Assume money can earn 4.25%. A) $598.99 B) $599.05 C) $601.63 D) $602.57 E) $603.54

152) Nellis wishes to make a single payment, made 95 days from now and is economically equivalent to the combination of three equal payments of $500 each: one due 75 days ago, the second due today, and the third due 75 days from today? Money is worth 3.5% per annum. A) $1,567.98 B) $1,534.98 C) $1,509.03 D) $1,513.66 E) $1,563.67

153) Thirty days ago Tabby signed an agreement with the bankruptcy courts requiring her to make three payments of $400 plus interest in 30, 60, and 90 days, respectively, from the date of the agreement. Each payment was to include interest on the $400 principal at the rate of 11%. Tabby won a wrongful dismissal lawsuit and wishes to pay back the full amount fifteen days from now. If the courts agree, what single payment should Manon require in the new agreement if money is worth 8%? A) $1,123.87 B) $1,785.23 C) $1,983.77 D) $1,298.65 E) $1,217.69

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154) A loan was provided on November 9 for $8,000. A payment of $2,000 was made on December 1. If the loan charges 2.4% simple interest, what final payment on December 31 will settle the loan? A) $6,023.41 B) $6,456.42 C) $6,099.23 D) $6,134.67 E) $9,871.10

155) A $2,500 line of credit on August 1 was repaid by payments of $500 on August 31, $1,200 on September 15, and a final payment on September 30. What was the third payment if the interest rate on the loan was 7.34%? A) $984.99 B) $826.54 C) $674.18 D) $984.56 E) $872.55

156) $2,000 was borrowed at an interest rate of 5.5%. Calculate the amount of each payment if the loan was paid off by three equal payments made 30, 75, and 120 days after the date of the loan. A) $765.54 B) $698.76 C) $674.18 D) $984.56 E) $872.55

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157) A loan of $4,000 is to be repaid by two payments of $1,500 due in three and eight months. A third unknown payment is due in thirteen months. What should be the size of the third payment if an interest rate of 6% is charged on the loan? Use today as the focal date. A) $1,054.25 B) $1,876.25 C) $1,879.75 D) $1,161.14 E) $987.76

158) Michael borrowed $10,800 for a new car on January 15, 2018 and agreed to repay the loan by three equal payments on the following July 30, 2018, January 31, 2019 and July 30, 2019. Calculate the payment size if the interest rate on the loan was 7.89%. A) $4,979.99 B) $3,908.95 C) $4,484.45 D) $3,932.88 E) $3,891.48

159)

Calculate the missing value: Principal ($)

Rate (%) 1500

160)

Time (months) 9.5

Interest ($) 7

Calculate the missing value: Principal ($)

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Rate (%)

Time (months)

Interest ($)

161)

10 1/4

Rate (%) 4850

4.5

Rate (%)

15,000

Interest ($) ?

145.50

Time (months)

? (to nearest 0.01)

Interest ($) 5

546.88

Calculate the missing value: Principal ($)

Rate (%) 6800

164)

Time (months)

Calculate the missing value: Principal ($)

163)

328.85

Calculate the missing value: Principal ($)

162)

Time (months) 7.7

Interest ($) 13

Calculate the missing value: Principal ($) 25,000

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Rate (%) 1.1% per month

Time (months)

Interest ($) 3

165)

Calculate the missing value: Principal ($)

Rate (%) 9125

166)

0.8% per month

Rate (%) 8900

Time (months)

511.00

Interest ($)

? per month

890.00

Calculate the missing value: Principal ($)

Rate (%) 2950

168)

Interest ($)

Calculate the missing value: Principal ($)

167)

Time (months)

Time 4 1/2

Maturity Value ($)

7 months

Calculate the missing value: Principal ($) 12,800

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Rate (%)

Time 11 3/4

Maturity Value ($) 237 days

169)

Calculate the missing value: Scheduled Payment ($)

Rate (%) 560

170)

10 3/4

Rate (%) 1215

Equivalent Payment ($) 8 1/2

? 7 months later

Calculate the missing value: Scheduled Payment ($)

Rate (%) 5230

172)

? 5 months earlier

Calculate the missing value: Scheduled Payment ($)

171)

Equivalent Payment ($)

Equivalent Payment ($) 9.25

? 174 days later

Calculate the missing value: Scheduled Payment ($)

Rate (%) 1480

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Equivalent Payment ($) 6.75

? 60 days earlier

173)

Calculate the missing value: Scheduled Payment ($)

Rate (%) 1975

174)

? (to the nearest 0.01)

Rate (%) 2370

? (to the nearest 0.01)

Rate (%) 830

$2508.79, 190 days later

Equivalent Payment ($) 9.9

$850.26, ? days later (to the nearest day)

Calculate the missing value:

Scheduled Payment ($)

Rate (%)

3500

177)

Equivalent Payment ($)

Calculate the missing value:

Scheduled Payment ($)

176)

$1936.53, 100 days earlier

Calculate the missing value: Scheduled Payment ($)

175)

Equivalent Payment ($)

Equivalent Payment ($) 5 1/4

$3439.80, ? months earlier (to the nearest month)

Calculate the missing value:

Scheduled Payment ($)

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Rate (%)

Equivalent Payment ($)

4850

178)

8 3/4 $4574.73, ? days earlier (to the nearest day)

Calculate the missing value:

Scheduled Payment ($)

Rate (%)

2740

Equivalent Payment ($) 4 1/2 $2755.20, ? days later (to the nearest day)

179) Determine a) whether the earlier or later payment has the greater economic value at the given interest rate and b) the interest rate (to the nearest 0.01%) at which the two payments would be equivalent: Earlier Payment ($) 560

Later Payment ($) 570

Time Interval 60 days

Interest Rate (%) 10 3/4

180) Determine a) whether the earlier or later payment has the greater economic value at the given interest rate and b) the interest rate (to the nearest 0.01%) at which the two payments would be equivalent: Earlier Payment ($) 1215

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Later Payment ($) 1280

Time Interval

Interest Rate (%)

11 months

8 1/2

181) Determine a) whether the earlier or later payment has the greater economic value at the given interest rate and b) the interest rate (to the nearest 0.01%) at which the two payments would be equivalent: Earlier Payment ($)

Later Payment ($)

5230

Time Interval

5500

5 months

Interest Rate (%) 0.6% per month

182) Determine a) whether the earlier or later payment has the greater economic value at the given interest rate and b) the interest rate (to the nearest 0.01%) at which the two payments would be equivalent: Earlier Payment ($)

Later Payment ($)

1480

Time Interval

1515

Interest Rate (%)

150 days

6.75%

183) Mr. and Mrs. Chan are considering two offers on a building lot that they own in a nearby town. One is for $49,000, consisting of $10,000 down and the balance to be paid in a lump payment in eight months. The second is for $50,000, with $10,000 down and the balance to be paid in 1 year. What rate of return must money earn for Mr. and Mrs. Chan to be indifferent between the two offers? Round to the nearest 0.01%

184) Calculate the equivalent value of the scheduled payments if money can earn the rate of return specified in the last column. Assume that any payments due before today have been missed. Scheduled Payments $500 today $300 in 3 months

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Equivalent Payment ? 6 months from now

Interest Rate 9 1/2%

185) Calculate the equivalent value of the scheduled payments if money can earn the rate of return specified in the last column. Assume that any payments due before today have been missed. Scheduled Payments $1000 today $1500 in 5 months

Equivalent Payment

Interest Rate

? 2 months from now

5 1/2%

186) Calculate the equivalent value of the scheduled payments if money can earn the rate of return specified in the last column. Assume that any payments due before today have been missed. Scheduled Payments $900 in 30 days $1000 in 210 days

Equivalent Payment

Interest Rate

? 90 days from now

7 3/4%

187) Calculate the equivalent value of the scheduled payments if money can earn the rate of return specified in the last column. Assume that any payments due before today have been missed. Scheduled Payments $2500 in 70 days $4000 in 200 days

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Equivalent Payment ? 30 days from now

Interest Rate 6 1/4%

188) Calculate the equivalent value of the scheduled payments if money can earn the rate of return specified in the last column. Assume that any payments due before today have been missed. Scheduled Payments $1000 today $1500 in 70 days $2000 in 210 days

Equivalent Payment ? 60 days from now

Interest Rate 8 1/2%

189) How much interest was paid on a $1500 loan for seven months at an annual interest rate of 4.5%?

190) Montel loaned $6800 to a friend for 13 months at an annual rate of 7.7% simple interest. How much interest did the borrower owe?

191) A $25,000 investment earned 0.25% per month simple interest for a three-month term. What total amount of interest was earned?

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192)

What was the term of a $4850 loan at 4.5% if the interest due at the end was $145.50?

193) The interest paid at the end of the term of a $9125 loan at 0.8% per month was $511.00. Calculate the term of the loan.

194) The interest paid on an 11-month loan at 10¼% was $328.85. What was the principal amount of the original loan?

195) What annual rate of interest, to the nearest 0.01%, was earned if a $15,000 investment for five months earned $546.88 in interest?

196) $890 interest was charged on $8900 borrowed on a simple interest basis for eight months. What was the interest rate per month on the loan?

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197)

How much interest will be earned on $5000 in 5 months if the interest rate is 5.5%?

198) An invoice states that interest will be charged on overdue accounts at the rate of 1½% per month. What will be the interest charges on a $3760 billing that is 3 months overdue?

199) The interest owed on a loan after 5 months was $292.50. If the simple interest rate charged on the loan was 0.9% per month, what was the amount borrowed?

200) How much must be placed in a five-month term deposit earning 4.3%, simple interest, in order to earn $500 interest?

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201) A five-month term deposit of $10,000 at the Scotiabank earned $175 in interest. What annual rate of simple interest did the deposit earn?

202) Indira paid interest charges of $169.05 on a $4830 invoice that was two months overdue. What monthly rate of simple interest was she charged?

203) Morgan loaned $3100 to Rolf at a simple interest rate of 0.65% per month. What was the term of loan if the total interest came to $221.65?

204) Asher cashed in a one-year term deposit after only five months had elapsed. In order to do so, he accepted an interest rate penalty-a reduction from the scheduled 5.5% rate of simple interest. If he was paid $145.83 interest on the $10,000 term deposit, what reduction was made in the per-annum rate of simple interest?

205) Sumer put $10,000 in a 3-month term deposit at Canada Trust, earning a simple interest rate of 2.2%. After the 3 months, she invested the entire amount of the principal and interest from the first term deposit in a new 3-month term deposit earning the same rate of interest. How much interest did she earn on each term deposit? Version 1

206) Sergon has $5000 to invest for six months. The rates offered on three-month and sixmonth term deposits at his bank are 5.5% and 5.8%, respectively. He is trying to choose between the six-month term deposit and two consecutive three-month term deposits. What would the simple interest rate on three-month term deposits have to be, three months from now, for Sergon to end up in the same financial position with either alternative? Assume that he would place both the principal and interest from the first three-month term deposit in the second three-month term deposit. Round to the nearest 0.01%

207) A $3800 loan at 7.5% was advanced on June 17, 2017. How much interest was due when the loan was repaid on October 1, 2017?

208) How much interest accrued from November 30, 2014 to March 4, 2015 on a $7350 loan at 7.5%?

209) An $85,000 investment earned a 3.9% rate of simple interest from December 1, 2015 to May 30, 2016. How much interest was earned?

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210) $850 borrowed on January 7, 2015 was repaid with interest at an annual rate of 7% on July 1, 2015. What was the amount of interest?

211) The interest rate on $27,000 borrowed on October 16, 2016 was 5.7%. How much interest was owed on the April 15, 2017 repayment date?

212) A $14,400 loan taken out on May 21, 2014 was repaid with interest at 11¼% per annum on July 19, 2015. How much interest was paid?

213) If $40.52 interest accrued on a $1000 certificate of deposit from January 15, 2017 to July 7, 2017, what rate of simple interest did the certificate of deposit earn? Round to the nearest 0.01%

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214) What was the principal amount of a loan at 9½% if $67.78 of interest accrued from October 28, 2014 to April 14, 2015?

215) On June 26 Laura put $2750 into a term deposit until September 3, when she needs the money for tuition, books, and other expenses to return to college. For term deposits in the 60-89day range, her credit union pays an interest rate of 3%. How much interest will she earn on the term deposit?

216) Raimo borrowed $750 from Chris on October 30 and agreed to repay the debt with simple interest at the rate of 12.3% on May 10. How much interest was owed on May 10? Assume that February has 28 days.

217) Joyce had $2149 in her daily interest savings account for the entire month of June. Her account was credited with interest of $2.65 on June 30 (for the exact number of days in June). What annual rate of simple interest did her balance earn? Round to the nearest 0.01%

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218) Maia's chequing account was $329 overdrawn beginning on September 24. On October 9 she made a deposit that restored a credit balance. If she was charged overdraft interest of $2.50, what annual rate of simple interest was charged? Round to the nearest 0.01%

219) In addition to a $2163 refund of his income tax overpayment, Revenue Canada paid Raisa $13.36 of interest on the overpayment. If the simple interest rate paid by Revenue Canada was 5.5%, how many days' interest was paid? Round to the nearest day.

220) Megan was charged $124.83 interest on her bank loan for the period September 18 to October 18. If the rate of interest on her loan was 8.25%, what was the outstanding principal balance on the loan during the month?

221) On June 26, 2017, $1000 was borrowed at an interest rate of 4.55%. On what date was the loan repaid if the amount of accrued interest was $11.47? Round to the nearest day.

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222) $1000 was invested on April 18, 2015 in a certificate of deposit earning 7.7% per annum. On its maturity date, the certificate paid $32.28 interest. On what date did it mature? Round to the nearest day.

223) On what date was a $1000 loan granted if the interest accrued as of November 16, 2015 was $50.05? The interest rate on the loan was 7¼%. Round to the nearest day.

224) The $1000 principal amount of a loan was repaid on March 13, 2015 along with accrued interest in the amount of $49.42. If the interest rate on the loan was 11%, what was the repayment date?

225) Bruce borrowed $6000 from Darryl on November 23. When Bruce repaid the loan, Darryl charged $127.60 interest. If the rate of simple interest on the loan was 6¾%, on what date did Bruce repay the loan? Assume that February has 28 days.

226) Sharon's $9000 term deposit matured on March 16, 2015. Based on a simple interest rate of 3.75%, she received $110.96 in interest. On what date did she originally make the term deposit? Round to the nearest day. Version 1

227) Mario borrowed $6000 on March 1 at a variable rate of interest. The interest rate began at 7.5%, increased to 8% effective April 17, and then fell by 0.25% effective June 30. How much interest will be owed on the August 1 repayment date?

228) Penny invested $4500 on October 28 at a floating rate of interest that initially stood at 6.3%. Effective December 2, the rate dropped by ½% and then it declined another ¼% effective February 27. What total amount of principal plus interest will Penny receive when the investment matures on March 15? Assume that the new year is a leap year.

229) How much will be required on February 1 to pay off a $3000 loan advanced on the previous September 30 if the variable interest rate began the interval at 4.7%, rose to 5.2% effective November 2, and then dropped back to 5.0% effective January 1?

230) The total accrued interest owed as of August 31 on a loan advanced the preceding June 3 was $169.66. If the variable interest rate started at 8¾%, rose to 9% effective July 1, and increased another ½% effective July 31, what was the principal amount of the loan?

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231) What will be the maturity value after seven months of $2950 earning interest at the rate of 4½%?

232) $12,800 was invested in a 237-day term deposit earning 3¾%. What was its maturity value?

233) What will be the maturity value in 15 months of a $4500 loan at a simple interest rate of 7.9%?

234) Cecille placed $17,000 in a 270-day term deposit earning 4.25%. How much will the bank pay Cecille on the maturity date?

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235) What was the principal amount of a loan at 10½% if the total amount owed after 23 days was $785.16?

236) The maturity value of an investment earning 7.7% per annum for a 360-day term was $2291.01. What amount was originally invested?

237) 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?

238) $7348.25 was the amount required to pay off a loan after 14 months. If the loan was at 8¼% per annum simple interest, how much of the total was interest?

239) To the nearest 0.01%, what was the interest rate on a $1750 loan if the amount required to pay off the loan after five months was $1828.02?

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240) A $2875.40 investment grew to $3000 after eight months. What annual rate of simple interest, to the nearest 0.01%, did it earn?

241) Marliss made a $780.82 purchase on her Visa card. Including 45 days' interest, the amount billed on her credit card was $798.63. What annual interest rate, to the nearest 0.01%, does her card charge?

242) The amount required to settle a $680 debt after 300 days was $730.30. What rate of interest, to the nearest 0.01%, was charged on the debt?

243) Janesh has savings of $9625.63. If he can invest this amount to earn 2.8%, how many days will it take for the investment to grow to $9,800? Round to the nearest day.

244) The amount required to pay off a $3500 loan at 8.4% was $3646.60. What was the term of the loan, to the nearest day? Version 1

245) A $7760 investment earning 6¼% matured at $8083.33. What was the term of the investment, to the nearest month?

246) The interest rate on an $859.50 debt was 10¼%. For how many months was the loan outstanding if it was settled with a payment of $907.22? Round to the nearest half month.

247) Judith received the proceeds from an inheritance on March 25. She wants to set aside enough on March 26 so that she will have $20,000 available on October 1 to purchase a car when the new models are introduced. If the current interest rate on 181- to 270-day term deposits is 3.75%, what amount should she place in the term deposit?

248) The bookkeeper for Durham's Garage is trying to allocate to principal and interest a payment that was made to settle a loan. The cheque stub has the note "$3701.56 for principal and 7 months' interest at 12.5%." What are the principal and interest components of the payment?

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249) The annual $3600 membership fee at the Oak Meadows Golf Club is due at the beginning of the year. Instead of a single "lump" payment, a member can pay $1600 at the start of the year and defer the $2000 balance for five months by paying a $75 surcharge at the time of the second payment. Effectively, what annual rate of simple interest is Oak Meadows charging on the $2000 deferred payment? Round to the nearest %.

250) The snow tires that you are planning to buy next October 1 at the regular price of $107.50 each are advertised at $89.95 in a spring clearance special that will end on the preceding March 25. What annual rate of simple interest will you earn if you "invest" in the new snow tires at the sale price on March 25 instead of waiting until October 1 to buy them at the regular price? Round to the nearest 0.01%

251) A&B Appliances sells a washer-dryer combination for $1535 cash. C&D Appliances offers the same combination for $1595 with no payments and no interest for 6 months. Therefore, you can pay $1535 now or invest the $1535 for 6 months and then pay $1595. What value would the annual rate of return have to exceed for the second alternative to be your advantage? Round to the nearest 0.01%

252) To the nearest day, how many days will it take $2500 to grow to $2614.47 at an annual rate of 8.75%?

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253) Karen borrowed $2000 at 10¼% on July 13. On what date would the amount owed first exceed $2100?

254) 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? Round to the nearest day.

255) 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 total amount was required to pay off the loans?

256) 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 result of the purchase and sale of securities from time to time, the account's balance changed as follows: Period January 1 to March 3

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Balance $3347

March 4 to May 23

$8687

May 24 to June 16

$2568

June 17 to June 30

$5923

What interest was credited to Amalia's account on June 30? The brokerage firm includes interest for both January 1 and June 30 in the June 30 payment. Assume that February had 28 days.

257) 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. Investment Date

Amount Invested

Interest Rate

Maturity Date

November 16

$74,000

6.3% April 1

December 30

$66,000

5.9% April 1

February 8

$92,000

5.1% April 1

What total amount will be available from the maturing term deposits on April 1 (of a leap year)?

258) What amount of money paid today is equivalent to $560 paid five months from now if money can earn 3¾% per annum?

259) What amount, seven months from now, is equivalent to $1215 today if money can be invested to earn 8½%? Version 1

260) What payment, 174 days from now, is equivalent to $5230 paid today? Assume that money is worth 5.25% per annum.

261) What amount should be accepted as equivalent, 60 days before an obligation of $1480 is due, if money can earn 6¾%?

262) What amount paid on September 24 is equivalent to $1000 paid on the following December 1 if money can earn 5%?

263) What amount received on January 13 is equivalent to $1000 received on the preceding August 12 if money can earn 9.5%?

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264) 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?

265) 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 amount should be acceptable to both parties?

266) To the nearest 0.01%, what annual rate of return would money have to earn for $1975.00 to be equivalent to $1936.53 paid 100 days earlier?

267) To the nearest 0.01%, at what rate can money be invested if $2370.00 is equivalent to $2508.79 paid 190 days later?

268) A late payment of $850.26 was considered equivalent to the originally scheduled payment of $830.00, allowing for interest at 9.9%. To the nearest day, how many days late was the payment?

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269) To the nearest month, what is the time interval separating equivalent payments of $3500.00 and $3439.80 if money is worth 5¼% per annum?

270) An early payment of $4574.73 was accepted instead of a scheduled payment of $4850.00, allowing for interest at the rate of 8¾%. To the nearest day, how many days early was the payment?

271) To the nearest day, how many days separate equivalent payments of $2755.20 and $2740.00 if money can earn 4½%?

272) a) 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? b) At what monthly rate (to the nearest 0.01%) would the two amounts be economically equivalent?

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273) Compare the economic values of $1480 today vs. $1515 in 150 days. Assume money can earn 6.75%. a) Which has the greater economic value? b) At what rate (to the nearest 0.01%) would the two amounts be equivalent?

274) To settle a $570 invoice, Anna can pay $560 now or the full amount 60 days later. a) Which alternative should she choose if money can earn 10¾%? b) What rate (to the nearest 0.01%) would money have to earn for Anna to be indifferent between the alternatives?

275) 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. a) Which is the better economic alternative if money is worth 8.5%? b) At what rate (to the nearest 0.01%) would the alternatives be equivalent?

276) 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 Bonds currently earning 3.9% per annum?

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277) 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.

278) A $3000 payment is scheduled for 6 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.

279) 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 Marpole can earn a rate of return of 10.75% on its funds?

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280) 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 the Kims is for $149,000 consisting of $29,000 down and $120,000 payable in one year. The Chans can earn an interest rate of 4.5% on low-risk short-term investments. a) What is the current economic value to the Chans of each offer? b) Other things being equal, which offer should the Chans accept? How much more is the better offer worth (in terms of current economic value)?

281) Westwood Homes is beginning work on its future College Park sub-division. 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 down payment (with the balance due in nine months.) The alternative is a $5000 deposit with the $290,000 balance due in nine months. Mr. and Mrs. Symbaluk are trying to decide which option to choose. They currently earn 4.8% on low-risk short-term investments. a) What is the current economic cost of buying on the $130,000-down $5000-off option? b) What is the current economic cost of buying on the $5000-deposit full-price option? c) Which alternative should the Symbaluks choose? In current dollars, what is the economic advantage of the preferred alternative?

282) 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? Round to the nearest 0.01%

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283) Calculate the combined equivalent value, six months from now, of $500 due today and $300 due in three months. Assume that money can earn 2½%.

284) 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%?

285) Payments of $900 and $1000 are due 30 days from now and 210 days from now, respectively. If money can be invested at 4%, what single payment made 90 days from now is equivalent to the payment stream?

286) 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 6¼%.

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287) 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 3.5%?

288) 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 in 75 days from today? Money is worth 9.9% per annum.

289) Two payments of $2000 each are to be received six and twelve months from now. If money is worth 5%, what is the total equivalent value of the payments: a) Today? b) Six months from today?

290) Two payments of $3000 each are due in 50 and 100 days. What is their combined economic value today if money can earn: a) 9%? b) 11%?

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291) Payments of $850 scheduled to be paid today and $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 scheduled payments if money can earn 4¼%?

292) 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 money can earn 4½%?

293) If money earns 3.5%, calculate the economic value today of the following payment streams: a) Payments of $900 due 150 days ago and $1400 due 80 days ago. b) Payments of $800 due in 30 days, $600 due in 75 days, and $1000 due in 125 days.

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294) 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.) a) $1000, $3000, and $2000 due in one, three, and five months, respectively. b) Two $3000 payments due two and four months from now.

295) Eight months ago, Louise agreed to pay Thelma $750 and $950 six and twelve months, respectively, from the date of the agreement. With each payment, Louise agreed to pay interest on the respective principal at the rate of 6.5% from the date of the agreement. Louise failed to make the first payment and now wishes to settle her obligations with a single payment four months from now. What payment should Thelma be willing to accept if money can earn 4.75%?

296) 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 of 13.5% from the date of the agreement. Stella now wants Manon to renegotiate the agreement and accept a single payment 30 days from now, instead of the three scheduled payments. What payment should Manon require in the new agreement if money is worth 8.5%?

297) Payments of $2600, due 50 days ago, and $3100, due in 40 days, are to be replaced by payments of $3000 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 earns 8.25%. Use 30 days from now as the focal date.

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298) 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 to be equivalent to the originally scheduled payments? Assume that money can earn an interest rate of 4%. Choose a focal date four months from now.

299) A $3000 loan at 6% was made on March 1. Two payments of $1000 each were made on May 1 and June 1. What payment on July 1 will pay off the loan?

300) $5000 was borrowed at 9½% on March 1. On April 1 and June 1, the borrower made payments of $2000 each. What payment was required on August 1 to pay off the loan's balance?

301) The interest rate on a $3000 loan advanced on March 1 was 5.2%. What must the first payment on April 13 be in order that two subsequent payments of $1100 on May 27 and $1100 on July 13 settle the loan?

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302) A $3000 loan on March 1 was repaid by payments of $500 on March 31, $1000 on June 15, and a final payment on August 31. What was the third payment if the interest rate on the loan was 8¼%?

303) A $1000 loan at 5.5% was repaid by two equal payments made 30 days and 60 days after the date of the loan. Determine the amount of each payment.

304) Two equal payments, 50 days and 150 days after the date of the loan, paid off a $3000 loan at 10¼%. What was the amount of each payment?

305) What should be the amount of each payment if a $2500 loan at 3.5% is to be repaid by three equal payments due two months, four months, and seven months following the date of the loan?

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306) $8000 was borrowed at an interest rate of 11½%. Calculate the amount of each payment if the loan was paid off by three equal payments made 30, 90, and 150 days after the date of the loan.

307) The simple interest rate on a $5000 loan is 7%. The loan is to be repaid by four equal payments on dates 100, 150, 200, and 250 days from the date on which the loan was advanced. What is the amount of each payment?

308) A $7500 loan will be paid off by four equal payments to be made 2, 5, 9, and 12 months after the date of the loan. What is the amount of each payment if the interest rate on the loan is 9.9%?

309) Maurice borrowed $6000 from Heidi on April 23 and agreed to make payments of $2000 on June 1 and $2000 on August 1, and to pay the balance on October 1. If simple interest at the rate of 5% was charged on the loan, what is the amount of the third payment? Use April 23 as the focal date.

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310) A loan of $10,000 is to be repaid by three payments of $2500 due in two, four, and six months, and a fourth payment due in eight months. What should be the size of the fourth payment if an interest rate of 11% is charged on the loan? Use today as the focal date.

311) A loan of $4000 at 6.25% is to be repaid by three equal payments due four, six, and eight months after the date on which the money was advanced. Calculate the amount of each payment. Use the loan date as the focal date.

312) Anthony borrowed $7500 on September 15 and agreed to repay the loan by three equal payments on the following November 10, December 30, and February 28. Calculate the payment size if the interest rate on the loan was 11¾%. Use September 15 as the focal date.

313) What amount invested at 4½% on November 19, 2015 had a maturity value of $10,000 on March 3, 2016?

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314) If $3702.40 earned $212.45 interest from September 17, 2016 to March 11, 2017, what rate of interest was earned? Round to the nearest 0.01%

315) A loan of $3300 at 6¼% simple interest was made on March 27. To the nearest day, on what date was it repaid if the interest cost was $137.99?

316) Marta borrowed $1750 from Jasper on November 15, 2016, and agreed to repay the debt with simple interest at the rate of 7.4% on June 3, 2017. How much interest was owed on June 3?

317) Petra has forgotten the rate of simple interest she earned on a 120-day term deposit at the Bank of Nova Scotia. At the end of the 120 days, she received interest of $327.95 on her $21,000 deposit. To the nearest 0.01%, what rate of simple interest was her deposit earning?

318) Jacques received the proceeds from an inheritance on March 15. He wants to set aside, in a term deposit on March 16, an amount sufficient to provide a $45,000 down payment for the purchase of a home on November 1. If the current interest rate on 181-day to 270-day deposits is 5¾%, what amount should he place in the term deposit?

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319) Sheldrick Contracting owes Western Equipment $60,000 payable on June 14. In late April, Sheldrick has surplus cash and wants to settle its debt to Western Equipment, if Western will agree to a fair reduction reflecting the current 3.6% interest rate that short-term funds can earn. What amount on April 29 should Sheldrick propose to pay to Western?

320) Peter and Reesa can book their Horizon Holiday package at the early-booking price of $3900, or wait four months and pay the full price of $3995. a) Which option should they select if money can earn a 5.25% rate of return? b) To the nearest 0.01%, at what interest rate would they be indifferent between the two prices?

321) What amount on January 23 is equivalent to $1000 on the preceding August 18 if money can earn 6½%?

322) Three payments are scheduled as follows: $1200 is due today, $900 is due in five months, and $1500 is due in eight months. The three payments are to be replaced by a single equivalent payment due ten months from now. What should the payment be if money is worth 5.9%? Use ten months from now as the focal date. Version 1

323)

Two payments of $5000 each are to be received four and eight months from now.

a) What is the combined equivalent value of the two payments today if money can earn 6%? b) If the rate of interest money can earn is 4%, what is the payments' combined equivalent value today?

324) Thad is planning to buy a rototiller next spring at an expected price of $579. In the current fall "flyer" from Evergreen Lawn and Garden, the model he wants is advertised at $499.95 in a Fall Clearance Special. a) If money can earn 4%, what is the economic value on the preceding September 15 of the $579 that Thad will pay to purchase the rototiller next April 1? (Assume that February has 28 days.) b) What are his true economic savings if he purchases the rototiller at the sale price of $499.95 on September 15? c) What interest rate would money have to earn for Thad to be indifferent between buying the rototiller at $499.95 on September 15 or buying it for $579 on the subsequent April 1? Round to the nearest 0.01%

325) Evelyn put $15,000 into a 90-day term deposit at Laurentian Bank paying a simple interest rate of 3.2%. When the term deposit matured, she invested the entire amount of the principal and interest from the first term deposit into a new 90-day term deposit earning the same rate of interest. What total amount of interest did she earn on both term deposits?

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326) Umberto borrowed $7500 from Delores on November 7, 2016. When Umberto repaid the loan, Delores charged him $190.02 interest. If the rate of simple interest on the loan was 6¾%, on what date did Umberto repay the loan?

327) Payments of $1000 scheduled to be paid 5 months ago and $7500 to be paid four months from now, are to be replaced with a single payment two months from now. What payment two months from now is equivalent to the scheduled payment if money can earn 2½%?

328) If money earns 7.5%, calculate the economic value today of the following payment streams: a) Payments of $1800 made 150 days ago and $2800 made 90 days ago. b) Payments of $1600 due 30 days from now, $1200 due 75 days from now, and $2000 due 120 days from now.

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329) Mr. & Mrs. Parsons are considering two offers to purchase their summer cottage. Offer A is for $200,000 consisting of an immediate $40,000 down payment with the $160,000 balance payable one year later. Offer B is for $196,500 made up of a $30,000 down payment and the $166,500 balance payable in six months. a) If money can earn 4%, what is the current economic value of each offer? b) Other things being equal, which offer should the Parsons accept? What is the economic advantage of the preferred offer over the other offer? c) If money can earn 6%, which offer should the Parsons accept? What is the economic advantage of the preferred offer?

330) A $9000 loan is to be repaid in three equal payments occurring 60, 180, and 300 days, respectively, after the date of the loan. Calculate the size of these payments if the interest rate on the loan is 7¼%. Use the loan date as the focal date.

331) Nine months ago, Muriel agreed to pay Aisha $1200 and $800 on dates 6 and 12 months, respectively, from the date of the agreement. With each payment Muriel agreed to pay interest at the rate of 8½% from the date of the agreement. Muriel failed to make the first payment and now wishes to settle her obligations with a single payment four months from now. What payment should Aisha be willing to accept if money can earn 6¾%?

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332) Calculate the equivalent value of the scheduled payments if money can earn the rate of return specified in the last column. Assume that any payments due before today have been missed. Scheduled Payments $1750, 75 days ago $1750, today $1750, in 75 days

Equivalent Value

Interest Rate

? 45 days from now

9.9%

333) The first two of the following three payments were not made as scheduled. $1200 was due seven months ago, $900 was due two months ago, and $1500 is due in one month. The three payments are to be replaced by a single equivalent payment due three months from now. What should the payment be if money is worth 9.9%? Use three months from now as the focal date.

334) What amount of interest will be earned on $1500 invested for 18 months at an interest rate of 4%?

335) How much will have to be deposited to earn $600 interest over two years at an interest rate of 3%? Round to the nearest 0.001%

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336) An investment of $2000 earned $156.25 interest in 30 months. What was the simple annual rate of interest?

337) The interest earned on a $7500 investment was $1181.25. What was the term in months if the rate of interest was 3.5%?

338) Sam borrowed $1250 on March 15 at an interest rate of 4.5%. Sam repaid the full amount plus the interest owed on September 1. How much did Sam repay?

339) Mandeep earned $40.07 interest at 2.5% on $5000 invested on April 7. To the nearest day, on what date did her investment mature?

340) Larissa earned $8.74 interest on $1100 invested from January 11 to June 4 (of a leap year). To the nearest %, what annual rate of simple interest did she earn?

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341) Kristina earned $33.70 at an interest rate of 2.5% from November 29 to April 1. What amount did she invest? Assume that February has 28 days.

342) What will be the maturity value of $3300 invested at an interest rate of 2.75% in 15 months?

343) How much interest will an investment of $5075 earn in two years at an interest rate of 2.25%?

344) Sandeep earned $650 on an investment deposited at an interest rate of 3.25% for 30 months. How much was the original investment?

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345) Elita deposited $2100 on May 22. On September 10, she had $2120.12. What simple interest rate per year did she earn? Round to the nearest 0.01%

346) What amount would have to be invested at a simple interest rate of 2.85% to grow to $2529.28 in 150 days?

347) A large retail store offers no payments, no interest for six months on all furniture and appliance purchases exceeding $1500. If money can earn 3.5%, how much should the store accept as a payment today on furniture costing $1850?

348) A large retail store offers a payment plan of no interest with 50% down and the balance in six months on a minimum purchase of $500. If money can earn 3.25%, how much of a discount should a buyer receive on a purchase of $2000 if paid in full at the time of purchase?

349) Purvinder has won a lottery. He can take $5000 now or $5500 in one year. If money can earn 8%, which option should he choose?

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350) Puri has a loan to repay. His terms are payments of $1000 in six months and $1000 in one year. He wants to settle the debt in three months. If the rate of interest is 6.5%, what single equivalent payment should Puri make?

351) Kris has borrowed $2000 and has agreed to repay the loan in two payments in nine and fifteen months. Each payment is $1000 of principal and interest at the rate of 7%. Kris wants to settle the debt in six months. What single equivalent payment should she make if money is now worth 5%?

352) A $10,000 loan made on January 1 at 7%, is to be repaid by payments of $3500 on July 1, $3500 on October 1, and a final payment on January 1 of the next year. What is the amount of the final payment required to pay off the loan in full?

353) A $6000 loan at 8% is to be repaid in three equal payments at three months, six months, and nine months. Determine the size of the equal payments.

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354) A $5,000 loan made on March 15 at an interest rate of 7.5%, is to be repaid by payments of $2000 on June 15, $2000 on October 15, and a final payment on December 15. What is the amount of the final payment required to pay off the loan in full?

355) An $8000 loan at an interest rate of 6.5% is to be repaid in three equal payments at six months, nine months, and one year later. Determine the size of the equal payments.

356) How much interest was paid on a $900 payday loan for five months at an annual interest rate of 6.9%?

357) Jeannette loaned $1000 to a friend for college textbooks. If her friend paid her back in eight months and paid interest at a rate of 4.4%, how much interest did Jeannette receive?

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358) A $10,000 investment earned a dividend of 0.5% per month simple interest for sixmonths. What total amount of interest was earned?

359) Aidan cashed in a two-year term deposit after only eight months had elapsed. In order to do so, he accepted an interest rate penalty—a reduction from the scheduled 3.2% rate of simple interest. If he was paid $36 interest on the $2,000 term deposit, what reduction was made in the per annum rate of simple interest?

360) Potter loaned his brother $2,500 to purchase a used car. If Potter's brother paid a simple interest rate of 0.2% per month. What was the term of the loan if the total interest came to $45?

361) Ocean Salmon Farms paid interest charges of $307.73 on a $10,257.62 invoice that was three months overdue. What monthly rate of simple interest was she charged?

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362) An eighteen-month GIC of $1,000 at Western Bank earned $45 in interest. What annual rate of simple interest did the deposit earn?

363) How much money must be placed in a nine-month high-interest savings account earning 2.5% simple interest in order to earn $93.75 interest?

364) The interest owed on a loan after fourteen months was $302.40. If the simple interest rate charged on the loan was 0.9% per month, what was the amount borrowed?

365) An invoice states that interest will be charged on overdue accounts at the rate of 1.25% per month. What will the interest charges be on a $10,612.50 billing that is three months overdue?

366) You invest $1,000 in the Canadian Small Cap Index Fund. After six months your balance in the account is $1,045. What annual rate of simple interest was earned?

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367) A small business loan was issued for $5,000 for eight months. If the Small Business Bank says you will them $5,083.33 after the eight-month term, what was the simple interest rate on the loan?

368) The local newspaper says you can pay your annual subscription fee late. The normal charge is $45 per year. If you can pay $47.70 due to an interest rate of 2% monthly, how many months late did you pay?

369) Your investment of $5,000 grew to $5,200, which included a simple interest rate of 12%. How many months did you hold this investment?

370) You attend the local payday store and ask how much a two-month loan would cost. You wish to borrow $500 and are advised they charge an administration fee of $25. If the total amount owed after two months is $545.83, what simple interest rate was charged? (There is no interest charged on the $25 administration fee.)

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371) Your college will charge you a late fee of $25 if you pay your tuition one month late. If your tuition fees are $4,500, what simple interest rate is the college charging?

372) Sindhu invested $10,000 in a six-month GIC at Laurentian Bank of Canada. The simple interest rate was 1.2%. Sindhu then invested the original principal and interest in a six-month high interest savings account at CIBC, earning a simple interest rate of 1.1928%. How much interest was earned at each institution?

373) Isadora has $10,000 to invest for three years. The current one-year rate is 2.2% per annum, simple interest. The three year rate is 2.35% per annum, simple interest. Isadora is deciding whether to invest in a one-year term and then re-invest the principal and interest for two additional terms (assuming the rate won't change), or lock the money into a three year term. Which decision would pay more in interest and by how much?

374) A $200 loan at 4.5% was advanced on August 17, 2019. How much interest was due when the loan was repaid on September 1, 2019?

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375) How much interest accrued from November 30, 2018, to October 24, 2019, on a $2350 loan at 3.5%?

376) A $5,000 GIC earned a 1.9% rate of simple interest from October 15, 2019, to January 30, 2020. How much interest was earned?

377) An invoice for $850 dated February 17, 2019, was repaid with interest at an annual rate of 2.3% on July 1, 2019. What was total amount paid back?

378) The interest rate on $13,000 borrowed against a line of credit on October 16, 2019, was 4.5%. How much interest was owed on the April 15, 2021, repayment date?

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379) A $14,400 line of credit taken out on June 19, 2018, was repaid with interest at 6% per annum on July 19, 2019. How much was the payment to settle the full amount if a $25 administrative fee was added on top of the interest?

380) If $42.58 interest accrued on a $1,000 payday loan from October 15, 2019, to January 7, 2020, what rate of simple interest did the payday company charge?

381) What was the principal amount of a loan at 5.5% if $83.06 of interest accrued from September 28, 2018, to January 12, 2019?

382) To save for a house, Xi put $20,750 into a term deposit until October 31, 2019. If Xi can earn 3.2% per annum simple interest, how much interest will be earned if the money was deposited on April 1, 2017.

383) Diana borrowed $10,000 from her mother on August 30 and agreed to repay the debt with simple interest at the rate of 4.5% on August 10. How much money was owed on May 10 to fully repay the debt and interest? Assume that February has 28 days.

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384) A client had $1,263 in a daily interest savings account for the entire month of June. The account was credited with interest of $0.52 on June 30 (for the exact number of days in June). What annual rate of simple interest did her balance earn?

385) Maia's missed her student loan payment on October 21, 2019. The credit institution charged her interest of $49.23 on a $4,264.50 balance starting September 2, 2019. What annual rate of simple interest was charged?

386) In 2018, a Canadian citizen overpaid their income taxes by $1,300 due to a calculation error. Canada Revenue Agency does pay interest on overpayments using a simple interest rate of 1% per annum. If interest of $3.92 was paid in interest, how many days of interest were paid?

387) Apple Orchards was charged $186.41 interest on an overdue invoice for the period August 2 to November 18. If the rate of interest on the invoice is 12% per annum, what was the outstanding principal balance on the loan during the period?

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388) On April 5, 2019, $2,000 was borrowed at an interest rate of 2.65%. On what date was the loan repaid if the amount of accrued interest was $26.43?

389) $2,000 was invested on May 12, 2019, in a TSX Index Account that earned 10.7% per annum. On its maturity date, the account had a value of $2,071.53, including interest and initial investment. On what date was this value calculated?

390) On what date was a $1,500 line of credit opened if the interest accrued as of August 21, 2019, was $24.91. The interest rate on the loan was 6.25%

391) Odell borrowed $2,000 from his parents on December 22, 2018. He borrowed an additional $4,000 on February 18, 2019. If Odell wishes to pay back his parents on August 31, 2019, how much did Odell pay if his parents charged him 1.7% per annum?

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392) $2,900 was invested in a 365-day term deposit earning 1.24%. What was its maturity value?

393) Augustus invested $17,000 in a 360-day savings bond earning 2.58%. How much will the bank pay Augustus on the maturity date?

394) The amount owed on a line of credit after 123 days was $757.89. If the institution charges 5.5% per annum, what amount was originally drawn against the line of credit?

395) $7,040.58 was the amount required to pay off a payday loan after 92 days. If the loan was at 2.3% per annum simple interest, how much of the total was interest?

396) A $1,500 income tax refund was invested in a 60-day term deposit. If the investment grew to $1,503.08, what annual rate of simple interest did it earn?

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397) If Tabitha owed $550 to her friend after borrowing an original amount of $495, what was the rate of simple interest if the term of the loan was eight months?

398) You won a contest and can choose $25,000 today or $27,500 two years from now. What is the simple rate of interest earned if you wait two years?

399) The interest rate on an $2,500 debt was 2.5%. For how many months was the loan outstanding if it was settled with a payment of $2,546.88?

400) The accountant for Chicken Farms is trying to allocate, the amount of an invoice and interest that was paid. A store manager left a note that stated the $4,256 cheque was for principal and interest on an eight-month invoice at an interest rate of 4.5%. What was the original invoice amount and interest components of the payment?

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401) You are planning to buy a new computer next Boxing Day (December 26). You are told the price will be $599.99 plus 12% in provincial and federal taxes. On October 1, you can put money into a savings account that can earn 2.3%. How much money will you have to invest on October 1 to have the full amount of the purchase?

402) Your line of credit advanced three amounts to you—$300 on July 23, $400 on September 5, and $1300 on October 31. Simple interest at 5.5% was charged on all three loans. What total amount was required to pay off the loans on December 31?

403) Gary has a $955 loan payment due today but he would like to defer the payment for nine months. How much is the equivalent payment nine months from today if the interest on the loan is 5.5% per annum?

404) What amount should be accepted as equivalent 180 days before an obligation of $815.47 is due if money can earn 3.92%?

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405) What amount received on September 12 is equivalent to $800 received on the preceding July 21 if money can earn 4.2%?

406) Brescia owes his best friend $200, which is scheduled to be paid on April 15. Brescia has extra money due to a tax refund. What payment on March 1 is equivalent to the full payment on April 15 if money can earn 1.75%?

407) Myron can purchase a magazine subscription today for a price of $425. He can also wait 90 days and pay $434.43. What annual rate of return would money have to earn for the two options to be economically equivalent?

408) What is the time interval (in months) separating equivalent payments of $1,900 and $1,931.67 if money is can earn 4.0% per annum?

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409) Jessica recently purchased a one-year membership at Valley Mountain Gold Club. She can add a food and beverage package to the membership now for $300, or wait five months and pay the regular price of $325. Which is the better economic alternative if money is worth 4.5%? At what discount rate would the alternatives be equivalent?

410) During a Spring Sale, K2 Mountain Equipment will sell its merchandise for 75% down, with the balance payable in one year. No interest is charged for the first year. What 100% cash price should Marpole accept on a $500 tent if K2 Mountain Equipment can earn a 8% rate of return on its funds?

411) What interest rate must money earn for a payment of $1,590.56 on December 31 to be equivalent to a payment of $1,580 on the previous August 31?

412) A payment stream consists of $800 payable now and $700 payable five months from now. What is the equivalent value of the payment stream seven months from now if money is worth 4.3%?

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413) What is the equivalent value 60 days from now, of a payment stream comprised of $200 due 70 days from now and $400 due 20 days from now? Assume money can earn 4.25%.

414) Nellis wishes to make a single payment, made 95 days from now and is economically equivalent to the combination of three equal payments of $500 each: one due 75 days ago, the second due today, and the third due 75 days from today? Money is worth 3.5% per annum.

415) Thirty days ago Tabby signed an agreement with the bankruptcy courts requiring her to make three payments of $400 plus interest in 30, 60, and 90 days, respectively, from the date of the agreement. Each payment was to include interest on the $400 principal at the rate of 11%. Tabby won a wrongful dismissal lawsuit and wishes to pay back the full amount fifteen days from now. If the courts agree, what single payment should Manon require in the new agreement if money is worth 8%?

416) A loan was provided on November 9 for $8,000. A payment of $2,000 was made on December 1. If the loan charges 2.4% simple interest, what final payment on December 31 will settle the loan?

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417) A $2,500 line of credit on August 1 was repaid by payments of $500 on August 31, $1,200 on September 15, and a final payment on September 30. What was the third payment if the interest rate on the loan was 7.34%?

418) $2,000 was borrowed at an interest rate of 5.5%. Calculate the amount of each payment if the loan was paid off by three equal payments made 30, 75, and 120 days after the date of the loan.

419) A loan of $4,000 is to be repaid by two payments of $1,500 due in three and eight months. A third unknown payment is due in thirteen months. What should be the size of the third payment if an interest rate of 6% is charged on the loan? Use today as the focal date.

420) Michael borrowed $10,800 for a new car on January 15, 2018 and agreed to repay the loan by three equal payments on the following July 30, 2018, January 31, 2019 and July 30, 2019. Calculate the payment size if the interest rate on the loan was 7.89%.

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Answer Key Test name: Chap 07_10ce 1) B 2) D 3) B 4) E 5) D 6) E 7) A 8) B 9) C 10) E 11) B 12) A 13) D 14) C 15) D 16) C 17) E 18) D 19) B 20) D 21) C 22) B 23) C 24) B 25) C 26) D Version 1

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27) E 28) B 29) A 30) A 31) C 32) C 33) E 34) B 35) A 36) B 37) E 38) A 39) C 40) C 41) D 42) B 43) E 44) D 45) E 46) A 47) A 48) C 49) D 50) B 51) E 52) C 53) E 54) B 55) A 56) D Version 1

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57) B 58) A 59) B 60) E 61) A 62) C 63) B 64) D 65) D 66) A 67) E 68) B 69) E 70) C 71) D 72) A 73) B 74) A 75) E 76) D 77) B 78) D 79) D 80) C 81) A 82) D 83) D 84) D 85) D 86) B Version 1

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87) B 88) A 89) B 90) C 91) E 92) B 93) D 94) A 95) B 96) A 97) B 98) C 99) D 100) E 101) A 102) B 103) C 104) D 105) E 106) A 107) B 108) C 109) D 110) E 111) A 112) B 113) D 114) E 115) A 116) B Version 1

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117) C 118) D 119) E 120) A 121) B 122) C 123) D 124) E 125) A 126) B 127) C 128) D 129) E 130) A 131) B 132) C 133) D 134) E 135) A 136) B 137) C 138) D 139) E 140) A 141) B 142) C 143) D 144) E 145) A 146) B Version 1

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147) C 148) E 149) A 150) B 151) C 152) D 153) E 154) A 155) B 156) C 157) D 158) E

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CHAPTER 8 1) What will be the maturity value of $25,000 placed in a 90-day term deposit paying an interest rate of 4.75%? A) $24,710.58 B) $25,396.77 C) $25,292.81 D) $25,306.77 E) $25,302.57

2) The current rates on 90- and 180-day GICs are 5.5% and 6% simple interest, respectively. An investor is trying to decide whether to purchase a 90-day GIC and then reinvest its maturity value in a second 90-day GIC. What would the interest rate on 90-day GICs have to be 90 days from now for the investor to end up in the same financial position with either alternative? A) 5.595% B) 6.500% C) 6.249% D) 6.413% E) 7.000%

3) A contract requires payments of $2000 and $3000, 90 days and 120 days, respectively, from today. What is the value of the contract today if the payments are discounted to yield a rate of return of 12%? A) $4824.06 B) $4828.66 C) $4831.48 D) $4837.87 E) $5177.53

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4) An investment earning 16% simple interest has a maturity value of $9440.00 after eight months. What was the initial amount invested? A) $8530.12 B) $10,446.93 C) $7228.92 D) $8853.33 E) $7780.22

5) An investment will pay $3000 six months from now. What purchase price will provide a rate of return of 12%? A) $2830.19 B) $3180.00 C) $2000.00 D) $2500.00 E) $2724.17

6) What is the price of a $50,000, 182-day T-bill on its issue date if the market rate of return on this date was 6.875%? A) $48,342.77 B) $48,262.15 C) $48,285.96 D) $48,148.15 E) $48,320.53

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7) An investor purchased a 91-day, $100,000 T-bill on its date of issue for $97,500, and sold it 40 days later for $98,475. What rate of return did the original investor actually realize during the 40-day holding period? A) 2.5% B) 8.898% C) 10.027% D) 4.011% E) 9.125%

8) An $8000 demand loan at a fixed rate of 10.5% was advanced on May 10. A payment of $2000 was made on July 15 and a final payment was made on Sept. 5. What was the size of the final payment? A) $6242.20 B) $6243.92 C) $6363.61 D) $6151.89 E) $8152.90

Calculate the maturity value of a 300-day, $6,000 term deposit earning 5.15%. A) $5,756.34 B) $6,253.97 C) $6,309.00 D) $6,111.78 E) $7,021.99

10) A 4-month Guaranteed Investment Certificate with a face value of $55,000 will have a maturity value of $56,100. What simple annual interest rate is it carrying?

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A) 6.00% B) 10.20% C) 2.00% D) 8.00% E) 20.00%

11) A 7-month, $75,400 Guaranteed Investment Certificate pays simple interest of 6.85%. Calculate the maturity value to the nearest dollar. A) $72,912 B) $76,201 C) $76,309 D) $86,112 E) $78,413

12) At the end of September Andy had $9,000 in his daily interest savings account. On the th 12 of October he withdrew $4,000. He made no other withdrawals or deposits in October. The interest rate throughout October was 4.2%. How much interest did Andy earn on this savings account in October? A) $9.21 B) $41.31 C) $22.90 D) $19.82 E) $26.17

13) At the end of April, Brad had $7,500 in his daily interest savings account. On the 13th of May he deposited another $3,500. He made no other deposits or withdrawals in May. The interest rate throughout May was 3.7%. How much interest did Brad earn on this savings account in May?

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A) $16.83 B) $30.31 C) $21.99 D) $39.52 E) $46.17

14) 270-Day Commercial Paper with a face value of $500,000 was sold 206 days after it was issued at a price that would provide a simple rate of interest to the purchaser of 9.85%. What was the price? A) $473,668 B) $508,636 C) $491,511 D) $527,796 E) $490,929

15) Calculate the simple rate of return on a $1,000,000 181-day Treasury Bill that was issued for $970,639. Round to the nearest 0.1% A) 6.1% B) 5.9% C) 4.9% D) 5.5% E) 7.7%

16) A $500,000 268-day Treasury Bill was issued to Buyer #1 at 4.1%. 168 days before the T-Bill reached maturity it was sold by Buyer #1 at a rate that would provide Buyer #2 with a return of 3.4% if Buyer #2 held the T-Bill to maturity. What annual simple rate did Buyer #1 actually realize over the period that Buyer #1 held the T-Bill? Round to the nearest 0.01%

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A) 4.10% B) 3.09% C) 5.19% D) 4.47% E) 6.77%

17) Alice purchased a $100,000 180-day Acme Corporation Commercial Paper when it was first issued at a yield rate of 7.45%. 50 days later she sold it to Betty at a rate that would provide Betty with a return of 8.45% if Betty held it to maturity. What annual simple rate did Alice actually realize over the period that she held the Commercial Paper? Round to the nearest 0.01% A) 6.45% B) 4.71% C) 7.45% D) 6.98% E) 7.95%

18) Commercial Paper with a face value of $1,000,000 issued at a discount rate of 7.5% has a term of 360 days. To the nearest dollar, at what price was it issued? A) $944,736 B) $1,000,000 C) $925,000 D) $1,073,973 E) $931,122

19) Determine the issue price, to the nearest dollar, of a 91-day, $100,000 Government of Alberta Treasury Bill that was issued at a discount rate of 5.75%.

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A) $98,587 B) $94,250 C) $96,194 D) $100,000 E) $101,434

20) How much interest would be earned by a six-month, $30,000 Guaranteed Investment Certificate at 5.7%? A) $143 B) $696 C) $763 D) $855 E) $978

21) What is the simple interest rate of a 7-month GIC that grows from $30,000 to its maturity value of $31,500? Round to the nearest 0.01% A) 5.00% B) 8.16% C) 8.57% D) 8.95% E) 9.88%

22) A 182-day, $250,000 Treasury Bill originally issued at 6.6% was sold at 5.9%, 82 days after it was issued. What was the selling price to the nearest dollar?

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A) $245,560 B) $250,000 C) $246,730 D) $246,347 E) $246,023

23) What interest rate was used to discount 270-day, $750,000 commercial paper when it was issued for $710,000? Round to the nearest 0.01% A) 7.21% B) 7.62% C) 5.33% D) 6.63% E) 6.94%

24) What will be the maturity value of $12,000 placed in a 150-day term deposit paying an interest rate of 2.15%? A) $12,106.03 B) $11,080.98 C) $12.408.35 D) $11,900.12 E) $12,408.45

25) Dan wants to deposit a $500 bonus cheque into his high-rate savings account that pays interest of 2.575%. Interest is calculated on the daily closing balance and paid at the close of business on the last day of the month. If Dan's current balance is on June 1 is $955 and he does not make any withdrawals, what interest will he earn on his savings account for the month of June by depositing the cheque on June 11?

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A) $4.75 B) $2.73 C) $5.46 D) $1.25 E) $1.98

26) Naomi wants to deposit a cheque for $2,000 into her premium-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 Danica already has $8,000 in her savings account on August 1 and does not make any withdrawals, how much interest would she earn for the month of August if she deposited the cheque on August 21? A) $25.50 B) $24.40 C) $23.30 D) $22.30 E) $26.40

27) A High Yield savings account 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. How much interest will be lost for the month of September if $600 is withdrawn from the account on May 13 and the opening balance on May 1 is $2,450? A) $1.12 B) $0.78 C) $0.88 D) $0.98 E) $1.05

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28) A high-rate savings account pays interest of 2.05%. 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 $12,245 opening balance on September 1, withdrew $1,100 for a car payment on September 4, and deposited his paycheque for $3,500 on September 18. What interest will be credited to the account at the month's end? A) $24.12 B) $22.29 C) $23.12 D) $19.49 E) $21.51

29) A savings account pays interest of 0.75%. 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 $1,452 opening balance on September 1, deposited $734 on September 9 and $417 on September 21, and withdrew $450 on September 12. What interest will be credited to the account at the month's end? A) $1.13 B) $1.76 C) $1.01 D) $1.05 E) $1.27

30) You have savings of $2,000 on June 1. Since you may need some of the money during the next three months, you are considering two options at your bank. (1) An Investment Builder account earns a 1.25% rate of interest. The interest is calculated on the daily closing balance and paid on the first day of the following month. (2) A 90- to 179-day cashable term deposit earns a rate of 1.8%, paid at maturity. If interest rates do not change and Joan does not withdraw any of the funds, how much more will she earn from the term deposit option up to September 1? (Keep in mind that savings account interest paid on the first day of the month will itself earn interest during the subsequent month.)

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A) $3.55 B) $2.81 C) $5.62 D) $3.76 E) $3.98

31) Suppose that the current rates on 180- and 360-day GICs are 1.25% and 1.50%, respectively. An investor is weighing the alternatives of purchasing a 360-day GIC versus purchasing a 180-day GIC and then reinvesting its maturity value in a second 180-day GIC. What would the interest rate on 180-day GICs have to be 180 days from now for the investor to end up in the same financial position with either alternative? A) 1.89% B) 1.95% C) 1.73% D) 1.64% E) 1.62%

32) For principal amounts of $20,000 to $24,999, a bank pays an interest rate of 1.95% on 90- to 182-day non-redeemable GICs, and 2.00% on 183 to 364-day non-redeemable GICs. Paul has $20,000 to invest for 364 days. Because he thinks interest rates will be higher six months from now, he is debating whether to choose a 182-day GIC now (and reinvest its maturity value in another 182-day GIC) or to choose a 364-day GIC today. What would the interest amount difference be between the two alternatives? A) $9.05 B) $8.47 C) $8.27 D) $8.07 E) $7.99

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33) A lottery ticket promises two payments of $50,000, on dates twelve and sixty months from today. If the required rate of return on the investment is 6.35%. What is the value of the prize today? A) $85,989.99 B) $84,765.34 C) $84,590.28 D) $85,876.35 E) $84.965.24

34) A World Soccer League prize promises two payments of $10,000, on dates 30 and 45 days from today to each player for winning the tournament. What amount would a player be willing to accept today if the rate of return is 7.5%? A) $19,847.12 B) $14,765.34 C) $14,590.28 D) $15,876.35 E) $14.965.24

35) A home builder requires payments of $15,000, $20,000, and $100,000 in 90, 120, and 150 days, respectively, from today. What is the value of the contract today if the payments are discounted to yield a 7.6% rate of return? A) $132,080.99 B) $131,207.84 C) $131,509.59 D) $131,409.59 E) $130,945.55

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36) A construction company will pave a new road but stipulates payments of $40,000, $25,000, and $50,000 in two, three, and four months, respectively, from today. If the city has enough money to pay cash, what amount could they pay today, in full, if the minimum rate of return is 3.25%? A) $112,080.99 B) $111,207.84 C) $114,047.15 D) $112,080.99 E) $114,207.84

37) A lawsuit awarded three months ago requires two payments to be paid five and ten months from the end of the lawsuit. Each payment was to be made for $10,000. If the person wishes to pay off the full amount of the payments today, how much can they save by making one full payment today instead of the two smaller payments if money can earn 5.7% A) $416.99 B) $419.89 C) $498.51 D) $415.91 E) $451.19

38) Calculate the price on its issue date of $800,000 face value, 120-day commercial paper issued by Ontario Hydro if the prevailing market rate of return is 1.22%. Round to the nearest dollar.

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A) $798,084 B) $797,080 C) $796,456 D) $795,973 E) $796,804

39) A $500,000, 91-day Province of Alberta Treasury bill was issued 16 days ago. What will be its purchase price today in order to yield the purchaser 1.55%? Round to the nearest dollar. A) $498,413 B) $497,080 C) $496,456 D) $495,973 E) $496,804

40) A $400,000, 30-day commercial paper certificate issued by Home Trust Corporation was sold on its issue date for $399,450. What rate of return will it yield to the buyer? Round to three decimal places. A) 1.765% B) 1.675% C) 1.925% D) 1.555% E) 1.775%

41) Debra paid $99,918 for a $100,000 T-bill with 26 days remaining until maturity. What (annual) rate of interest will she earn, to two decimal places?

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A) 1.33% B) 1.22% C) 1.15% D) 1.11% E) 1.09%

42) A 128-day, $100,000 T-bill was initially issued at a price that would yield the buyer 1.19%. If the yield required by the market remains at 3.19%. If the t-bill was sold to earn 1.75% twenty days prior to maturity, how much money in interest did the initial owner earn? A) $318.98 B) $318.87 C) $317.87 D) $319.78 E) $320.90

43) Mark purchased a $150,000 90-day T-bill when the prevailing yield on T-bills was 2.5%. He sold the T-bill 43 days later when the prevailing yield was 2.2%. What interest rate did Mark earn during the 43-day period? A) 0.58% B) 0.64% C) 0.72% D) 0.95% E) 0.85%

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44) On the April 12 interest payment date, the outstanding balance on Home Alone Cat Sitting Service revolving loan was $2,000. The floating interest rate on the loan stood at 6.25% on April 12, but rose to 6.5% on April 17, and to 7% on April 29. If Home Alone Cat Sitting Service made a principal payment of $1,000 on April 30, what were the interest charges to its bank account on May 12? A) $8.66 B) $7.99 C) $8.04 D) $8.34 E) $8.87

45) A $3,000 demand loan was advanced on September 30. Fixed monthly payments of $1000 were required on the first day of each month beginning November 1. What was the balance of the loan on December 1, before the monthly payment? Assume that the interest rate remained at 6.75% for the life of the loan. A) $2,030.15 B) $2,028.85 C) $2,032.98 D) $2,027.21 E) $2,077.24

46) Ronald borrowed $10,000 from his life insurance company on a demand loan on February 10 to purchase additional RRSP amounts. The terms of the loan require fixed monthly payments of $1,500 on the first day of each month, beginning March 1. The floating rate on the loan is prime plus 3%. What is the balance owing on April 1 if the prime rate is 3.5%? Calculate the balance before the monthly payment.

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A) $8,686.56 B) $8,597.23 C) $8,580.95 D) $8,098.89 E) $8,590.95

47) Captain Sanders of the Canadian Armed Forces has a $25,000 personal (revolving) line of credit with the Armed Forces Bank. The loan is on a demand basis at a floating rate of prime plus 1%. On the 1st of each month, a payment equal to the greater of $100 or 2% of the combined principal and accrued interest is deducted from his paycheque. The principal balance after a payment on September 15 stood at $4,598. If Captain Sanders received another $500 from his line of credit on September 20, what was his paycheque deduction on October 1? Assume the prime rate remains at 3.25%. A) $101.15 B) $101.79 C) $102.01 D) $102.14 E) $102.41

48) Jarrod's Canada Student Loans totalled $9400 by the time he graduated from the Oil and Drilling program at the Northern Alberta Institute of Technology College in May. He arranged to capitalize the interest on November 30 and to begin monthly payments of $135 on December 31. Jarrod elected the floating rate interest option (prime plus 2.5%). The prime rate stood at 2.75% on June 1, dropped to 2.5% effective September 3, and then increased by 0.25% on January 17. Calculate the grace period interest and the balance of the loan on December 31.

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A) $240.72 interest $9,546.32 balance B) $241.70 interest $9,564.32 balance C) $241.70 interest $9,550.12 balance D) $243.80 interest $9,546.32 balance E) $241.70 interest $9,546.32 balance

49) Hari finished her education at Hampton College on the Green on June 3 with Canada Student Loans totalling $6800. She decided to capitalize the interest that accrued (at prime plus 2.5%) during the grace period. In addition to regular end-of-month payments of $200, she made an extra $500 lump payment on March 25 that was applied entirely to principal. The prime rate dropped from 6% to 5.75% effective September 22, and declined another 0.5% effective March 2. Calculate the interest accrued during the grace period the interest portion of the first payment. A) $286.67 interest $48.05 interest portion of first payment B) $268.87 interest $48.05 interest portion of first payment C) $286.67 interest $49.05 interest portion of first payment D) $275.67 interest $48.05 interest portion of first payment E) $286.67 interest $47.05 interest portion of first payment

50) Calculate the maturity value and date of payment of a 80-day, $1,200 face value note is the money was issued on April 30, 2020, and earning interest at 10.75%.

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A) $1,228.27 July 21, 2020 B) $1,228.27 July 19, 2020 C) $1,234.27 July 19, 2020 D) $1,276.27 July 19, 2020 E) $1,228.27 July 29, 2020

51) You wish to purchase a used motorcycle and your friend will lend you $2,500, as long as you sign a promissory note. You agree to pay back the money in six months. If interest is calculated at 2.75%, what amount will the final payment be? A) $2,543.38 B) $2,568.38 C) $2,534.38 D) $2,599.38 E) $2,576.38

52) A six-month non-interest-bearing note issued on March 31, 2019 for $3300 was discounted at 8.25% on July 31, 2019. What were the proceeds of the note? A) $3,411.90 B) $3,299.98 C) $3,215.15 D) $3,211.68 E) $3,252.94

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53) A 60-day $500 note with interest at 9.5% was written on July 15. The maker approaches the payee on August 9 to propose an early settlement. What amount should the payee be willing to accept on August 9 if short-term investments can earn 7.25%? A) $502.30 B) $503.40 C) $584.30 D) $502.50 E) $504.30

54) Your friend signs a promissory note for $2,000 for 30 days with a rate of 2.25% attached. After fifteen days, you realize you need the money and sell the promissory to another friend to yield you 3.00%. What was the value of the note when you sold it? A) $2,001.11 B) $2,003.40 C) $2,184.30 D) $2,402.50 E) $2,304.30

55) Your friend signs a promissory note for $2,000 for 30 days with a rate of 2.25% attached. After fifteen days, you realize you need the money and sell the promissory to another friend to yield you 3.00%. How much interest did your friend earn in interest (dollar amount) for holding the promissory note for the last fifteen days? A) $2.76 B) $2.51 C) $2.96 D) $2.58 E) $2.98

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56) You buy a house from your brother and promise to pay him the $25,000 down payment in 2 years with 1.25% simple interest. You decide to pay off the down payment early, in one year. What amount will settle the debt if money can earn 0.75%? A) $25,834.24 B) $25,436.24 C) $25,434.24 D) $25,449.24 E) $25,458.24

57) a) What will be the maturity value of $15,000 placed in a 120-day term deposit paying an interest rate of 2.25%? b) 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 the depositor receive when the second term deposit matures?

58) For amounts between $10,000 and $24,999, a credit union pays a rate of 2.5% on term deposits with maturities in the 91 to 120-day range. However, early redemption will result in a rate of 1.75% being applied. How much more interest will a 91-day $20,000 term deposit earn if it is held until maturity than if it is redeemed after 80 days?

59) For 90- to 365-day GICs, TD Canada Trust offered a rate of 3.00% on investments of $25,000 to $59,999 and a rate of 3.20% on investments of $60,000 to $99,999. How much more will an investor earn from a single $60,000, 270-day GIC than from two $30,000, 270-day GICs?

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60) On a $10,000 principal investment, a bank offered interest rate of 3.45% on 270- to 364day GIC's and 3.15% on 180- to 269-day GICs. How much more will an investor earn from a 364-day GIC than from two consecutive 182-day GICs? (Assume that the interest rate on 180- to 269-day GICs will be the same on the renewal date as it is today. Remember that both the principal and the interest from the first 182-day GIC can be invested in the second 182-day GIC.)

61) For investments of $5000 to $24,999, a bank quotes interest rate of 2.65% on 90-day GICs and 2.85% on 180-day 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? (Assume that interest rates do not change over the next 90 days. Remember that interest earned from the first 90-day GIC can be invested in the second 90-day GIC.)

62) 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 September 21, and withdrew $300 on September 10. What interest will be credited to the account at the month's end?

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63) Joan has savings of $12,000 on June 1. Since she may need some of the savings during the next 3 months, she is considering two options at her bank. (1) An Investment Builder savings account earns a 2.25% rate of interest. The interest is calculated on the daily closing balance and paid on the first day of the following month. (2) A 90- to 179-day cashable term deposit earns a rate of 2.8%, paid at maturity. If interest rates do not change and Joan does not withdraw any of the funds, how much more will she earn from the term deposit up to September 1? (Keep in mind that savings account interest paid on the first day of the month will itself subsequently earn interest during the subsequent month.)

64) 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. What would the interest rate on 90-day GICs have to be 90 days from now for the investor to end up in the same financial position with either alternative? Round to the nearest 0.01%

65) An Investment Savings account offered by a trust company pays a rate of 1.25% on the first $1000 of daily closing balance, 1.5% on the portion of the balance between $1000 and $3000, and 1.75% on any balance in excess of $3000. What interest will be paid for the month of April if the opening balance was $2439, $950 was deposited on April 10, and $500 was withdrawn on April 23?

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66) The Money builder account offered by a chartered bank calculates interest daily based on the daily closing balance as follows: Interest rate (%)

Amount to which the rate applies 0.00 Balance when it is below $1000 1.25 Entire balance when it is between $1000 and $3000 1.75 Portion of balance above $3000

The balance at the beginning of March was $1678. On March 5, $700 was withdrawn. Then $2500 was deposited on March 15, and $900 was withdrawn on March 23. What interest will be credited to the account for the month of March?

67) 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: Interest rate (%)

Amount to which the rate applies 0.50 Entire balance when it is between $0 and $2999.99 1.00 Entire balance when it is between $3000 and $4999.99 1.25 Entire balance when it is between $5000 and $9999.99 1.50 Entire balance when it is between 10,000 and $24,999.99 1.75 Entire balance when it is between $25,000 and $49,999.99 2.25 Entire balance when it is $50,000 or over

September's opening balance was $8572. The transactions in the account for the month were a $9500 deposit on September 6, a deposit of $8600 on September 14, and a withdrawal of $25,000 on September 23. What interest will be credited to the account at the end of September?

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68) For principal amounts of $5000 to $49,999, a bank pays an interest rate of 2.95% on 180to 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 higher six months from now, he is debating whether to choose a 182-day GIC now (and reinvest its maturity value in another 182-day GIC) or to choose a 364-day GIC today. What would the interest rate on 182day GICs have to be on the reinvestment date for both alternatives to yield the same maturity value 364 days from now? Round to the nearest 0.01%

69) An investment promises two payments of $500, on dates 3 and 6 months from today. If the required return on investment is 4%: a) What is the value of the investment today? b) What will its value be in 1 month if the required rate of return remains at 4%?

70) An investment promises two payments of $1000, on dates 60 and 90 days from today. What price will an investor pay today: a) If her required return is 10%? b) If her required return is 11%?

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71) Certificate A pays $1000 in 4 months and another $1000 in 8 months. Certificate B pays $1000 in 5 months and another $1000 in 9 months. If the current rate of return required on this type of investment certificate is 5.75%, determine the current value of each of the certificates.

72) 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?

73) An agreement stipulates payments of $4000, $2500, and $5000 in 3, 6, and 9 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%?

74) 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 payee is offering to sell the contract to a finance company in order to raise cash. If the finance company requires a return of 15%, what price will it be prepared to pay today for the contract?

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75) Nadir bought a new home theatre system, with 5.1 surround sound, 3D TV and leather theater seating for $10,000 from Best Future Electronics on March 20. He paid $2000 in cash and signed a conditional sales contract requiring a payment on July 1 of $3000 plus interest on the $3000 at a rate of 11%, and another payment on September 1 of $5000 plus interest at 11% from the date of the sale. The vendor immediately sold the contract to a finance company, which discounted the payments at its required rate of return of 16%. What proceeds did Best Future receive from the sale of the contract?

76) Calculate the price (to the nearest dollar) 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%.

77) Calculate the price (to the nearest dollar) on its issue date of $100,000 face value, 90-day commercial paper issued by G E Capital Canada if the prevailing market rate of return is 1.932%.

78) 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 (to the nearest dollar) was paid if the paper was discounted at 2.10%?

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79) A $100,000, 91-day Province of Ontario Treasury bill was issued 37 days ago. What will it sell at today (to the nearest dollar) in order to yield the purchaser 0.98%?

80) Calculate 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%. Round to the nearest dollar.

81) Calculate 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 the lifetime of the T-bill. Round to the nearest dollar.

82) Jake purchased a $100,000 182-day T-bill discounted to yield 1.15%. When he sold it 30 days later, yields had dropped to 1.09%. How much did Jake earn?

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83) 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? Round to the nearest 0.001%

84) Debra paid $99,615 for a $100,000 T-bill with 30 days remaining until maturity. What (annual) rate of interest will she earn? Round to the nearest 0.001%

85) 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 of 1981. (The period from 1979 to 1990 was a time of historically high inflation rates and interest rates.) How much more would you have paid for a $100,000 face value 90-day T-bill at the February 2010 discount rate than at the August 1981 discount rate?

86) A 168-day, $100,000 T-bill was initially issued at a price that would yield the buyer 5.19%. If the yield required by the market remains at 5.19%, how many days before its maturity date will the T-bill's market price first exceed $99,000? Round to the nearest day.

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87) 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, to the nearest 0.001%, did Lydia earn during the 60-day period?

88) A $100,000, 168-day Government of Canada Treasury bill was purchased on its date of issue to yield 2.1%. Round all prices to the nearest dollar, and rates of return to the nearest 0.001%. a) What price did the investor pay? b) Calculate the market value of the T-bill 85 days later if the rate of return then required by the market has: (i) risen to 2.4%. (ii) remained at 2.1%. (iii) fallen to 1.8%. c) Calculate the rate of return actually realized by the investor if the T-bill is sold at each of the three prices calculated in part (b).

89) 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. Round all rates of return to the nearest 0.001%. a) What rate of return was implied in the original price? b) What rate of return did the market require on the sale date? c) What rate of return did the original investor actually realize during the 60-day holding period?

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90) Dr. Robillard obtained a $75,000 operating line of credit at prime plus 3%. Accrued interest up to but not including the last day of the month is deducted from his bank account on the last day of each month. On February 5 (of a leap year) he received the first draw of $15,000. He made a payment of $10,000 toward principal on March 15, but took another draw of $7000 on May 1. Complete the loan repayment schedule below. Assume that the prime rate remained at 5.5% through to the end of May. Date

Number of Days

Interest Rate (%)

Interest ($)

Accrued Payment Principal Balance ($) Interest ($) (Advance) ($) Portion ($)

Feb 5

(15,000)

15,000

Feb 29

8.5

83.84

15,000

Mar 15

8.5

52.40

Mar 31

8.5

5,000

Apr 30

8.5

34.93

5,000

May 1

8.5

1.16

(7,000)

12,000

May 31

8.5

83.84

85.00

12,000

91) Mr. Michaluk has a $50,000 personal (revolving) line of credit with the Canadian Imperial Bank of Commerce (CIBC). The loan is on a demand basis at a floating rate of prime plus 1.5%. On the fifteenth of each month, a payment equal to the greater of $100 or 3% of the combined principal and accrued interest is deducted from his chequing account. The principal balance after a payment on September 15 stood at $23,465.72. Complete the loan repayment schedule below. Assume that he makes the minimum payments and the prime rate remains at 5.25%. Date Number of Interest Interest ($) Accrued Payment Principal Days Rate (%) Interest ($) (Advance) ($) Portion ($)

Balance ($)

Sep 15

23,465.72

Oct 15

6.75

130.19

707.88

577.69

22,888.03

Nov 15

6.75

131.21

690.58

559.37

22,328.66

Dec 15

6.75

Jan 15

6.75

124.86

657.11

532.25

21,246.71

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92) McKenzie Wood Products negotiated a $200,000 revolving line of credit with the Bank of Montreal at prime plus 2%. On the 20th of each month, interest is calculated (up to but not including the 20th) and deducted from the company's chequing account. If the initial loan advance of $25,000 on July 3 was followed by a further advance of $30,000 on July 29, complete the repayment schedule below. The prime rate was at 3% on July 3 and fell to 2.75% on August 5. Date

Number of Days

Interest Rate (%)

Interest ($)

Accrued Payment Principal Balance ($) Interest ($) (Advance) ($) Portion ($)

Jul 3

(25,000)

25,000

Jun 20

25,000

Jul 29

30.82

(30,000)

55,000

Aug 5

52.74

83.56

55,000

Aug 20

55,000

93) On the June 12 interest payment date, the outstanding balance on Delta Nurseries' revolving loan was $65,000. The floating interest rate on the loan stood at 6.25% on June 12, but rose to 6.5% on July 3, and to 7% on July 29. If Delta made principal payments of $10,000 on June 30 and July 31, complete the repayment schedule below. Date

Number of Days

Jun 12

65,000

Jun 30

6.25

200.34

10,000

55,000

Jul 3

28.25

228.59

55,000

Jul 12

6.5

88.15

316.74

55,000

Jul 29

166.51

55,000

Jul 31

10,000

45,000

Aug 12

103.56

291.17

45,000

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Interest Rate (%)

Interest ($)

Accrued Payment Principal Balance ($) Interest ($) (Advance) ($) Portion ($)

94) Scotiabank approved a $75,000 line of credit for Curved Comfort Furniture on the security of its accounts receivable. Curved Comfort drew down $30,000 on October 7, another $15,000 on November 24, and $20,000 on December 23. The bank debited interest at the rate of prime plus 3.5% from the business's bank account on the fifteenth of each month. The prime rate was 4.25% on October 7, and dropped by 0.25% on December 17. Complete the loan repayment schedule below. Date

Number of Days

Interest Rate (%)

Interest ($)

Accrued Payment Principal Balance ($) Interest ($) (Advance) ($) Portion ($)

Oct 7

(30,000)

30,000

Oct 15

50.96

30,000

Nov 15

7.75

197.47

30,000

Nov 24

7.75

57.33

Dec 15

7.75

200.65

257.98

45,000

Dec 17

19.11

45,000

Dec 23

55.48

74.59

(20,000)

65,000

Jan 15

7.5

307.19

65,000

95) Shoreline Yachts has a $1 million line of credit with the Royal Bank secured by its inventory of sailboats. Interest is charged at the floating (naturally!) rate of prime plus 2% on the 10th of each month (for days up to but not including the 10th). On February 10 (of a non-leap year), the loan balance stood at $770,000 and the prime rate at 6.5%. Shoreline took an additional $100,000 draw on March 1. Spring sales enabled Shoreline to make payments of $125,000 and $150,000 against the principal on March 30 and April 28. The prime rate rose by 0.5% on April 8. Complete the repayment schedule below. Date

Number of Days

Feb 10

770,000

Mar 1

8.5

(100,000)

870,000

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Interest Rate (%)

Interest ($)

Accrued Payment Principal Balance ($) Interest ($) (Advance) ($) Portion ($)

Mar 10

8.5

1823.42

5230.41

870,000

Mar 30

8.5

4052.05

125,000

Apr 8

8.5

1561.44

5613.49

745,000

Apr 10

367.40

5980.89

Apr 28

3306.58

150,000

595,000

May 10

1760.55

5067.13

595,000

What total interest was Shoreline charged?

96) Hercules Sports obtained a $60,000 operating line of credit on March 26. Interest charges at the rate of prime plus 3.5% were deducted from its chequing account on the eighteenth of each month. Hercules took an initial draw of $30,000 on March 31, when the prime rate was 4%. Further advances of $10,000 and $15,000 were taken on April 28 and June 1. Payments of $5000 and $10,000 were applied against the principal on June 18 and July 3. The prime rate rose to 4.25% effective May 14. Complete the repayment schedule below. Date

Number of Days

Mar 31

(30,000)

30,000

Apr 18

7.5

30,000

Apr 28

7.5

61.64

(10,000)

40,000

May 14

7.5

131.51

193.15

40,000

May 18

7.75

33.97

227.12

40,000

Jun 1

7.75

118.90

(15,000)

55,000

Jun 18

7.75

Jul 3

7.75

159.25

10,000

40,000

Jul 18

7.75

127.40

286.65

40,000

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Interest Rate (%)

Interest ($)

Accrued Payment Principal Balance ($) Interest ($) (Advance) ($) Portion ($)

97) Benjamin has a $20,000 personal line of credit at prime plus 2% with his credit union. His minimum end-of-month payment is the greater of $100 or 3% of the combined principal and accrued interest. After his payment on April 30, his balance was $3046.33. On May 23, he used his income tax refund to make a principal payment of $1000. On July 17, he took a $7000 advance to purchase a car. The prime rate began at 6%, rose 0.25% on June 25, and jumped another 0.25% on July 18. Complete the loan repayment schedule below. Date

Number of Days

Interest Rate (%)

Interest ($)

Accrued Payment Principal Balance ($) Interest ($) (Advance) ($) Portion ($)

Apr 30

3046.33

May 23

15.36

1000

May 31

3.59

18.95

100

Jun 25

10.77

1965.28

Jun 30

8.25

2.22

12.99

100

87.01

1878.27

Jul 17

8.25

7.22

(7000)

8878.27

Jul 18

2.01

9.23

8878.27

Jul 31

8.5

26.88

36.11

98) Bronwyn's $15,000 line of credit is at prime plus 2.5%. The minimum payment (the greater of $100 or 3% of the combined principal and accrued interest) is automatically deducted from her chequing account on the 15th of each month. After the payment on August 15, her balance was $3589.80. To reduce the loan faster, she makes an additional discretionary payment of $300 on the last day of each month. Each $300 payment is applied entirely to principal. Complete the repayment schedule below. The prime rate was at 6.25% on August 15 but dropped 0.25% effective October 11. Date

Number of Days

Aug 15

3589.80

Aug 31

8.75

13.77

Sep 15

8.75

11.83

25.60

100

74.40

3215.40

Sep 30

8.75

11.56

300

2915.40

8.75

7.69

19.25

Oct 15

8.5

2.72

21.97

Oct 31

8.5

10.57

300

2537.37

Nov 15

8.5

8.86

19.43

100

80.57

2456.80

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Interest Rate (%)

Interest ($)

Accrued Payment Principal Balance ($) Interest ($) (Advance) ($) Portion ($)

99) A $5000 demand loan was advanced on June 3. Fixed monthly payments of $1000 were required on the first day of each month beginning July 1. Complete the loan repayment schedule below. Assume that the interest rate remained at 8.75% for the life of the loan. Date

Number of Days

Interest Rate (%)

Interest ($)

Accrued Payment Principal Balance ($) Interest ($) (Advance) ($) Portion ($)

Jun 3

5000

Jul 1

8.75

33.56

1000

Aug 1

8.75

1000

970.02

3063.54

Sep 1

8.75

22.77

1000

977.23

2086.31

Oct 1

8.75

15.00

1000

985.00

1101.31

Nov 1

8.75

8.18

1000

991.82

109.49

Dec 1

8.75

0.79

100) Giovando, Lindstrom & Co. obtained a $6000 demand loan at prime plus 1.5% on April 1 to purchase new office furniture. The company agreed to fixed monthly payments of $1000 on the first of each month, beginning May 1. The prime rate started at 2.75% on April 1, decreased to 2.5% effective June 7, and returned to 2.75% on August 27. Complete the loan repayment schedule below. Date

Number of Days

Apr 1

6000

May 1

4.25

20.96

5020.96

Jun 1

4.25

1000

981.88

4039.08

Jun 7

4.25

2.82

4039.08

Jul 1

10.62

13.44

1000

986.56

3052.52

Aug 1

10.37

1000

989.63

2062.89

Aug 27

5.88

2062.89

Sep 1

4.25

1.20

7.08

1000

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Interest Rate (%)

Interest ($)

Accrued Payment Principal Balance ($) Interest ($) (Advance) ($) Portion ($)

Oct 1

4.25

3.74

1000

996.26

73.71

Nov 1

4.25

0.27

What are the total interest charges over the life of the loan?

101) Doina borrowed $7000 from her credit union on a demand loan on July 20 to purchase a motorcycle. The terms of the loan require fixed monthly payments of $1400 on the first day of each month, beginning September 1. The floating rate on the loan is prime plus 3%. The prime rate started at 5.75%, but rose 0.5% on August 19, and another 0.25% effective November 2. Complete the loan repayment schedule below. Date

Number of Days

Jul 20

7000

Aug 19

8.75

7000

Sep 1

9.25

23.06

73.40

1400

1326.60

5673.40

Oct 1

9.25

43.13

1400

1356.87

4316.53

Nov 1

9.25

33.91

1400

1366.09

2950.44

Nov 2

0.75

2950.44

Dec 1

9.5

22.27

23.02

1400

Jan 1

9.5

12.70

1400

1387.30

186.16

Feb 1

9.5

1.50

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Interest Rate (%)

Interest ($)

Accrued Payment Principal Balance ($) Interest ($) (Advance) ($) Portion ($)

102) Beth borrowed $5000 on demand from Canada Trust on February 23 for a Registered Retirement Savings Plan (RRSP) contribution. Because she used the loan proceeds to purchase Canada Trust's mutual funds for her RRSP, she received a special interest rate of prime plus 0.5%. Beth was required to make fixed monthly payments of $1000 on the 15th of each month, beginning April 15. The prime rate was initially 4.75%, but it jumped to 5% effective June 15 and increased another 0.25% on July 31. (It was not a leap year.) Complete the repayment schedule below. Date

Number of Days

Interest Rate (%)

Interest ($)

Accrued Payment Principal Balance ($) Interest ($) (Advance) ($) Portion ($)

Feb 23

Apr 15

36.68

1000

963.32

4036.68

May 15

5.25

17.42

982.58

3054.10

Jun 15

5.25

13.62

1000

986.38

2067.72

Jul 15

5.5

9.35

1000

990.65

1077.07

Jul 31

5.5

2.60

1077.07

Aug 15

5.75

2.55

5.15

1000

994.85

Sep 15

5.75

0.40

103) Dr. Chan obtained a $15,000 demand loan at prime plus 1.5% on September 13 from the Bank of Montreal to purchase a new dental X-ray machine. Fixed payments of $700 will be deducted from the dentist's chequing account on the 20th of each month, beginning October 20. The prime rate was 7.5% at the outset, dropped to 7.25% on the subsequent November 26, and rose to 7.75% on January 29. Complete the repayment schedule below. Date Number of Interest Interest ($) Accrued Payment Principal Days Rate (%) Interest ($) (Advance) ($) Portion ($)

Balance ($)

Sep 13

15,000

Oct 20

136.85

700

563.15

14,436.85

Nov 20

700

589.65

13,847.20

Nov 26

20.49

13,847.20

Dec 20

79.67

100.16

700

599.84

13,247.36

Jan 20

8.75

98.45

700

601.55

12,645.81

Jan 29

8.75

27.28

12,645.81

Feb 20

70.50

97.78

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104) Sarah's Canada Student Loans totalled $9400 by the time she graduated from Georgian College in May. She arranged to capitalize the interest on November 30 and to begin monthly payments of $135 on December 31. Sarah elected the floating rate interest option (prime plus 2.5%). The prime rate stood at 2.75% on June 1, dropped to 2.5% effective September 3, and then increased by 0.25% on January 17. Complete the repayment schedule below. February has 28 days. Date

Number of Days

Interest Rate (%)

Interest ($)

Accrued Payment Principal Balance ($) Interest ($) (Advance) ($) Portion ($)

Dec 1

Dec 31

9546.31

Jan 17

22.23

9546.31

Jan 31

5.25

19.22

41.45

135

93.55

9452.76

Feb 28

5.25

38.07

135

96.93

9355.83

105) Harjap completed his program at Nova Scotia Community College in December. On June 30, he paid all the interest that had accrued (at prime plus 2.5%) on his $5800 Canada Student Loan during the 6-month grace period. He selected the fixed rate option (prime plus 5%) and agreed to make end-of-month payments of $95 beginning July 31. The prime rate began the grace period at 8% and rose by 0.5% effective March 29. On August 13, the prime rate rose another 0.5%. The relevant February had 28 days. a) What amount of interest accrued during the grace period? b) Complete the repayment schedule below. Date

Number of Days

Interest Rate (%)

Interest ($)

Accrued Payment Principal Balance ($) Interest ($) (Advance) ($) Portion ($)

Jul 1

5800

Jul 31

13.5

30.64

5769.36

Aug 31

66.15

28.85

5740.51

Sep 30

13.5

63.70

31.30

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106) Monica finished her program at New Brunswick Community College on June 3 with Canada Student Loans totalling $6800. She decided to capitalize the interest that accrued (at prime plus 2.5%) during the grace period. In addition to regular end-of-month payments of $200, she made an extra $500 lump payment on March 25 that was applied entirely to principal. The prime rate dropped from 6% to 5.75% effective September 22, and declined another 0.5% effective March 2. The relevant February had 28 days. a) Calculate the balance owed at the end of the grace period. b) Calculate the balance owed on the floating rate option after the regular March 31 payment.

107) Kari had Canada Student Loans totalling $3800 when she completed her program at Niagara College in December. She had enough savings at the end of June to pay the interest that had accrued during the 6-month grace period. Kari made arrangements with her credit union to start end-of-month payments of $60 in July. She chose the fixed interest rate option (at prime plus 5%) when the prime rate was at 5.5%. a) Calculate the balance owed at the end of the grace period. b) Calculate the balance owed after the September 30 payment.

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108) Seth had accumulated Canada Student Loans totalling $5200 by the time he graduated from Mount Royal College in May. He arranged with the Bank of Nova Scotia to select the floating-rate option (at prime plus 2½%) and to begin monthly payments of $110 on December 31. The prime rate was initially at 3.25%. It dropped by 0.25% effective January 31. Seth made an additional principal payment of $300 on February 14. a) Calculate the balance owed at the end of the grace period. b) Calculate the balance owed after the February 28 payment.

109) Calculate the price of a $50,000, 91-day Province of Nova Scotia Treasury bill on its issue date if the current market rate of return is 1.273%.

110) A $100,000, 182-day Province of New Brunswick Treasury bill was issued 66 days ago. What will it sell at today to yield the purchaser 4.48%?

111) A $100,000, 90-day commercial paper certificate issued by Bell Canada Enterprises was sold on its issue date for $98,950. What annual rate of return (to the nearest 0.001%) will it yield to the buyer?

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112) A chartered bank offers a rate of 5.50% on investments of $25,000 to $59,999 and a rate of 5.75% on investments of $60,000 to $99,999 in 90 to 365-day GICs. How much more will an investor earn from a single $80,000, 180-day GIC than from two $40,000, 180-day GICs?

113) An Investment Savings account offered by a trust company pays a rate of 1.00% on the first $1000 of daily closing balance, 1.75% on the portion of the balance between $1000 and $3000, and 2.25% on any balance in excess of $3000. What interest will be paid for the month of January if the opening balance was $3678, $2800 was withdrawn on the 14th of the month, and $950 was deposited on the 25th of the month?

114) An agreement stipulates payments of $4500, $3000, and $5500 in 4, 8, and 12 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 10.5%?

115) Paul has $20,000 to invest for 6 months. For this amount, his bank pays 3.3% on a 90-day GIC and 3.5% on a 180-day GIC. If the interest rate on a 90-day GIC is the same 3 months from now, how much more interest will Paul earn by purchasing the 180-day GIC than by buying a 90-day GIC and then reinvesting its maturity value in a second 90-day GIC?

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116) Suppose that the current rates on 60 and 120-day GICs are 5.50% and 5.75%, respectively. An investor is weighing the alternatives of purchasing a 120-day GIC versus purchasing a 60-day GIC and then reinvesting its maturity value in a second 60-day GIC. What would the interest rate on 60-day GICs have to be 60 days from now for the investor to end up in the same financial position with either alternative? Round to the nearest 0.001%

117) A $100,000, 168-day Government of Canada Treasury bill was purchased on its date of issue to yield 1.97%. a) What price did the investor pay? b) Calculate the market value of the T-bill 85 days later if the annual rate of return then required by the market has: (i) risen to 2.0%. (ii) remained at 1.97%. (iii) fallen to 1.84%. c) Calculate the rate of return actually realized by the investor if the T-bill is sold at each of the three prices calculated in part (b). Round to the nearest 0.001%

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118) A $25,000, 91-day Province of Newfoundland Treasury bill was originally purchased at a price that would yield the investor a 5.438% rate of return if the T-bill is held until maturity. Thirty-four days later, the investor sold the T-bill through his broker for $24,775. Round rates of return to the nearest 0.001% a) What price did the original investor pay for the T-bill? b) What rate of return will the second investor realize if she holds the T-bill until maturity? c) What rate of return did the first investor realize during his holding period?

119) A conditional sale contract requires two payments 3 and 6 months after the date of the contract. Each payment consists of $1900 principal plus interest at 12.5% on $1900 from the date of the contract. One month into the contract, what price would a finance company pay for the contract if it requires an 18% rate of return on its purchases?

120) An assignable loan contract executed 3 months ago requires two payments of $3200 plus interest at 9% from the date of the contract, to be paid 4 and 8 months after the contract date. The payee is offering to sell the contract to a finance company in order to raise urgently needed cash. If the finance company requires a 16% rate of return, what price will it be prepared to pay today for the contract?

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121) Ruxandra's Canada Student Loans totalled $7200 by the time she finished Conestoga College in April. The accrued interest at prime plus 2.5% for the grace period was converted to principal on October 31. She chose the floating interest rate option and began monthly payments of $120 on November 30. The prime rate of interest was 5.5% on May 1, 5.25% effective July 9, and 5% effective December 13. a) Calculate the balance owed at the end of the grace period. b) Calculate the balance owed after the January 31st payment.

122) George borrowed $4000 on demand from CIBC on January 28 for an RRSP contribution. Because he used the loan proceeds to purchase CIBC's mutual funds for his RRSP, the interest rate on the loan was set at the bank's prime rate. George agreed to make monthly payments of $600 (except for a smaller final payment) on the twenty-first of each month, beginning February 21. The prime rate was initially 6.75%, dropped to 6.5% effective May 15, and decreased another 0.25% on July 5. It was not a leap year. Calculate the amount of the final payment.

123) Ms. Wadeson obtained a $15,000 demand loan from the Canadian Imperial Bank of Commerce on May 23 to purchase a car. The interest rate on the loan was prime plus 2%. The loan required payments of $700 on the 15th of each month, beginning June 15. The prime rate was 4.5% at the outset, dropped to 4.25% on July 26, and then jumped by 0.5% on September 14. Calculate the balance owed after the third $700 payment.

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124) Mayfair Fashions has a $90,000 line of credit from the Bank of Montreal. Interest at prime plus 2% is deducted from Mayfair's chequing account on the 24th of each month. Mayfair initially drew down $40,000 on March 8 and another $15,000 on April 2. On June 5, $25,000 of principal was repaid. If the prime rate was 5.25% on March 8 and rose by 0.25% effective May 13, what were the first four interest deductions charged to the store's account?

125) Duncan Developments Ltd. obtained a $120,000 line of credit from its bank to subdivide a parcel of land it owned into four residential lots and to install water, sewer, and underground electrical services. Amounts advanced from time to time are payable on demand to its bank. Interest at prime plus 4% on the daily principal balance is charged to the developer's bank account on the 26th of each month. The developer must apply at least $30,000 from the proceeds of the sale of each lot against the loan principal. Duncan drew down $50,000 on June 3, $40,000 on June 30, and $25,000 on July 17. Two lots quickly sold, and Duncan repaid $30,000 on July 31 and $35,000 on August 18. The initial prime rate of 5% changed to 5.25% effective July 5 and 5.5% effective July 26. What were the first three interest deductions charged to the developer's account?

126)

Calculate the missing value for the promissory note: Issue Date

Term

Legal Due Date

May 19

120 days

127)

Calculate the missing value for the promissory note: Issue Date

June 30

Version 1

Term 90 days

Legal Due Date ? 46

128)

Calculate the missing value for the promissory note: (to the nearest day) Issue Date

July 6

129)

Term ? days

November 14

Term ? days

Legal Due Date January 31

Calculate the missing value for the promissory note: Issue Date

131)

October 17

Calculate the missing value for the promissory note: (to the nearest day) Issue Date

130)

Legal Due Date

Term 4 months

Legal Due Date February 28

Calculate the missing value for the promissory note: Issue Date

Version 1

Term 9 months

Legal Due Date October 3

132)

Calculate the missing value for the promissory note: Issue Date

Term

Legal Due Date

180 days

133)

Calculate the missing value for the promissory note: Issue Date

Term 60 days

134)

Legal Due Date March 1 (leap year)

Calculate the missing value for the promissory note:

Issue Date April 30

135)

September 2

Face Value

Term

Interest Rate

$1000 4 months

Maturity Value

9.5%

Calculate the missing value for the promissory note:

Issue Date February 15

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Face Value

Term

$3300 60 days

Interest Rate

Maturity Value

8.75%

136)

Calculate the missing value for the promissory note:

Issue Date

Face Value

Term

July 3

137)

? 90 days

Face Value

$2667.57

? 3 months

Interest Rate

Maturity Value

7.5%

$7644.86

Calculate the missing value for the promissory note: (to the nearest 0.01%)

Issue Date January 22

Face Value

Term

Interest Rate

Maturit.y Value

$6200 120 days

$6388.04

Calculate the missing value for the promissory note: (to the nearest 0.01%) Issue Date

November 5

140)

10.2%

Term

August 31

139)

Maturity Value

Calculate the missing value for the promissory note:

Issue Date

138)

Interest Rate

Face Value

Term

Interest Rate

$4350 75 days

Maturity Value ?

$4445.28

Calculate the missing value for the promissory note: (to the nearest day) Issue Date

December 31

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Face Value

Term

$5200 ? days

Interest Rate 11%

Maturity Value $5275.22

141)

Calculate the missing value for the promissory note: (to the nearest day)

Issue Date

Face Value

March 30

142)

Maturity Value

9.9%

$9560.62

Calculate the missing value for the promissory note: $1000 March 30

Interest Rate

Term

0% 50 days

Date of Sale Discount Rate April 8

Proceeds

10%

Calculate the missing value for the promissory note:

Future Value Issue Date Interest Rate $6000 May 17

144)

Interest Rate

$9400 ? days

Future Value Issue Date

143)

Term

0% 3 months

Date of Sale Discount Rate June 17

Proceeds

Calculate the missing value for the promissory note:

Face Value

Issue Date

$2700 September 4

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Interest Rate

Term

Date of Sale

Discount Rate

10% 182 days December 14

12%

Proceeds ?

145)

Calculate the missing value for the promissory note:

Future Value Issue Date $3500 October 25

146)

Interest Rate

Date of Sale

Discount Rate

10% 120 days December 14

$9000 July 28

Term

8% 91 days

Date of Sale September 1

Discount Rate

Proceeds ?

$9075.40

Calculate the missing value for the promissory note: (to the nearest 0.01%)

Face Value

Issue Date

Interest Rate

$4000 November 30

148)

Proceeds

Calculate the missing value for the promissory note: (to the nearest 0.01%)

Face Value Issue Date Interest Rate

147)

Term

8% 75 days

Date of Sale Discount Rate January 1

Proceeds $4015.20

Determine the legal due date for:

a) A 5-month note dated September 29, 2015. b) A 150-day note issued September 29, 2015.

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149)

Determine the legal due date for:

a) A 4-month note dated April 30, 2017. b) A 120-day note issued April 30, 2017.

150) Calculate the maturity value of a 120-day, $1000 face value note dated November 30, 2014, and earning interest at 10.75%.

151) Calculate the maturity value of a $1000 face value, 5-month note dated December 31, 2015, and bearing interest at 9.5%.

152) A 90-day non-interest-bearing note for $3300 is dated August 1. What would be a fair selling price for the note on September 1 if money can earn 7.75%?

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153) A 6-month non-interest-bearing note issued on September 30, 2013 for $3300 was discounted at 11.25% on December 1. What were the proceeds of the note?

154) A 100-day $750 note with interest at 12.5% was written on July 15. The maker approaches the payee on August 10 to propose an early settlement. What amount should the payee be willing to accept on August 10 if short-term investments can earn 8.25%?

155) The payee on a 3-month $2700 note earning interest at 8% wishes to sell the note to raise some cash. What price should she be prepared to accept for the note (dated May 19) on June 5 in order to yield the purchaser an 11% rate of return?

156) A six-month note dated June 30 for $2900 bears interest at 13.5%. Determine the proceeds of the note if it is discounted at 9.75% on September 1.

157) An investor is prepared to buy short-term promissory notes at a price that will provide him with a return on investment of 12%. What amount would he pay on August 9 for a 120-day note dated July 18 for $4100 with interest at 10.25% pa?

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158) What will be the maturity value of $10,000 placed in a 90-day term deposit paying an interest rate of 3.25%?

159) What will be the maturity value of $15,000 placed in a 120-day term deposit paying an interest rate of 2.75%, if the term deposit proceeds are reinvested into another 120-day term deposit paying 3.5%?

160) For investments over $5,000, a bank quotes interest rate of 2.75% on 90-day GICs, and 3.25% on 180-day GICs. How much more interest will an investor earn by placing $8000 in the 180-day GIC, rather than purchasing two consecutive 90-day GICs?

161) An investment promises two payments of $500, 90 and 150 days from today. What price will an investor pay today if her required rate of return is 6.5%?

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162) A contract requires payments of $750 in 100, and 200 days. What is the value of the contract today if the payments are discounted to yield 7.5%?

163) An investment promises two payments of $1500, 120 and 150 days from today at a rate of 7%. What price will an investor pay today if her required rate of return is 6.5%?

164) A contract requires payments of $1700 in 50 and 100 days with interest at 6%. What is the value of the contract today if the payments are discounted to yield 7.5%?

165) A contract requires payments of $1000, $2000, and $3000 in 90, 120, and 150 days respectively, from today. What is the value of the contract today if the payments are discounted to yield a 6% rate of return?

166) If the average rate of return on 168-day Government of Canada Treasury bills sold at the Tuesday auction was 2.35%, what price was paid for a $100,000 face value T- bill? Version 1

167) The purchaser of a 168-day T-bill with a face value of $100,000 paid $98,929.92 for it. She then sold the T-bill to a client at a rate of interest of 2%. What profit did she realize on the sale?

168) The purchaser of a 168-day T-bill with a face value of $100,000 paid $97,320.00 for it. After 60 days, interest rates had increased and she sold the T-bill for $97,833.95. What rate of return per annum did she realize while holding the T-bill? Round to the nearest 0.01%

169) Sixty-day commercial paper with face value $100,000 was issued by a company for $98,890.25. What rate of return will be realized if the investment is held until maturity? Round to the nearest 0.01%

170) A $100,000, 91-day Province of Ontario T-bill was purchased for $98,527.62. It was then sold for 4.8%. What profit was realized on the sale?

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171) Sam has a $10,000 personal line of credit. The interest rate is prime + 2%. On the last day of each month, a payment equal to the greater of $200 or 4% of the current balance (including the current month's accrued interest) is deducted from his chequing account. On July 2, he withdrew $4000 and another $3000 on July 15. The prime rate during July was 3%. Calculate the balance owing at the end of July.

172) Marcie has a $20,000 personal line of credit with an interest rate of prime + 3%. On the last day of each month, a payment equal to the greater of $500 or 4% of the current balance (including the current month's accrued interest) is deducted from her chequing account. On December 6, she withdrew $5000. On January 15, she withdrew $12,000. The prime rate during this time was 3%. Calculate the balance owing at the end of February (non-leap year).

173) Sam borrowed $10,000 at prime + 2% on March 29. He agreed to payments of $2000 on the first day of each month beginning May 1. The prime rate was 4% when Sam took out the loan. What will be the amount of the final payment?

174) Calculate the maturity value of a 120-day, $1000 face value note dated September 5, 2014, earning interest at 4.75%.

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175)

Determine the legal due date for a three-month note dated October 6, 2013.

176) A 90-day non-interest-bearing note issued on September 30, 2013 for $5000 was discounted at 5.75% on November 5, 2013. What were the proceeds of the note?

177) A six-month non-interest-bearing note issued on April 11, 2013, for $4000 was discounted at 6.25% on September 2, 2013. What were the proceeds of the note?

178) A 90-day note dated June 30 for $2000 at an interest rate of 5.5% was sold on July 15, discounted at 8%. What were the proceeds of the note on July 15?

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179) What will be the maturity value of $12,000 placed in a 150-day term deposit paying an interest rate of 2.15%?

180) Dan wants to deposit a $500 bonus cheque into his high-rate savings account that pays interest of 2.575%. Interest is calculated on the daily closing balance and paid at the close of business on the last day of the month. If Dan's current balance is on June 1 is $955 and he does not make any withdrawals, what interest will he earn on his savings account for the month of June by depositing the cheque on June 11?

181) Naomi wants to deposit a cheque for $2,000 into her premium-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 Danica already has $8,000 in her savings account on August 1 and does not make any withdrawals, how much interest would she earn for the month of August if she deposited the cheque on August 21?

182) A High Yield savings account 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. How much interest will be lost for the month of September if $600 is withdrawn from the account on May 13 and the opening balance on May 1 is $2,450?

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183) A high-rate savings account pays interest of 2.05%. 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 $12,245 opening balance on September 1, withdrew $1,100 for a car payment on September 4, and deposited his paycheque for $3,500 on September 18. What interest will be credited to the account at the month's end?

184) A savings account pays interest of 0.75%. 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 $1,452 opening balance on September 1, deposited $734 on September 9 and $417 on September 21, and withdrew $450 on September 12. What interest will be credited to the account at the month's end?

185) You have savings of $2,000 on June 1. Since you may need some of the money during the next three months, you are considering two options at your bank. (1) An Investment Builder account earns a 1.25% rate of interest. The interest is calculated on the daily closing balance and paid on the first day of the following month. (2) A 90- to 179-day cashable term deposit earns a rate of 1.8%, paid at maturity. If interest rates do not change and Joan does not withdraw any of the funds, how much more will she earn from the term deposit option up to September 1? (Keep in mind that savings account interest paid on the first day of the month will itself earn interest during the subsequent month.)

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186) Suppose that the current rates on 180- and 360-day GICs are 1.25% and 1.50%, respectively. An investor is weighing the alternatives of purchasing a 360-day GIC versus purchasing a 180-day GIC and then reinvesting its maturity value in a second 180-day GIC. What would the interest rate on 180-day GICs have to be 180 days from now for the investor to end up in the same financial position with either alternative?

187) For principal amounts of $20,000 to $24,999, a bank pays an interest rate of 1.95% on 90- to 182-day non-redeemable GICs, and 2.00% on 183 to 364-day non-redeemable GICs. Paul has $20,000 to invest for 364 days. Because he thinks interest rates will be higher six months from now, he is debating whether to choose a 182-day GIC now (and reinvest its maturity value in another 182-day GIC) or to choose a 364-day GIC today. What would the interest amount difference be between the two alternatives?

188) A lottery ticket promises two payments of $50,000, on dates twelve and sixty months from today. If the required rate of return on the investment is 6.35%. What is the value of the prize today?

189) A World Soccer League prize promises two payments of $10,000, on dates 30 and 45 days from today to each player for winning the tournament. What amount would a player be willing to accept today if the rate of return is 7.5%?

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190) A home builder requires payments of $15,000, $20,000, and $100,000 in 90, 120, and 150 days, respectively, from today. What is the value of the contract today if the payments are discounted to yield a 7.6% rate of return?

191) A construction company will pave a new road but stipulates payments of $40,000, $25,000, and $50,000 in two, three, and four months, respectively, from today. If the city has enough money to pay cash, what amount could they pay today, in full, if the minimum rate of return is 3.25%?

192) A lawsuit awarded three months ago requires two payments to be paid five and ten months from the end of the lawsuit. Each payment was to be made for $10,000. If the person wishes to pay off the full amount of the payments today, how much can they save by making one full payment today instead of the two smaller payments if money can earn 5.7%

193) Calculate the price on its issue date of $800,000 face value, 120-day commercial paper issued by Ontario Hydro if the prevailing market rate of return is 1.22%. Round to the nearest dollar.

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194) A $500,000, 91-day Province of Alberta Treasury bill was issued 16 days ago. What will be its purchase price today in order to yield the purchaser 1.55%? Round to the nearest dollar.

195) A $400,000, 30-day commercial paper certificate issued by Home Trust Corporation was sold on its issue date for $399,450. What rate of return will it yield to the buyer? Round to three decimal places.

196) Debra paid $99,918 for a $100,000 T-bill with 26 days remaining until maturity. What (annual) rate of interest will she earn, to two decimal places?

197) A 128-day, $100,000 T-bill was initially issued at a price that would yield the buyer 1.19%. If the yield required by the market remains at 3.19%. If the t-bill was sold to earn 1.75% twenty days prior to maturity, how much money in interest did the initial owner earn?

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198) Mark purchased a $150,000 90-day T-bill when the prevailing yield on T-bills was 2.5%. She sold the T-bill 43 days later when the prevailing yield was 2.2%. What interest rate did Lydia earn during the 60-day period?

199) On the April 12 interest payment date, the outstanding balance on Home Alone Cat Sitting Service revolving loan was $2,000. The floating interest rate on the loan stood at 6.25% on April 12, but rose to 6.5% on April 17, and to 7% on April 29. If Home Alone Cat Sitting Service made a principal payment of $1,000 on April 30, what were the interest charges to its bank account on May 12?

200) A $3,000 demand loan was advanced on September 30. Fixed monthly payments of $1000 were required on the first day of each month beginning November 1. What was the balance of the loan on December 1, before the monthly payment? Assume that the interest rate remained at 6.75% for the life of the loan.

201) Ronald borrowed $10,000 from his life insurance company on a demand loan on February 10 to purchase additional RRSP amounts. The terms of the loan require fixed monthly payments of $1,500 on the first day of each month, beginning March 1. The floating rate on the loan is prime plus 3%. What is the balance owing on April 1 if the prime rate is 3.5%? Calculate the balance before the monthly payment.

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202) Captain Sanders of the Canadian Armed Forces has a $25,000 personal (revolving) line of credit with the Armed Forces Bank. The loan is on a demand basis at a floating rate of prime plus 1%. On the 1st of each month, a payment equal to the greater of $100 or 2% of the combined principal and accrued interest is deducted from his paycheque. The principal balance after a payment on September 15 stood at $4,598. If Captain Sanders received another $500 from his line of credit on September 20, what was his paycheque deduction on October 1? Assume the prime rate remains at 3.25%.

203) Jarrod's Canada Student Loans totalled $9400 by the time he graduated from the Oil and Drilling program at the Northern Alberta Institute of Technology College in May. He arranged to capitalize the interest on November 30 and to begin monthly payments of $135 on December 31. Jarrod elected the floating rate interest option (prime plus 2.5%). The prime rate stood at 2.75% on June 1, dropped to 2.5% effective September 3, and then increased by 0.25% on January 17. Calculate the grace period interest and the balance of the loan on December 31.

204) Hari finished her education at Hampton College on the Green on June 3 with Canada Student Loans totalling $6800. She decided to capitalize the interest that accrued (at prime plus 2.5%) during the grace period. In addition to regular end-of-month payments of $200, she made an extra $500 lump payment on March 25 that was applied entirely to principal. The prime rate dropped from 6% to 5.75% effective September 22, and declined another 0.5% effective March 2. Calculate the interest accrued during the grace period the interest portion of the first payment.

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205) Calculate the maturity value and date of payment if an 80-day, $1,200 face value note was issued on April 30, 2020, and earns interest at 10.75%.

206) You wish to purchase a used motorcycle and your friend will lend you $2,500, as long as you sign a promissory note. You agree to pay back the money in six months. If interest is calculated at 2.75%, what amount will the final payment be?

207) A six-month non-interest-bearing note issued on March 31, 2019 for $3300 was discounted at 8.25% on July 31, 2019. What were the proceeds of the note?

208) A 60-day $500 note with interest at 9.5% was written on July 15. The maker approaches the payee on August 9 to propose an early settlement. What amount should the payee be willing to accept on August 9 if short-term investments can earn 7.25%?

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209) Your friend signs a promissory note for $2,000 for 30 days with a rate of 2.25% attached. After fifteen days, you realize you need the money and sell the promissory to another friend to yield you 3.00%. What was the value of the note when you sold it?

210) Your friend signs a promissory note for $2,000 for 30 days with a rate of 2.25% attached. After fifteen days, you realize you need the money and sell the promissory to another friend to yield you 3.00%. How much interest did your friend earn in interest (dollar amount) for holding the promissory note for the last fifteen days?

211) You buy a house from your brother and sign a promissory note for the $25,000 down payment. The note is due in two years with an interest rate of 1.25%. You decide to pay off the down payment early, in one year. What amount will settle the debt if money can earn 0.75%?

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Answer Key Test name: Chap 08_10ce 1) C 2) D 3) B 4) A 5) A 6) A 7) E 8) A 9) B 10) A 11) E 12) C 13) B 14) C 15) A 16) C 17) B 18) E 19) A 20) D 21) C 22) E 23) B 24) A 25) B 26) C Version 1

27) D 28) E 29) A 30) B 31) C 32) D 33) E 34) A 35) B 36) C 37) D 38) E 39) A 40) B 41) C 42) D 43) E 44) A 45) B 46) C 47) D 48) E 49) A 50) B 51) C 52) E 53) E 54) A 55) C 56) C Version 1

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CHAPTER 9 1)

What is the maturity value of a $3500 loan for 15 months at 12% compounded quarterly? A) $3019.13 B) $5452.89 C) $4063.39 D) $4258.29 E) $4057.46

2) Fred borrowed money 18 months ago at 12% compounded semiannually. He now owes a total of $5450. How much of this is interest? A) $874.07 B) $893.71 C) $767.67 D) $3540.63 E) $1041.04

3) $3500 borrowed one year ago, is to be settled by payments of $500 today, $1500 six months from now, and a final payment eighteen months from now. What is the amount of the final payment if the interest rate on the loan is 12% compounded monthly? A) $3625.31 B) $1500.00 C) $7005.78 D) $1427.01 E) $2429.16

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4) A company borrowed $50,000 at 12% compounded monthly. It made a payment of $15,000 after two years, and $12,000 after three years. How much is required to pay off the loan one year after the second payment? A) $17,432.08 B) $42,636.06 C) $29,799.41 D) $48,043.38 E) $80,611.30

5) What principal earning 16% compounded quarterly will grow to $8500 after six years and three months? A) $448.66 B) $22,659.61 C) $3188.49 D) $3361.68 E) $3147.71

6) What amount today is equivalent to $6800 three years ago, if money earned 12% compounded quarterly over the past three years? A) $8872.46 B) $9553.51 C) $9695.17 D) $9729.23 E) $4769.38

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7) Assume money can earn 15% compounded semiannually. Rank the following payments in order of the payee's first choice, second choice, and third choice, respectively: $10,000 paid today, $20,000 to be paid five years from today, or $13,500,000 to be paid fifty years from today. A) $10,000; $20,000; $13,500,000 B) $10,000; $13,500,000; $20,000 C) $13,500,000; $10,000; $20,000 D) $13,500,000; $20,000; $10,000 E) $20,000; $13,500,000; $10,000

8) A payment of $8000 is due May 15, 2023. What was the value of this obligation on May 15, 2008 if money can earn 12% compounded quarterly between the two dates? A) $26,096.30 B) $5,952.75 C) $16,66.31 D) $1,357.86 E) $13,578.65

9) Judy invested $8500 in a three-year compound-interest GIC earning 6% compounded monthly. What is the GIC's maturity value? A) $7102.98 B) $10,102.98 C) $10,123.64 D) $9897.02 E) $10,171.78

10) A $7000 non-interest-bearing promissory note is discounted at 10% compounded quarterly, two years before maturity. What are the proceeds from the sale of the note? Version 1

A) $6829.27 B) $6662.70 C) $5785.12 D) $5933.33 E) $5745.23

11) If the inflation rate for the next 20 years is 4% per year, what hourly rate of pay in 20 years will be equivalent to $10 per hour today? A) $226.00 B) $14.56 C) $19.19 D) $21.91 E) $22.60

12) A $10,000 eight-year investment earns interest at 12% compounded semiannually. If it is sold 30 months before maturity to yield 16% compounded quarterly, what is its selling price? A) $17,161.71 B) $6755.64 C) $10,719.15 D) $4219.55 E) $20,009.91

13) A $25,000 loan at 9% compounded monthly is to be repaid by two equal payments due 1.5 years and 2.5 years after the date of the loan. What is the size of each payment?

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A) $11,939.97 B) $14,940.15 C) $15,015.33 D) $18,266.18 E) $22,855.95

14) Payments of $2000 due six months ago and $5000 due three years from now, are to be replaced by two equal payments due now and one year from today. What is the amount of each payment if money is worth 12% compounded monthly? A) $3118.98 B) $2641.34 C) $2976.33 D) $4915.04 E) $3211.14

15) Helen's investment of $500 has grown, at a rate of 13% compounded annually, for 45 years. To the nearest dollar, what is the value of her investment today? A) $204,381 B) $129,667 C) $825 D) $82,592 E) $122,321

16) If Smitty is able to earn 11% compounded semiannually on his $750 investment, how much money will he have in 40 years? Round to the nearest dollar.

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A) $48,751 B) $54,357 C) $73,825 D) $89,324 E) $7,979

17) Calculate the maturity value of $18,559 after 7.5 years at 9% compounded quarterly. Round to the nearest dollar. A) $36,179 B) $31,086 C) $32,000 D) $53,776 E) $29,000

18) Everyone thought he was being foolish again when, 65 years ago, great-great-uncle Crazy Louie invested $150 in the common stock of a company that produced a carbonated soft drink in Atlanta Georgia. The value of the stock has grown at an average rate of 15% compounded semiannually. To the nearest dollar, what's the value of Crazy Louie's foolish investment now? A) $13,559,733 B) $5,872,556 C) $1,816,317 D) $925,767 E) $146,250

19) If you deposit $2,500 into an investment that grows at 13.2% compounded monthly, what will its value be in 17.5 years? Round to the nearest dollar.

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A) $24,870 B) $57,750 C) $21,890 D) $48,901 E) $16,211

20) Betty borrowed $50 from Gurpreet for 2 years at 9% compounded monthly. How much did she owe at the end of the two years? A) $19.83 B) $59.82 C) $67.88 D) $54.16 E) $63.71

21) Twenty years ago Harminder invested $2,000. For the first 10 years he earned 13% compounded semiannually. For the next 10 years he earned 8% compounded quarterly. To the nearest dollar, what was the value of the investment now, at the end of the 20 years? A) $5,927 B) $9,185 C) $17,292 D) $14,732 E) $15,561

22) Boris borrowed $500 five years ago. The interest rate on the loan was 9% compounded monthly for the first 27 months and 6% compounded quarterly for the rest of the time. How much does he owe now?

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A) $878.27 B) $720.63 C) $846.92 D) $603.33 E) $751.90

23) If Oleg puts $45,000 into an investment that earns 12% compounded monthly, and after three years he withdraws $30,000, how much money will the investment be worth seven years after the withdrawal? Round to the nearest dollar. A) $79,316 B) $49,506 C) $92,142 D) $69,202 E) $118,517

24) Twenty-five years ago Sandy invested $3,000. Fifteen years ago she put another $2,000 into the investment. Over the 25 years, interest has accumulated at a rate of 6% compounded monthly. To the nearest dollar, how much interest has she earned over the 25 years? A) $18,303 B) $6,567 C) $5,134 D) $11,567 E) $13,303

25) Five years ago Sylvio borrowed $12,000 from Warren at 11% compounded annually. Two years ago he made a payment of $7,000 to reduce his debt. Now how much, including interest, does Sylvio owe to Warren? Round to the nearest dollar.

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A) $14,339 B) $11,596 C) $9,217 D) $7,675 E) $5,972

26) Jack invested $10,000 at 10% compounded annually for 35 years. Jill also invested $10,000 for 35 years but her interest rate was 11% compounded annually. To the nearest dollar, how much MORE interest did Jill earn compared to Jack? A) $14,166 B) $55,632 C) $92,418 D) $104,724 E) $189,627

27) Calculate the present value of a payment of $27,500 payable in 10 years if money is worth 9% compounded semiannually. A) $29,723.88 B) $11,616.30 C) $11,402.68 D) $9,725.39 E) $8,899.11

28) How much money would have to be invested today, at 9% compounded monthly in order to have $40,000 in seven years?

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A) $21,353.81 B) $23,726,43 C) $33,786.03 D) $34,928.08 E) $5,071.92

29) Laurel borrowed some money from Hardy 42 months ago. The loan principal plus interest at 17% compounded annually is to be repaid today. Laurel and Hardy agree that the total amount due is $31,618. How much did Laurel borrow from Hardy 42 months ago? A) $10,618.49 B) $13,367.12 C) $18,250.88 D) $23,157.32 E) $49,868.89

30) Leo's Furniture is offering a "houseful of furniture" for $7,777. Furthermore, if you make a down payment of $777 you can wait for 2½ years to pay the $7,000 balance. If Leo's Furniture immediately sells the $7,000 receivable contract to the Corleone Finance Group at a discount rate of 24% compounded monthly, how much money will Leo's actually receive for the "houseful of furniture"? A) $3,864.50 B) $4,255.53 C) $4,641.50 D) $5,679.53 E) $6,897.50

31) What amount was invested 35 years ago at 7% compounded semiannually if the value of the investment has now grown to $1,000,000? Round to the nearest dollar.

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A) $634,757 B) $111,128 C) $103,549 D) $89,986 E) $57,637

32) Murphy's annual income has increased by 10% per year for the last 8 years. If Murphy's annual income is now $72,596, what was it 8 years ago? Round to the nearest dollar. A) $14,519 B) $33,867 C) $41,587 D) $51,922 E) $58,077

33) Money is worth 5% compounded semiannually. What is the value today of a contract that will bring in a payment of $86,500 in nine years? Round to the nearest dollar. A) $63,276 B) $38,090 C) $55,461 D) $41,962 E) $55,759

34) Eighteen years from now I will need to have $120,000 to pay for my child's postsecondary education. I anticipate being able to earn 14% compounded annually for the first 10 years and 11% compounded annually for years #11 through #20. To the nearest dollar, what amount of money should I invest today in order to meet my goal?

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A) $14,046 B) $16,380 C) $21,750 D) $29,600 E) $30,790

35) Doris is retiring today and she plans to buy a new car for $25,000 seven years from now and a second new car for $40,000 seventeen years from now. How much "new car money" should she set aside now if she can expect to earn 8½% compounded annually on her savings? Round to the nearest dollar. A) $42,515 B) $31,879 C) $24,421 D) $24,118 E) $16,590

36) Today is Almo's 20th birthday and he has just received a large amount of money to sign a contract with a professional hockey team. He wants to put away enough money to make sure that on his 50th birthday he will have $2,500,000. For the next ten years he is confident that his investments will earn 15% compounded annually and after that, 10% compounded annually. To the nearest dollar, how much must he invest today? A) $761,545 B) $299,419 C) $117,674 D) $99,278 E) $91,856

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37) Andy borrowed money four years ago at 13.2% compounded monthly. He now owes a total of $13,743. To the nearest dollar, how much of this is interest? A) $8,129 B) $7,114 C) $5,614 D) $9,492 E) $11,611

38) In order to pay off a debt that he took out today, Roger will have to make a payment of $3,500 in 15 months and $5,500 in 36 months. The interest rate is 8% compounded quarterly. What is the total amount of interest that is included in these payments? A) $1,016.39 B) $1,493.23 C) $2,287.88 D) $7,506.77 E) $1,839.61

39) Two payments of $7,500 each must be made three years and six years from now. If money can earn 8.4% compounded monthly, what single payment, four years from now, would be equivalent to the two scheduled payments? Round to the nearest dollar. A) $13,218 B) $18,638 C) $15,501 D) $14,499 E) $22,034

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40) Two payments of $850 and $600 must be made two years and five years from now respectively. If money can earn 4% compounded semiannually, what single payment, three years from now, would be equivalent to the two scheduled payments? A) $1,477.16 B) $1,609.22 C) $1,578.88 D) $1,404.19 E) $1,438.65

41) Kramer borrowed $6,000 from George at an interest rate of 6% compounded quarterly. The loan is to be repaid by three payments. A payment of $2,000 is due two years after the date of the loan. The second and third payments are to be of equal amounts and are to be paid three and five years after the date of the original loan. Calculate the size of the last two payments. A) $2,481.63 B) $2,406.52 C) $2,675.72 D) $2,277.43 E) $2,197.91

42) A loan of $10,000 is being taken out today. The interest rate is 9% compounded monthly. Equal payments are to be made two and five years from now. After the second payment is made in five years there will be a balance of $3,000 still owing on the loan. Calculate the size of the two equal payments. A) $4,790.21 B) $5,482.35 C) $5,692.38 D) $6,014.19 E) $4,747.27

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43) What periodic payment will an investor receive from a six-year, $90,000 monthly payment GIC earning a nominal rate of 4.2% compounded monthly? A) $378 B) $315 C) $292 D) $266 E) $188

44) What periodic payment will an investor receive from a 10-year, $250,000 annual payment GIC earning a nominal rate of 5.88% compounded annually? A) $7,600 B) $5,698 C) $19,267 D) $12,250 E) $14,700

45) What regular interest payment will Grandmamma receive from a seven-year, $1,750,000 monthly payment GIC earning a nominal rate of 5.4% compounded monthly? A) $30,378 B) $21,767 C) $9,544 D) $7,875 E) $6,450

46) Calculate the maturity value of a five-year, $400,000 Guaranteed Investment Certificate accumulating interest at 6% compounded quarterly. Round to the nearest dollar. Version 1

A) $538,742 B) $696,988 C) $880,000 D) $903,443 E) $994,001

47) Calculate the maturity value of a two-year, $20,000 Guaranteed Investment Certificate accumulating interest at 5% compounded semiannually. Round to the nearest dollar. A) $18,119 B) $20,000 C) $22,076 D) $23,612 E) $24,310

48) First Dominion Bank offers a two-year "Rising Rate" GIC. For the first year the interest rate is 4.5% compounded semiannually and for the second year the rate is 5.5% compounded semiannually. To the nearest dollar, what will be the maturity value of a $50,000 two-year "Rising Rate" GIC? A) $51,770 B) $52,500 C) $55,000 D) $55,190 E) $57,765

49) A bank offers a four-year "Escalating Rate GIC" on which the interest rate for year one is 3% compounded annually, 4% compounded annually for year two, 5% compounded annually for the third year and 6% compounded annually for the fourth year. To the nearest dollar, determine the maturity value of a $100,000 four-year "Escalating Rate GIC".

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A) $116,794 B) $117,251 C) $118,704 D) $118,933 E) $119,225

50) To the nearest dollar, how much interest would be earned on a 10-year $117,000 Guaranteed Investment Certificate that grows at 9% compounded monthly? A) $126,360 B) $159,982 C) $169,809 D) $276,981 E) $286,808

51) Marvin has a five-year GIC which has a maturity value of $88,206.38. The GIC is accumulating interest at 6.2% compounded semiannually. What is the principal amount of the GIC? A) $30,000 B) $65,000 C) $47,500 D) $48,335 E) $70,000

52) Oswald has a five-year compound interest GIC. Its interest rate is 7.2% compounded monthly and its maturity value will be $76,243. To the nearest dollar, how much interest will he have earned over the five-year term?

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A) $49,500 B) $53,250 C) $26,743 D) $22,993 E) $19,243

53) A 25-year, $10,000 strip bond was issued at a market rate of 9.4% compounded semiannually. What was the issue price? A) $216.11 B) $962.46 C) $1,006.16 D) $1,058.20 E) $6,117.44

54) A 30-year, $1,000 strip bond was issued by Sun Oil Company at a yield rate of 8.8% compounded semiannually. How much money did Sun Oil borrow by issuing this bond? A) $17.50 B) $75.50 C) $755.00 D) $1,000.00 E) $1,750.55

55) Four years after it was first issued at 6% compounded semiannually, a 25-year, $10,000 strip bond was sold on the bond market at a price that would provide the purchaser with a yield rate of 4.8% compounded semiannually. To the nearest dollar, what was the selling price at that time?

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A) $2,281 B) $2,667 C) $2,890 D) $3,693 E) $3,736

56) Seventeen years after it was first issued at 11% compounded semiannually, a 30-year, $1,000 strip bond was sold on the bond market at a price that would provide the purchaser with a yield rate of 6.4% compounded semiannually. What was the selling price at that time? A) $440.89 B) $342.68 C) $248.56 D) $161.96 E) $103.78

57) A 25-year, $10,000 strip bond was first issued at 6% compounded semiannually. Nine years before maturity it was sold on the bond market at a price that would provide the purchaser with a yield rate of 6.8% compounded semiannually. To the nearest dollar, what was the selling price at that time? A) $3,430 B) $3,883 C) $5,478 D) $5,874 E) $6,246

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58) A 25-year, $1,000 strip bond was first issued at 5.5% compounded semiannually. Five years before maturity it was sold on the bond market at a price that would provide the purchaser with a yield rate of 6.8% compounded semiannually. To the nearest dollar, what was the selling price at that time? A) $338 B) $263 C) $762 D) $716 E) $258

59) A 30-year, $10,000 strip bond was originally issued at 5% compounded semiannually. Ten years later the original purchaser sold the bond at the prevailing market rate at that time which was 7% compounded semiannually. To the nearest dollar, how much profit did the original purchaser earn over the 10 years? A) $1,198 B) $253 C) $806 D) $1,451 E) $2,000

60) If a 30-year, $10,000 strip bond is issued at a yield rate of 5.75% compounded semiannually, what is its issue price? Round to the nearest dollar. A) $349 B) $978 C) $993 D) $1,869 E) $1,826

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61) To the nearest dollar, what was the issue price of a 25-year strip bond with a face value of $50,000 and a discount rate of 7% compounded semiannually? A) $8,953 B) $9,212 C) $11,318 D) $11,834 E) $11,997

62) On the day it was issued, Aaron bought a 30-year, $1,000 strip bond at a market rate of 6% compounded semiannually. Four years later he sold it to Zevon at the market rate of 7% compounded semiannually. What was Aaron's profit or loss? A) ($6.91) Loss B) ($2.58) Loss C) $0.00 D) $2.58 Profit E) $6.91 Profit

63) Albert purchased Bonzo's car for $500 cash and a non-interest-bearing promissory note for $2,000 payable in two years. How much money can Bonzo expect to receive for the note if he immediately sells it to Corleone Finance Company at a discount rate of 30% compounded monthly? Round to the nearest dollar. A) $383 B) $2,616 C) $1,617 D) $1,400 E) $1,106

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64) Debbie has two promissory notes payable to her. The first one will mature in five years at $42,371 and the second one will mature in eight years at $78,529. What amount can she expect to receive from the Lansky Finance Company if, one year from now, she sells both of the notes to them at a discount rate of 19% compounded annually? Round to the nearest dollar. A) $37,283 B) $44,367 C) $78,154 D) $39,028 E) $57,413

65) A nine-year, $270,000 promissory note bears interest at a rate of 8% compounded annually. To the nearest dollar, what is its maturity value? A) $441,889 B) $539,731 C) $299,057 D) $752,198 E) $135,067

66) The population of Ourtown, Saskatchewan is expected to grow at a rate of 2.5% per year for the next five years. If the current population is 11,763 what is it expected to be in five years? Round to the nearest person. A) 13,233 B) 12,057 C) 16,555 D) 13,309 E) 10,364

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67) Bones McGoo weighs 218 kilograms. His goal is to decrease his weight by 5% each year for 15 years. What will he weigh in 15 years if he achieves his goal? Round to the nearest kg. A) 101 kg. B) 54.5 kg. C) 143 kg. D) 107.4 kg. E) 126.1 kg.

68) The number of people working in service industries in British Columbia has been growing at a rate of 4% per year for eight years. Today there are 1.86 million service workers in B. C. How many were there five years ago? Round to the nearest 0.01 million. A) 1.09 million B) 2.26 million C) 1.49 million D) 1.53 million E) 1.36 million

69) In Brazil, there are 462,966 people in prison. The prison population there has been decreasing at a rate of 1.9% per year for the last 10 years. To the nearest person, how many prisoners were there in Brazil 10 years ago? A) 375,002 B) 560,866 C) 607,562 D) 558,844 E) 383,537

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70) It is estimated that the whale population in the North Atlantic will continue to decrease by 1.5% per year. At that rate what percentage of the current whale population will be lost over the next 20 years? Round to the nearest 0.1% A) 23.1% B) 43.6% C) 26.1% D) 28.9% E) 30.0%

71) The quality control director at Ace Industries has determined that, currently far too many of the Aces they produce are defective. His target is to reduce the defective rate by 5% of the previous month's rate for each of the next six months. If he is successful what proportion of the current rate of defective Aces will he have eliminated? Round to the nearest 0.1% A) 26.5% B) 30.0% C) 34.0% D) 48.6% E) 16.5%

72) Six year old Jerry's grandmother is going to invest $18,000 now to pay for the first two years of Jerry's college education. She plans to provide him with two equal payments. The first will be in 11 years and the second will be in 12 years. If the investment earns 9% compounded semiannually what will be the size of the two payments? A) $13,765.75 B) $15,749.62 C) $18,499.77 D) $22,259.16 E) $24,745.52

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73) Orlando must be able to take $5,000 from his savings in four years and again in seven years. His savings will earn 7.2% compounded monthly. To the nearest dollar, how much must be in the account now in order to meet his needs? A) $6,738 B) $6,050 C) $6,777 D) $7,255 E) $7,451

74) Maria has just received an inheritance of $89,218 and she is going to invest the money today at 10.5% compounded monthly. This money must provide her with $75,000 in eight years and $100,000 in twelve years. If the $89,218 isn't enough, she will add to the investment now from her other savings. If the $89,218 is more than enough she will spend the extra money. Which of the following statements is true? A) She must add $11,674 to the $89,218. B) She must add $85,782 to the $89,218. C) She has exactly the right amount of money now. D) She can spend $137,812 of the $89,218. E) She can spend $28,200 of the $89,218.

75) Determine the periodic interest rate for a nominal interest rate of 4.8% compounded semiannually? A) 2.4% every six months B) 1.4% every six months C) 2.6% every six months D) 2.8% every six months E) 2.9% every six months

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76) Determine the periodic interest rate for a nominal interest rate of 4.8% compounded quarterly? A) 2.2% every quarter B) 1.2% every quarter C) 1.4% every quarter D) 1.5% every quarter E) 1.6% every quarter

77) Determine the periodic interest rate for a nominal interest rate of 4.8% compounded monthly? A) 08% every month B) 09% every month C) 04% every month D) 02% every month E) 07% every month

78)

Determine the nominal rate of interest if the periodic rate is 1.5% per month. A) 16% compounded monthly B) 15% compounded monthly C) 36% compounded monthly D) 18% compounded monthly E) 9% compounded monthly

79)

Determine the nominal rate of interest if the periodic rate is 1.5% per quarter.

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A) 3% compounded quarterly B) 12% compounded quarterly C) 4% compounded quarterly D) 8% compounded quarterly E) 6% compounded quarterly

80)

Determine the nominal rate of interest if the periodic rate is 1.5% per half-year. A) 6% compounded semiannually B) 12% compounded semiannually C) 3% compounded semiannually D) 8% compounded semiannually E) 9% compounded semiannually

81) For a nominal rate of 6.75%, determine the compounding frequency if the periodic interest rate is 0.5625%. A) Quarterly B) Monthly C) Semiannually D) Annually E) Biweekly

82) For a nominal rate of 6.75%, determine the compounding frequency if the periodic interest rate is 1.6875%.

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A) Annually B) Quarterly C) Monthly D) Semiannually E) Biannually

83) For a nominal rate of 6.75%, determine the compounding frequency if the periodic interest rate is 3.375%. A) Annually B) Quarterly C) Semiannually D) Weekly E) Bimonthly

84) What is the maturity value of $7,000 invested at 2.0% compounded semiannually for five years? A) $7,567.35 B) $7,932.35 C) $7,732.35 D) $7,792.35 E) $7,876.35

85) What is the maturity value of $7,000 invested at 4.0% compounded semiannually for five years?

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A) $8,632.96 B) $8,732.96 C) $8,432.96 D) $8,532.96 E) $8,932.96

86) What is the maturity value of $7,000 invested at 4.0% compounded quarterly for five years? A) $8,741.33 B) $8,941.33 C) $9,141.33 D) $8,541.33 E) $8,141.33

87) What is the maturity value of $7,000 invested at 5.0% compounded semiannually for five years? A) $8,789.59 B) $8,876.59 C) $8,900.59 D) $8,960.59 E) $8,127.59

88) What is the maturity value of $17,000 invested at 5.0% compounded semiannually for five years?

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A) $22,761.37 B) $21,961.37 C) $21,671.37 D) $22,761.37 E) $21,761.37

89) What is the maturity value of $15,000 invested at 2.0% compounded semiannually for fifteen years? A) $20,217.73 B) $22,217.73 C) $23,217.73 D) $19,217.73 E) $24,217.73

90) What is the maturity value of $17,000 invested at 5.0% compounded quarterly for five years? A) $21,794.63 B) $21,974.63 C) $20,794.63 D) $21,875.63 E) $21,864.63

91) You receive a loan of $22,000 for 24 months at 5.2% compounded quarterly? How much interest is charged on the loan?

Version 1

A) $2,597.86 B) $2,397.86 C) $2,937.86 D) $2,312.86 E) $2,767.86

92) You receive a loan of $22,000 for 36 months at 5.2% compounded quarterly? How much interest is charged on the loan? A) $3,888.34 B) $3,688.34 C) $3,868.34 D) $3,680.34 E) $3,488.34

93) You receive a loan of $22,000 for 24 months at 5.2% compounded semiannually? How much interest is charged on the loan? A) $2,758.79 B) $2,878.79 C) $2,378.79 D) $2,478.79 E) $2,387.79

94) You receive a loan of $22,000 for 36 months at 5.2% compounded semiannually? How much interest is charged on the loan?

Version 1

A) $3,862.97 B) $3,665.97 C) $3,662.97 D) $3,669.97 E) $3,532.97

95) How much more will an investment of $100,000 earning 4% compounded annually be worth after 15 years than after 12 years? A) $18,991.13 B) $19,891.13 C) $19,991.13 D) $19,291.13 E) $19,919.13

96) How much more will an investment of $100,000 earning 2% compounded annually be worth after 30 years than after 25 years? A) $17,705.56 B) $17,805.56 C) $18,075.56 D) $17,075.56 E) $17,570.56

97) How much more will an investment of $50,000 earning 2% compounded quarterly be worth after 13 years than after 12 years?

Version 1

A) $1,290.05 B) $1,380.05 C) $1,480.05 D) $1,280.05 E) $1,580.05

98) How much more will an investment of $50,000 earning 4% compounded semiannually be worth after 5 years than after 4 years? A) $2,986.75 B) $2,456.75 C) $2,355.75 D) $2,466.75 E) $2,366.75

99) What amount today is equivalent to $5,000 five years ago, if money earned 7% compounded monthly over the last four years? A) $7,248.13 B) $7,128.13 C) $7,098.13 D) $7,488.13 E) $7,088.13

100) You won a lawsuit three years ago and were awarded $10,000. If money earned 5% compounded monthly, how much money would you receive today as full payment?

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A) $11,614.72 B) $11,314.72 C) $11,619.72 D) $11,697.72 E) $11,814.72

101) You loaned a friend $5,000 one year ago for tuition. If your friend agreed to pay interest at a rate of 0.5% per month, what payment will pay off the loan today? A) $5,308.39 B) $5,808.39 C) $5,038.39 D) $5,380.39 E) $5,508.39

102) You loaned a friend $5,000 one year ago for tuition. If your friend agreed to pay interest at a rate of 0.5% per month, how much money will you earn in interest? A) $318.39 B) $308.39 C) $208.39 D) $398.39 E) $388.39

103) You borrowed $1,000, $2,500, and $3,000 from your parents on September 1 of three successive years at college. You agreed that interest would accumulate on each amount at the rate of 3% compounded semiannually. You wish to repay the loan one year after the last loan. What consolidated amount will he owe at that time?

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A) $6,237.53 B) $6,837.53 C) $6,873.53 D) $7,837.53 E) $8,837.53

104) Maia wishes to plan for her children's education. She wishes for them to have money for college when they turn eighteen. Maia has just deposited $3,000 in each of two savings plans for her kids. They will have access to the accumulated funds on their 18th birthdays. Jacob is 13 years and 5 months while Natasha is 11 years and 4 months old. If the plans earn 4% compounded monthly, what amount will each grandchild receive at age 18? A) Jacob $3,802.55 Natasha $3,715.08 B) Jacob $3,682.55 Natasha $3,715.08 C) Jacob $3,602.55 Natasha $3,915.08 D) Jacob $3,642.55 Natasha $3,215.08 E) Jacob $3,692.55 Natasha $3,215.08

105) You wished to start a new business and attended the Small Business Bank. You borrowed $10,000 for 4 years. For the first 1.5 years, the interest rate on the loan was 4.8% compounded monthly. Then the rate became 3.5% compounded semiannually. What total amount was required to pay off the loan if no payments were made?

Version 1

A) $12,718.69 B) $11,918.69 C) $11,718.69 D) $11,781.69 E) $10,718.69

106) You wished to start a new business and attended the Small Business Bank. You borrowed $10,000 for 4 years. For the first 1.5 years, the interest rate on the loan was 4.8% compounded monthly. Then the rate became 3.5% compounded semiannually. What total amount of interest was accrued in the last 2.5 years? A) $978.68 B) $993.68 C) $973.68 D) $923.68 E) $913.68

107) An investment of $4,500 earned interest at 2.8% compounded quarterly for 1.5 years, and then 3.0% compounded monthly for an additional three years. How much interest did the investment earn in the 4.5 years? A) $3,133.66 B) $4,133.66 C) $5,133.66 D) $5,155.66 E) $5,122.66

108) A loan of $9,000 at 6.5% compounded quarterly requires three payments of $2,000 at twelve twenty-four and thirty-six months after the date of the loan, and a final payment of the full balance after four years. What is the amount of the final payment?

Version 1

A) $4,836.71 B) $4,824.71 C) $5,812.71 D) $4,812.71 E) $6,812.71

109) Xindu borrowed $5,000 fromhis parents to travel to Canada and study engineering. The interest on the loan was to be 1% compounded semiannually for the first three years, and 2% compounded monthly thereafter. If Xindu graduated and wished to pay back the full amount of the loan five years after he received it, how much was the final payment? A) $5,461.96 B) $5,961.96 C) $51631.96 D) $5,361.96 E) $5,316.96

110) You borrowed a small amount of money and the credit company calculated you will owe them $8,520.19 two years from now. If the money is discounted at 3.2% compounded annually, how much was the original loan for? A) $7,500 B) $6,000 C) $7,000 D) $9,000 E) $8,000

111) You wish to have a down payment in three years for a new house. If you wish to have $25,000 as a down payment, what will you have to invest today if money can earn 1.5% compounded monthly?

Version 1

A) $22,900.61 B) $23,990.61 C) $23,909.61 D) $24,900.61 E) $23,900.61

112) The maturity value of an investment after 42 months is $5,645.61. What was the original investment, if it earned 3.5% compounded semiannually? A) $5,100 B) $5,900 C) $5,600 D) $5,500 E) $5,000

113) What amount today is economically equivalent to $4,000 paid 36 months from now, if money is worth 4.6% compounded quarterly? A) $3,478.14 B) $3,687.14 C) $3,587.14 D) $5,487.14 E) $3,487.14

114) If your company's objective is to have $100,000 in two years for four new trucks, how much should they invest today in an account earning 3.5% compounded semiannually?

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A) $93,295.85 B) $95,295.85 C) $93,395.85 D) $93,195.85 E) $93,995.85

115) You have just been notified that the combined principal and interest on your credit card is $4,597.98. The credit card company charges interest at the rate of 18% compounded monthly. If it has been one year since any last payment or charges, how much did you owe on your credit card one year ago? A) $3,845.69 B) $3,945.69 C) $3,745.69 D) $3,854.69 E) $3,245.69

116) You won a contest that will pay you $10,000 six months from today. You don't wish to wait so you tell your friend they can have the $10,000 six months from now if they give you a lump sum today. If money can earn 4.75% compounded semiannually, how much money would you expect for the prize today? A) $9,868.01 B) $9,768.01 C) $9,968.01 D) $9,786.01 E) $9,798.01

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117) Your company lost a lawsuit and they have to pay $125,000 one year from today. The company wishes to pay off the lawsuit immediately instead of waiting one year. If money can earn 5.6% compounded quarterly, how much should they pay today to clear the debt? A) $128,238.30 B) $118,238.30 C) $108,238.30 D) $120,238.30 E) $128,238.30

118) Your friend borrowed money from you nine months ago. If they pay you $2,550 today, how much did they originally borrow from you if money can earn 3.35% compounded quarterly? A) $2,468.99 B) $2,486.99 C) $2,286.99 D) $2,886.99 E) $2,686.99

119) You can receive a discount on your tuition if you make an early payment instead of waiting until the due date. If you pay six months early, you can earn 5% compounded quarterly. If the amount owed on the due date six months from now is $4,500, how much will you save if you pay early and receive the discount? A) $130.43 B) $120.43 C) $110.43 D) $117.43 E) $118.43

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120) Your company wishes to replace a payment of $1,600 three months from now with a single payment today. If money can earn 4.2% compounded monthly, what single payment today can replace the future payment of $1,600? A) $1,183.32 B) $1,383.32 C) $1,583.32 D) $1,853.32 E) $1,538.32

121) You have financial obligations of $2,000 due in twelve months and $1,500 due in two years. Your parents wish to give you the money to pay off your debts. What single payment today can replace the two payments if money can earn 1.75% compounded annually? A) $3,490.45 B) $3,419.45 C) $3,714.45 D) $3,414.45 E) $3,814.45

122) What single payment one year from now would be economically equivalent to payments of $1,000 due fifteen months from now and $500 due eighteen months from now? Assume money can earn 3.25% compounded quarterly. A) $1,438.91 B) $1,489.91 C) $1,783.91 D) $1,483.91 E) $1,883.91

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123) A scheduled payment stream consists of three payments: $1,800 due in 1.25 years, $1,300 due in 18 months and $1,700 due in twenty four months. What single payment three months from now would be economically equivalent to the payment stream? Money can earn 2.2% compounded quarterly. A) $4,961.74 B) $3,661.74 C) $4,681.74 D) $4,661.74 E) $4,681.74

124) Your company has asked you to evaluate a piece of real estate they wish to sell. There are two offers-to-purchase that the company has received. Offer A is an immediate cash payment of $200,000 and Offer B consists of two payments of $50,000—one in six months and one in twelve months. Offer B also includes an immediate down payment of $120,000. If money can earn 2.75% compounded semiannually, which offer should you recommend and how much more (in current dollars) is the better offer worth? A) Offer B is worth $17.974.67 more B) Offer A is worth $15.974.67 more C) Offer B is worth $19.974.67 more D) Offer B is worth $18.974.67 more E) Offer A is worth $17.974.67 more

125) You purchased a seven-year, $10,000 compound interest GIC with funds in his RRSP. If the interest rate on the GIC is 1.25% compounded annually, what is the GIC's maturity value? A) $10,998.50 B) $10,908.50 C) $11,908.50 D) $12,908.50 E) $13,908.50

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126) Mrs. Landry placed $14,500 in a four-year compound interest GIC earning 2.75% compounded monthly. What is the GIC's maturity value? A) $16,198 B) $16,184 C) $16,148 D) $16,190 E) $16,132

127) TD Trust offers two-year compound interest GICs earning 1.85% compounded monthly or 1.9% compounded semiannually. Which rate should an investor choose? A) 1.9% compounded annually B) 1.9% compounded quarterly C) 1.9% compounded semiannually D) 1.9% compounded weekly E) 1.5% compounded semiannually

128) If an investor has the choice between rates of 2.4% compounded quarterly and 2.5% compounded semiannually for a six-year GIC, which rate should she choose? A) 2.5% compounded semiannually B) 2.9% compounded semiannually C) 2.7% compounded semiannually D) 2.5% compounded annually E) 2.5% compounded quarterly

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129) Western Financial offers a three-year compound interest GIC earning rates of 0.5%, 0.75% and 1% in successive years. CIBC offers a similar GIC paying rates of 0.75%, 0.75% and.90% in successive years. For a $1,000 investment, which GIC will have the greater maturity value after five years? How much greater? A) Western will offer an extra $1.53 B) CIBC will offer an extra $1.53 C) CIBC will offer an extra $3.53 D) Western will offer an extra $1.98 E) CIBC will offer an extra $2.45

130) How, if at all, will the future value of $5,000 invested in a three-year variable-rate GIC differ if it earns 1%, 1.5%, and 2% in successive years instead of 2%, 1.5%, and 1% in successive years? A) Same result B) 0.5% C) 1.0% D) 1.5% E) 1.25%

131) A high-interest GIC will earn 2.3% compounded annually for the first two years and 3.1% compounded annually for the last two years of its four-year term. What will be the maturity value of $10,000 invested in this GIC? A) $11,124.20 B) $13,124.20 C) $11,214.20 D) $11,142.20 E) $12,124.20

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132) $22,000 is invested in a five-year compound interest GIC earning interest rates of 2%, 2.1%, 2.25%, 2.5%, and 2.75% in successive years. What amount will the investor receive at maturity? A) $24,672.75 B) $24,692.75 C) $24,627.75 D) $25,672.75 E) $23,672.75

133) Fidelity Investments compound interest GIC earns 1.125%, 1.25%, 1.5%, 1.875%, and 1.95% in successive years. How much interest is earned over the life of the GIC if you invest $5,000? A) $396.90 B) $369.90 C) $296.90 D) $399.90 E) $398.90

134) You currently have $150 extra per month after all expenses to spend on activities. How much will you need 10 years from now to have the same purchasing power if the (compound annual) rate of inflation during the period is 2.2%? A) $286.47 B) $186.47 C) $168.47 D) $146.47 E) $156.47

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135) If a car today costs $21,999, how much money would have been needed nine years ago to buy the exact same car if the (compound annual) rate of inflation has been 2.7%? A) $19,308.88 B) $17,308.88 C) $17,988.88 D) $17,768.88 E) $17,380.88

136) If the inflation rate for the next five years is 2.1% per year, what hourly rate of pay in five yearswill be equivalent to $11.50/hour today? A) $12.87 B) $11.76 C) $12.76 D) $13.76 E) $14.76

137) During a political crisis, the cost of living was rising by 1.2% on a daily basis. If a loaf of bread currentlycosts $0.99, how much will the same loaf of bread cost 192 days from now if the inflation rate stays the same? A) $9.12 B) $8.78 C) $4.78 D) $6.78 E) $9.78

138) You are wishing to retire in five years and believe you will need $35,000 per year in today's dollars to live comfortably. How much money you require in your first year of retirement if the cost of living is averaging an annual increase of 2.25%? Version 1

A) $39,181.72 B) $44,118.72 C) $29,118.72 D) $43,118.72 E) $39,118.72

139) According to the 2018 census, the town of North Ashford, had the fastest growing crime rate in Canada, recroding 12.5 crimes per 100 people. If the crime rate grows 9.17% per year for the next two years, what will the new crime rate be? A) 11.5 crimes per 100 people B) 12.9 crimes per 100 people C) 12.9 crimes per 100 people D) 16.9 crimes per 100 people E) 14.9 crimes per 100 people

140) A $5,000 face value strip bond has fifteen years remaining until maturity. What is its price if the market rate of return on such bonds is 1.22% compounded semiannually? A) $4,146.16 B) $4,366.16 C) $4,266.16 D) $5,166.16 E) $4,166.16

141) You wish to purchase some 25-year-maturity strip bonds with the $11,874 in cash you now have. If these strip bonds are currently priced to yield 2.125% compounded semiannually, how many $1000 denomination bonds can you purchase?

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A) 7 bonds B) 5 bonds C) 6 bonds D) 8 bonds E) 14 bonds

142) If the current discount rate on 20-year strip bonds is 0.95% compounded semiannually, how many $1000 face value strips can be purchased with $7,000? A) 1 bond B) 5 bonds C) 6 bonds D) 4 bonds E) 10 bonds

143) Scheduled payments of $2,000 due today and $4,000 due in nine months are to be replaced by two payments—$3,000 due in fifteen months and a second payment of undetermined size due in twenty-four months. What must the second payment be for the two streams to be economically equivalent? Assume that money can earn 1.75% compounded quarterly. A) $3,319.80 B) $3,119.80 C) $3,179.80 D) $3,199.80 E) $4,119.80

144) A two-payment stream consisting of $2,500 due today and $1,900 due in nine months is to be replaced by an economically equivalent stream comprised of an undetermined payment due in ten months and a payment of $2,000 due in twenty-two months. Calculate the unknown replacement payment if money is worth 5% compounded monthly.

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A) $2,611.40 B) $2,811.40 C) $2,631.40 D) $1,611.40 E) $2,619.40

145) Paula is unable to make a $4500 payment due today. She proposes to settle the obligation by making two equal payments—one in four months and a second in nine months. What must each payment be to make the proposed payment stream equivalent to the scheduled payment if money can earn 3.2% compounded monthly? A) $2,452.80 B) $2,852.80 C) $2,492.80 D) $1,452.80 E) $3,452.80

146) You work for a development firm and have a residential building lot for sale. You have received two purchase offers. Offer A is offering a $200,000 down payment plus $450,000 payable in one year. Offer B is $150,000 down plus two $250,000 payments due six and twelve months from now. Which offer has the greater economic value if money can earn 4% compounded quarterly and how much greater is the higher offer in today's dollars? A) Offer A $2,877.94 greater value B) Offer B $2,977.94 greater value C) Offer B $2,877.94 greater value D) Offer A $2,977.94 greater value E) Offer B $2,888.94 greater value

147)

Calculate the missing value:

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Nominal Interest Rate (%)

Compounding Frequency

Periodic Interest Rate (%)

10.8 Quarterly

148)

Calculate the missing value:

Nominal Interest Rate (%)

Compounding Frequency

Periodic Interest Rate (%)

11.75 Semiannually

149)

Calculate the missing value:

Nominal Interest Rate (%)

Compounding Frequency

Periodic Interest Rate (%)

10.5 Monthly

150)

Calculate the missing value:

Nominal Interest Rate (%)

Compounding Frequency

Periodic Interest Rate (%)

? Semiannually

151)

4.95

Calculate the missing value:

Nominal Interest Rate (%) 8.25

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Compounding Frequency

Periodic Interest Rate (%) ?

4.125

152)

Calculate the missing value:

Nominal Interest Rate (%)

Compounding Frequency

13.5

153)

Periodic Interest Rate (%) ?

1.125

What is the periodic rate of interest corresponding to:

a) 7.5% compounded quarterly? b) 8.4% compounded monthly?

154)

Determine the periodic interest rate for a nominal interest rate of:

a) 8% compounded semiannually? b) 8% compounded monthly, to the nearest 0.01%?

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155)

Determine the nominal interest rate if the periodic rate is:

a) 1.25% per quarter. b) per month.

156)

What is the nominal rate of interest if the periodic rate is:

a) 0.25% per month? b) 4.8% per year?

157)

Calculate the maturity value:

Principal ($)

Term

Nominal Rate (%)

5000 7 years

158)

Compounding Frequency 6 Semiannually

Calculate the maturity value:

Principal ($) 8500

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Term 5.5 years

Nominal Rate (%)

Compounding Frequency 9.5 Quarterly

159)

Calculate the maturity value:

Principal ($) 12100

160)

4400

3.25 years

Compounding Frequency 7.5 Monthly

Term

Nominal Rate (%)

6.75 years

Compounding Frequency 5 Monthly

Calculate the equivalent value of the scheduled payment on the indicated date.

Scheduled Payment $5000 due 1.5 years ago

162)

Nominal Rate (%)

Calculate the maturity value:

Principal ($)

161)

Term

Date of Equivalent Value Money Can Earn 2.5 years from now

Compounding Frequency

8.25% Annually

Calculate the equivalent value of the scheduled payment on the indicated date.

Scheduled Payment $3000 due in 5 months

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Date of Equivalent Value Money Can Earn 3 years from now

Compounding Frequency

7.5% Monthly

163)

Calculate the original principal:

Maturity Value $10,000

164)

$5437.52

$7000 due in 8 years

4.5% Annually

Term

Nominal Rate

27 months

Compounding Frequency

8.5% Quarterly

Date of Equivalent Value Money Can Earn 1.5 years from now

Compounding Frequency

6.2% Semiannually

Calculate the equivalent value of the scheduled payment on the indicated date.

Scheduled Payment $1300 due in 3.5 years

167)

10 years

Compounding Frequency

Calculate the equivalent value of the scheduled payment on the indicated date.

Scheduled Payment

166)

Nominal Rate

Calculate the original principal:

Maturity Value

165)

Term

Date of Equivalent Value Money Can Earn 9 months from now

Compounding Frequency

5.5% Quarterly

Calculate the equivalent value of the scheduled payments on the indicated date.

Scheduled Payments $1400 due today

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Date of Equivalent Value Money Can Earn 3 years from now

Compounding Frequency

3% Quarterly

$1800 due in 5 years

168)

Calculate the equivalent value of the scheduled payments on the indicated date.

Scheduled Payments $2100 due 1.5 years ago $1300 due today $800 due in 2 years

169)

Date of Equivalent Value Money Can Earn 6 months from now

Compounding Frequency

4.5% Monthly

Calculate the equivalent value of the scheduled payments on the indicated date.

Scheduled Payments

Date of Equivalent Value Money Can Earn

$750 due today 18 months from now $1000 due in 2 years $1250 due in 4 years

Compounding Frequency

9.5% Semiannually

170) A furniture store is advertising television sets for 25% down and no interest on the balance, which is payable in a lump amount six months after the date of sale. When asked what discount would be given for cash payment on an $1195 set, the sales clerk offered $30. If you can earn 5% compounded monthly on short-term funds:

a) Should you pay cash and take the discount, or purchase the set on the advertised terms? b) What is the economic advantage, in today's dollars, of the preferred alternative?

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171) Carla has decided to purchase a $30,000 car. She can either liquidate some of her investments and pay cash, or accept the dealer's terms of $7000 down and successive payments of $10,000, $9000, and $8000 at the end of each of the next three years. a) Which choice should Carla make if she can earn 7% compounded semiannually on her investments? In current dollars, how much is the economic advantage of the preferred alternative? b) Which choice should Carla make if she can earn 10% compounded semiannually on her investments? In current dollars, how much is the economic advantage of the preferred alternative?

172) Boris recently turned 30, an event causing him to give thought to some long-range financial planning. He believes that, if he owns a home and is debt-free by age 60, he and his partner can retire and live comfortably on an annual income that is equivalent to $40,000 today. Fill in the cells of the following table with the nominal annual income (to the nearest dollar) needed to satisfy this criterion at each age under each of three inflation rate scenarios. Annual Rate of Inflation:

Income at age 60: Income at age 70: Income at age 80:

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173)

Calculate the periodic rate of interest if the nominal interest rate is 6% compounded:

a) Monthly. b) Quarterly. c) Semiannually.

174)

Determine the nominal interest rate if the periodic rate is:

a) 1.25% per quarter. b) per month.

175)

What is the nominal rate of interest if the periodic rate is:

a) per month? b) 5.8% per year?

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176) Calculate the compounding frequency for a nominal rate of 6.6% if the periodic rate of interest is:

a) 1.65% b) 3.3% c) 0.55%

177) For a nominal rate of 5.9%, determine the compounding frequency if the periodic interest rate is:

a) 2.95% b) c) 1.475%

178) What is the compounding frequency for a nominal rate of 4.7% if the periodic interest rate is:

a) 1.175%? b) ?

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179) For a nominal rate of 6.75%, determine the compounding frequency if the periodic interest rate is:

a) 0.5625% b) 1.6875%

180)

What is the future value of $8500 after 5½ years if it earns 9.5% compounded quarterly?

181) To what amount did $12,100 grow after 3¼ years if it earned 2.5% compounded monthly?

182) What was a $4400 investment worth after 6¾ years if it earned 5.4% compounded monthly?

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183) Assume that a $10,000 investment can earn 3% compounded quarterly. What will be its future value:

a) After 15 years? b) After 20 years? c) After 25 years? d) After 30 years?

184) By calculating the maturity value of $100 invested for 1 year at each rate, determine which rate of return an investor would prefer. a) 3.0% compounded monthly. b) 3.1% compounded quarterly. c) 3.2% compounded semiannually. d) 3.3% compounded annually.

185) By calculating the maturity value of $100 invested for 1 year at each rate, determine which rate of return an investor would prefer. a) 12.0% compounded monthly. b) 12.1% compounded quarterly. c) 12.2% compounded semiannually. d) 12.3% compounded annually.

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186) a) What is the maturity value of a $12,000 loan for 18 months at 7.2% compounded quarterly? b) How much interest is charged on the loan?

187) What total interest will be earned by $5000 invested at 5.4% compounded monthly for 3½ years?

188) How much more will an investment of $10,000 be worth after 25 years if it earns 5% compounded annually instead of 4% compounded annually? Calculate the difference in dollars and as a percentage (to the nearest 0.01%) of the smaller maturity value.

189) How much more will an investment of $10,000 be worth after 25 years if it earns 6% compounded annually instead of 5% compounded annually? Calculate the difference in dollars and as a percentage (to the nearest 0.01%) of the smaller maturity value.

190) How much more will an investment of $10,000 earning 5% compounded annually be worth after 25 years than after 20 years? Calculate the difference in dollars and as a percentage (to the nearest 0.01%) of the smaller maturity value. Version 1

191) How much more will an investment of $10,000 earning 8% compounded annually be worth after 15 years than after 10 years? Calculate the difference in dollars and as a percentage (to the nearest 0.01%) of the smaller maturity value.

192) A $1000 investment is made today. Calculate its maturity values for the six combinations of terms and annually compounded interest rates in the following table. Term Rate of Return

20 years

25 years

30 years

8% 10%

193) Suppose an individual invests $1000 at the beginning of each year for the next 30 years. Thirty years from now, how much more will the first $1000 investment be worth than the 16th $1000 investment if both earn 8.5% compounded annually?

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194) A $5000 payment due 1½ years ago has not been paid. If money can earn 3.25% compounded annually, what amount paid 2½ years from now would be the economic equivalent of the missed payment?

195) What amount three years from now is equivalent to $3000 due five months from now? Assume that money can earn 7.5% compounded monthly.

196) What amount today is equivalent to $10,000 4 years ago, if money earned 5.5% compounded monthly over the last 4 years?

197) What amount two years from will be equivalent to $2300 1½ years ago, if money earns 6.25% compounded semiannually during the intervening time?

198) Payments of $1300 due today and $1800 due in 1¾ years are to be replaced by a single payment 4 years from now. What is the amount of that payment if money is worth 2% compounded quarterly?

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199) Bjorn defaulted on payments of $2000 due 3 years ago and $1000 due 1½ years ago. What would a fair settlement to the payee be 1½ years from now if the money could have been invested in low-risk government bonds to earn 4.2% compounded semiannually?

200) Faisal borrowed $3000, $3500, and $4000 from his father on January 1 of 3 successive years at college. Faisal and his father agreed that interest would accumulate on each amount at the rate of 5% compounded semiannually. Faisal is to start repaying the loan on the January 1 following graduation. What consolidated amount will he owe at that time?

201) Interest rates were at historical highs in the early 1980s. In August of 1981, you could earn 17.5% compounded annually on a five-year term deposit with a Canadian bank. Since then, the interest rate offered on five-year term deposits dropped to a low of 2.0% compounded annually in February of 2013. On a $10,000 deposit for a term of five years, how much more would you have earned at the historical high interest rate than at the more recent low rate?

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202) Mrs. Vanderberg has just deposited $5000 in each of three savings plans for her grandchildren. They will have access to the accumulated funds on their 19th birthdays. Their current ages are 12 years, 7 months (Donna); 10 years, 3 months (Tim); and 7 years, 11 months (Gary). If the plans earn 8% compounded monthly, what amount will each grandchild receive at age 19?

203) Nelson borrowed $5000 for 4.5 years. For the first 2.5 years, the interest rate on the loan was 8.4% compounded monthly. Then the rate became 7.5% compounded semiannually. What total amount was required to pay off the loan if no payments were made before the expiry of the 4.5-year term?

204) Alberto has just invested $60,000 in a five-year Guaranteed Investment Certificate (GIC) earning 6% compounded semiannually. When the GIC matures, he will reinvest its entire maturity value in a new five-year GIC. What will be the maturity value of the second GIC if it yields:

a) The same rate as the current GIC? b) 7% compounded semiannually? c) 5% compounded semiannually?

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205) An investment of $2500 earned interest at 4.5% compounded quarterly for 1½ years, and then 4.0% compounded monthly for two years. How much interest did the investment earn in the 3½ years?

206) A debt of $7000 accumulated interest at 9.5% compounded quarterly for 15 months, after which the rate changed to 8.5% compounded semiannually for the next six months. What was the total amount owed at the end of the entire 21-month period?

207) Megan borrowed $1900 3½ years ago at 7% compounded semiannually. Two years ago she made a payment of $1000. What amount is required today to pay off the remaining principal and the accrued interest?

208) Duane borrowed $3000 from his grandmother five years ago. The interest on the loan was to be 5% compounded semiannually for the first three years, and 6% compounded monthly thereafter. If he made a $1000 payment 2½ years ago, what is the amount now owed on the loan?

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209) A loan of $4000 at 7.5% compounded monthly requires three payments of $1000 at 6, 12, and 18 months after the date of the loan and a final payment of the full balance after 2 years. What is the amount of the final payment?

210) Dr. Sawicki obtained a variable-rate loan of $10,000. The lender required payment of at least $2000 each year. After nine months the doctor paid $2500, and another nine months later she paid $3000. What amount was owed on the loan after 2 years if the interest rate was 6.6% compounded monthly for the first year, and 7% compounded quarterly for the second year?

211) If money can be invested to earn 2.5% compounded annually, how much would have to be invested today to grow to $10,000 after:

a) 10 years? b) 20 years? c) 30 years?

212) 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:

a) 5% compounded quarterly? b) 7% compounded quarterly? c) 9% compounded quarterly? Version 1

213) What amount invested today would grow to $10,000 after 25 years if the investment earns: a) 4% compounded annually? b) 4% compounded semiannually? c) 4% compounded quarterly? d) 4% compounded monthly?

214) paid:

If money is worth 6% compounded annually, what amount today is equivalent to $10,000

a) 12 years from now? b) 24 years from now? c) 36 years from now?

215) What is the present value of $10,000 discounted at 4.5% compounded annually over ten years?

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216) What principal amount will have a maturity value of $5437.52 after 27 months if it earns 8.5% compounded quarterly?

217) The maturity value of an investment after 42 months is $9704.61. What was the original investment if it earned 3.5% compounded semiannually?

218) What amount today is economically equivalent to $8000 paid 18 months from now if money is worth 5% compounded monthly?

219) 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?

220) Ross has just been notified that the combined principal and interest on an amount that he borrowed 27 months ago at 11% compounded quarterly is now $2297.78. How much of this amount is principal and how much is interest? Version 1

221) Your client has a choice of either receiving $5000 two years from now or receiving a lump payment today. If your client can earn 5.4% compounded semiannually, what amount received today is equivalent to $5000 in two years?

222) 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?

223) What amount, 1½ years from now, is equivalent to $7000 due in 8 years if money can earn 6.2% compounded semiannually?

224) A payment of $1300 is scheduled for a date 3½ years from now. What would be an equivalent payment 9 months from now if money is worth 5.5% compounded quarterly?

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225) What amount 15 months ago is equivalent to $2600, 1½ years from now? Assume money can earn 5.4% compounded monthly.

226) Mustafa can receive a $77 dollar discount if he pays his property taxes early. Alternatively, he can pay the full amount of $2250 when payment is due in 9 months. Which alternative is to his advantage if he can earn 6% compounded monthly on short-term investments? In current dollars, how much is the advantage?

227) 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?

228) 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?

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229) Mohinder has financial obligations of $1000 due in 3½ years and $2000 due in 5½ 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 be willing to accept?

230) What payment 2¼ years from now would be a fair substitute for the combination of $1500 due (but not paid) 9 months ago and $2500 due in 4½ years, if money can earn 9% compounded quarterly?

231) What single payment 6 months from now would be economically equivalent to payments of $500 due (but not paid) 4 months ago, and $800 due in 12 months? Assume money can earn 2.5% compounded monthly.

232) What single payment 1 year from now would be equivalent to $2500 due in 3 months, and another $2500 due in 2 years? Money is worth 7% compounded quarterly.

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233) A scheduled payment stream consisted of three payments: $2100 due (but not paid) 1½ years ago, $1300 due today, and $800 due in 2 years. What single payment, 6 months from now, would be economically equivalent to the payment stream? Money can earn 4.5% compounded monthly.

234) 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 economicallyequivalent payment 18 months from now. What is that amount if the payee can earn 9.5% compounded semiannually?

235) 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 months. Which offer has the larger economic value if Alicia can earn 4.4% compounded quarterly on low-risk investments? How much more (in current dollars) is the better offer worth?

236) 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:

a) 5% compounded semiannually? b) 8% compounded semiannually?

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237) 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 contract. The news media always ignore the time value of money when they report the "value" of professional athletes' contracts. What is the economic value of Pete's contract on the date it was signed? Assume that the signing bonus was paid on that date, that the annual salaries will be paid in lump amounts ½ year, 1½ years, 2½ years, and 3½ years later, and that money is worth 5% compounded semiannually. Round the answer to the nearest $1000.

238) 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 5 years from now to have the same maturity value at age 55 as an immediate investment of $1000? Assume that both investments earn 8% compounded annually.

239) Michelle has just received an inheritance from her grandfather's estate. She will be entering college in 3½ years, and wants to immediately purchase three compound-interest investment certificates having the following maturity values and dates: $4000 at the beginning of her first academic year, $5000 at the start of her second year, and $6000 at the beginning of her third year. She can obtain interest rates of 5.6% compounded semiannually for any terms between 3 and 5 years, and 5% compounded quarterly for terms between 5 and 7 years. What principal amount should she invest in each certificate?

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240) 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 payee be willing to accept instead of the last three payments, if money can earn 8.5% compounded semiannually?

241) 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: $950 due in 4 months, $780 due in 6 months, and $1270 due in 5 months?

242) Teresita has three financial obligations to the same person: $2700 due in 1 year, $1900 due in 1½ years, and $1100 due in 3 years. She wishes to settle the obligations with a single payment in 2¼ years, when her inheritance will be released from her mother's estate. What amount should the creditor accept if money can earn 6% compounded quarterly?

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243) A $15,000 loan at 5.5% compounded semiannually is advanced today. Two payments of $4000 are to be made 1 year and 3 years from now. The balance is to be paid in 5 years. What will the third payment be?

244) 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?

245) A $10,000 loan at 4% compounded semiannually is to be repaid by three equal payments due 2½, 4, and 7 years after the date of the loan. What is the size of each payment?

246) A $6000 loan at 9% compounded quarterly is to be settled by two payments. The first payment is due after 9 months and the second payment, half the amount of the first payment, is due after 1½ years. Determine the size of each payment.

247) Commercial Finance Co. buys conditional sale contracts from furniture retailers at discounts that provide a 12% compounded monthly rate of return on the purchase price effective today. What total price should Commercial Finance pay for the following three contracts: $950 due in 4 months, $780 due in 6 months, and $1270 due in 5 months? Version 1

248) Teresita has three financial obligations to the same person: $2700 due in 1 year, $1900 due in 1½ years, and $1100 due in 3 years. She wishes to settle the obligations with a single payment in 2¼ years, when her inheritance will be released from her mother's estate. What amount should the creditor accept if money can earn 9% compounded monthly from the date nine months ago when the obligations were incurred?

249) If the total interest earned on an investment at 8.2% compounded semiannually for 8½ years was $1175.98, what was the original investment?

250) Peggy has never made any payments on a 5-year-old loan from her mother at 6% compounded annually. The total interest owed is now $845.56. To the nearest dollar, how much did she borrow from her mother?

251) Mrs. Sandhu placed $11,500 in a 4-year compound-interest GIC earning 6.75% compounded monthly. What is the GIC's maturity value?

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252) If an investor has the choice between rates of 5.4% compounded quarterly and 5.5% compounded annually for a 6-year GIC, which rate should be chosen?

253) 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?

254) 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, which GIC will have the greater maturity value after five years? How much greater?

255) Stan purchased a $15,000 compound-interest Series P79 Canada Premium Bond on December 1, 2011. The interest rate in the first year was 1.0% and in the second year was 1.2%. What interest did he receive when he redeemed the CPB on May 1, 2013?

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256)

TABLE 8.2 Interest Rates (%) on Unmatured Canada Premium Bonds

Interest rate P58 (issued P64 (issued P70 (issued P76 (issued P78 (issued P84 (issued P86 (issued effective Nov. 1, Nov. 1, Nov. 1, Nov. 1, Nov. 1, Nov. 1, Nov. 1, Nov. 1 of: 2007) 2008) 2009) 2010) 2011) 2014) 2015) 2007

3.30

2008

3.40

2.35

2009

3.50

2.50

1.00

2010

1.10

2.65

1.40

1.10

2011

1.40

1.00

1.80

1.40

1.00

2012

1.70

1.20

1.00

1.70

1.20

2013

1.00

1.40

1.20

1.00

1.40

2014

1.20

1.00

1.40

1.20

1.00

2015

1.40

1.20

0.70

1.40

1.20

0.70

1.40

0.80

1.40

0.80

2016 2017 Matures Nov.

0.90 2017

2018

2019

0.90 2020

2021

2017

20189

What amount did the owner of a $5000 face value compound-interest series P64 Canada Premium Bond receive when she redeemed the bond on:

a) November 1, 2013? b) August 21, 2014?

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257)

TABLE 8.2 Interest Rates (%) on Unmatured Canada Premium Bonds

3.30

2008

3.40

2.35

2009

3.50

2.50

1.00

2010

1.10

2.65

1.40

1.10

2011

1.40

1.00

1.80

1.40

1.00

2012

1.70

1.20

1.00

1.70

1.20

2013

1.00

1.40

1.20

1.00

1.40

2014

1.20

1.00

1.40

1.20

1.00

2015

1.40

1.20

0.70

1.40

1.20

0.70

1.40

0.80

1.40

0.80

2016 2017 Matures Nov.

0.90 2017

2018

2019

0.90 2020

2021

2017

20189

What amount did the owner of a $10,000 face value compound-interest series P70 CPB receive when he redeemed the bond on: a) November 1, 2012? b) May 19, 2013?

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258)

TABLE 8.2 Interest Rates (%) on Unmatured Canada Premium Bonds

3.30

2008

3.40

2.35

2009

3.50

2.50

1.00

2010

1.10

2.65

1.40

1.10

2011

1.40

1.00

1.80

1.40

1.00

2012

1.70

1.20

1.00

1.70

1.20

2013

1.00

1.40

1.20

1.00

1.40

2014

1.20

1.00

1.40

1.20

1.00

2015

1.40

1.20

0.70

1.40

1.20

0.70

1.40

0.80

1.40

0.80

2016 2017 Matures Nov.

0.90 2017

2018

2019

0.90 2020

2021

20189

2017

What was the redemption value of a $300 face value compound-interest series P78 CPB on March 1, 2014?

259) On February 1, 2014, Selma purchased a $50,000 compound-interest CSB. The interest rate on the CSB was 1.55% for each of the first two years and 2.675% for the third year. What was the total interest earned on the CSB by the time Selma redeemed the bond on April 1, 2016? Version 1

260) Calculate the maturity value of $2000 invested in a five-year compound-interest GIC earning 2.1% compounded annually?

261) 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?

262) $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?

263) 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?

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264) 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 2.75% compounded annually. What total interest would be earned during the five-year term on a $5000 investment in each type of GIC?

265) 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?

266) 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. Calculate the interest earned in the fourth year from a $10,000 investment in each GIC.

267) 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 would have to be initially invested in each GIC to have a maturity value of $20,000? Version 1

268) 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:

a) 2%? b) 3%? c) 4%?

269) How much money was needed 15 years ago to have the purchasing power of $1000 today if the average (compound annual) rate of inflation has been:

a) 2%? b) 4%?

270) 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?

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271) Zimbabwe's descent into economic chaos during the late 1990s and early 2000s resulted in hyperinflation. By August of 2008, the monthly inflation rate stood at 839%! Retailers were increasing their prices more than once each day. The government had to issue currency in ever rising denominations-the highest denomination note circulating in August 2008 was for $100 billion ($100,000,000,000) Zimbabwean dollars!

a) Consider a loaf of bread with a price of $4 at the beginning of a month. With an inflation rate of 839% per month, what would the loaf's price be at the end of a month in order to "keep pace" with inflation? b) In the scenario in part (a), what percentage of its purchasing power did a fixed nominal amount of currency retain at the end of the month? (Round to the nearest 0.01%) c) What daily percent price increase, compounded over a 30-day month, would result in an 839% overall price increase during the month? (Round to the nearest 0.01%) d) Consider a piece of candy priced at just one cent ($0.01) at the beginning of a year. If inflation continued at the rate of 839% per month for an entire year, what would be the inflationadjusted price of the candy at the end of the year? (Round to the nearest dollar)

272) 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:

a) 2%? b) 3%? c) 5%?

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273) In 2002 the number of workers in the forest industry was forecast to decline by 3% per year, reaching 80,000 in 2012. How many were employed in the industry in 2002? Round to the nearest person

274) 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?

275) 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?

276) Consider a $10,000 face value Government of Canada strip bond from the issue in Table 8.3 that matures on June 1, 2033. Assume the yield does not change as years go by.

a) What will be the bond's value on December 1, 2021? b) What will be the bond's value on December 1, 2025? c) Suppose you invest an amount equal to the answer from Part (a) at 2.228% compounded semiannually for four years. What will its maturity value be?

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277) Consider a $5000 face value Province of British Columbia strip bond from the issue in Table 8.3 that matures on December 18, 2026. If the yield does not change as years go by, what will be the bond's value on:

a) December 18, 2019? b) December 18, 2021? c) December 18, 2023?

278) Mrs. Janzen wishes to purchase 13-year-maturity strip bonds with $12,830 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?

279) If the current discount rate on 15-year strip bonds is 4.75% compounded semiannually, how many $1000 face value strip bonds can be purchased with $10,000?

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280) For a given term of 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-year GICs are 5.00%, 4.875%, and 4.75% for annual, semiannual, and monthly compounding, respectively. How much more will an investor earn over five years on a $10,000 GIC at the most favourable rate than at the least favourable rate?

281) 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.

a) Suppose your hourly wage at the beginning of 1978 was $10 per hour. What wage did you need to earn at the end of 1982 just to keep pace with inflation? b) To the nearest 0.01%, what percentage of its purchasing power did money lose over these five years?

282) 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 for the next four years. To the nearest dollar, what are the expected sales for the final year of the seven year period?

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283) 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 4½ years later when the market yield was 5.2% compounded semiannually. What was Wojtek's total gain on the investment?

284) 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?

285) 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?

286) 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 every three months.) A second payment in the amount needed to pay off the loan is due one year later. What price would an investor pay for the contract six months after the date of the loan to earn 10% compounded semiannually on the purchase price?

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287) 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 years. What would an investor pay for the loan contract 20 months after the date of the loan if she requires a rate of return of 9% compounded monthly?

288) 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 equivalent? Assume that money can earn 3% compounded quarterly.

289) 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 replacement payment if money is worth 9% compounded monthly.

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290) Patrice defaulted on payments of $1000 due one year ago and $1500 due six months ago. A Small Claims Court 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 payment is to be determined so that the creditor will end up in the same economic position as if the original payments had been made on time. The court set the fair rate of return at 4.2% compounded monthly. What should the third payment be?

291) 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 earn 4.5% compounded semiannually, what must the second payment be to make the proposed payments equivalent to the scheduled payments?

292) 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 earn 5.6% compounded quarterly. What is the amount of each of these payments?

293) Jorge is unable to make a $4500 payment due today. He proposes to settle the obligation by making three equal payments-one today, another in four months, and a third in nine months. What must each payment be to make the proposed payment stream equivalent to the scheduled payment if money can earn 7.2% compounded monthly?

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294) The scheduled payment stream consists of $5000 due today and $10,000 due in five years. It is proposed to replace this stream by an economically equivalent stream comprised of three equal payments due one, three, and five years from now. Determine the size of each payment if money is worth 5% compounded annually.

295) Payments of $400 due eight months ago and $650 due three months ago were not made. Now the debtor is proposing to "make good" by two future payments that provide for a 7.5% compounded monthly rate of return to the creditor on the missed payments. The first payment will be made in two months. The second payment, twice as large as the first, will be made in seven months. Determine the amount of each payment.

296) Two payments of $2000 each are scheduled for six months from now and two years from now. They are to be re-scheduled as follows: a payment one year from now and a second payment, half the size of the first payment, three years from now. What must the amount of each payment be for the replacement stream to be equivalent to the originally scheduled stream? Assume that money can earn 3.8% compounded semiannually.

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297) 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 the greater economic value if money can earn 9.5% compounded quarterly? How much more is it worth in current dollars?

298) During its January sale, Furniture City is offering terms of 25% down with no further payments and no interest charges for 6 months when the balance is due. Furniture City sells the conditional sale contracts from these credit sales to a finance company. The finance company discounts the contracts to yield 18% compounded monthly. What cash amount should Furniture City accept on a $1595 item in order to end up in the same financial position as if the item were sold under the terms of the January sale?

299) 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. a) Which choice should Henri make if he can earn 7% compounded semiannually on his investments? In current dollars, what is the economic advantage of the preferred alternative? b) Which choice should Henri make if he can earn 11% compounded semiannually on his investments? In current dollars, what is the economic advantage of the preferred alternative?

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300) 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. a) Which alternative should the winner choose if money can earn 3% compounded annually? In current dollars, what is the economic advantage of the preferred alternative?

b) Which alternative should the winner choose if money can earn 4.5% compounded annually? In current dollars, what is the economic advantage of the preferred alternative?

301) CompuSystems was supposed to pay a manufacturer $19,000 on a date 4 months ago and another $14,000 on a date two months from now. CompuSystems is proposing to pay $10,000 today and the balance in 5 months, when it will receive payment on a major sale to the provincial government. What will the second payment be if the manufacturer requires 12% compounded monthly on overdue accounts?

302) Payments of $5000 due three years from today and $7000 due five years from today are to be replaced by two payments due 1½ and four years from today. The first payment is to be half the amount of the second payment. What should the payments be if money can earn 3.5% compounded semiannually?

303) 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 accept?

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304) 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 1½ years. What should the last two payments be if money is worth 6.4% compounded quarterly?

305) A $15,000 loan with interest being charged at 10% compounded quarterly was made 2½ 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 an equivalent financial position, given that money can now earn only 6% compounded semiannually. What should be the amount of the second payment?

306) 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 3½ years at 8% compounded semiannually. Heather is now proposing to settle both debts with two equal payments to be made one and three years from now. What should the payments be if money now earns 6% compounded quarterly?

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307) What amount three years ago is equivalent to $4800 on a date 1½ years from now if money earns 3% compounded semiannually during the intervening time?

308) If the inflation rate for the next 10 years is 3% per year, what hourly rate of pay in 10 years will be equivalent to $15 per hour today?

309) To satisfy more stringent restrictions on toxic waste discharge, a pulp mill will have to reduce toxic waste by 10% from the previous year's level every year for the next five years. What fraction is the target level of the current discharge level? Round to the nearest 0.01%

310) If an investor has the choice between rates of 5.5% compounded semiannually and 5.6% compounded annually for a six-year GIC, which rate should be chosen?

311) The population for the Region of Waterloo at the end of 2014 was 568,500. If population growth matches current values and increases 1.63% per year for the next five years, what is the predicted population for the region in 2019? Round your answer to the nearest 1,000 people.

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312) At the same time as compound-interest Canada Savings Bonds were being sold with guaranteed minimum annual rates of 5.25%, 6%, and 6.75% in the first 3 years of their 10-year term, a trust company offered 3-year "Bond-Beater" GICs paying 5.75%, 6.5%, and 7.25% compounded annually in the 3 successive years. If the CSBs earn their minimum interest rates, how much more will $4000 earn over the 3 years if invested in the GIC?

313) Jacques has just been notified that the combined principal and interest on an amount he borrowed 19 months ago at 8.4% compounded monthly is now $2297.78. How much of this amount is principal and how much is interest?

314) Accurate Accounting obtained a private loan of $25,000 for five years. No payments were required, but the loan accrued interest at the rate of 9% compounded monthly for the first 2½ years and then at 8.25% compounded semiannually for the remainder of the term. What total amount was required to pay off the loan?

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315) A credit union's Rate-Climber GIC pays rates of 2%, 2.5%, and 3% compounded semiannually in successive years of a 3-year term. a) What will be the maturity value of $12,000 invested in this GIC?

b) How much interest will be earned in the second year?

316) A $1000 face value compound-interest Series P64 Canada Premium Bond was redeemed on March 14, 2013. What amount did the bond's owner receive? TABLE 8.2 Interest Rates (%) on Unmatured Canada Premium Bonds Interest rate P58 (issued P64 (issued P70 (issued P76 (issued P78 (issued P84 (issued P86 (issued effective Nov. 1, Nov. 1, Nov. 1, Nov. 1, Nov. 1, Nov. 1, Nov. 1, Nov. 1 of: 2007) 2008) 2009) 2010) 2011) 2014) 2015) 2007

3.30

2008

3.40

2.35

2009

3.50

2.50

1.00

2010

1.10

2.65

1.40

1.10

2011

1.40

1.00

1.80

1.40

1.00

2012

1.70

1.20

1.00

1.70

1.20

2013

1.00

1.40

1.20

1.00

1.40

2014

1.20

1.00

1.40

1.20

1.00

2015

1.40

1.20

0.70

1.40

1.20

0.70

1.40

0.80

1.40

0.80

2016 2017 Matures Nov.

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0.90 2017

2018

2019

0.90 2020

2021

2017

20189

317) On the same date that the Alberta Treasury Branches were advertising rates of 2.25%, 3%, 3.75%, 4.5%, and 6.5% in successive years of their five-year compound-interest Springboard GIC, they offered 3.5% compounded annually on their five-year fixed-rate compound-interest GIC. a) What will be the maturity values of $10,000 invested in each GIC?

b) How much interest will each GIC earn in the third year?

318) Maynard Appliances is holding a "Fifty-Fifty Sale. " Major appliances may be purchased for nothing down and no interest to pay if the customer pays 50% of the purchase price in 6 months and the remaining 50% in 12 months. Maynard then sells the conditional sale contracts at a discount to Consumers Finance Co. What will the finance company pay Maynard for a conditional sale contract in the amount of $1085 if it requires a return of 14% compounded quarterly?

319) Donnelly Excavating has received two offers on a used backhoe that Donnelly is advertising for sale. Offer 1 is for $10,000 down, $15,000 in six months, and $15,000 in 18 months. Offer 2 is for $8000 down plus two $17,500 payments one and two years from now. a) What is the economic value of each offer today if money is worth 5.25% compounded semiannually?

b) Which offer should be accepted?

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320) For the five-year period ended October 31, 2012, the RBC Canadian Equity Income Fund had compound annual returns of 14.40% while RBC's North American Value fund had returns of 4.31% compounding annually. How much more would an initial $1000 investment in the Canadian Equity Fund have earned over the five-year period compared to a $1000 investment in RBC's North American Value fund?

321) Isaac borrowed $3000 at 10.5% compounded quarterly 3½ years ago. One year ago he made a payment of $1200. What amount will extinguish the loan today?

322) For the 5-year period ended October 31, 2012, the Fidelity Dividend Plus Fund had a compound annual return of 7.99% compared to the average annual five-year returns of -0.337% for funds in the same category. How much more would an initial $1000 investment have earned over the 5-year period in the Fidelity Dividend Plus compared to a $1000 investment fund earning the average rate of return?

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323) Determine the redemption value of a $500 face value compound-interest Series P78 Canada Premium Bond on: a) November 1, 2016. b) April 15, 2017. TABLE 8.2 Interest Rates (%) on Unmatured Canada Premium Bonds Interest rate P58 (issued P64 (issued P70 (issued P76 (issued P78 (issued P84 (issued P86 (issued effective Nov. 1, Nov. 1, Nov. 1, Nov. 1, Nov. 1, Nov. 1, Nov. 1, Nov. 1 of: 2007) 2008) 2009) 2010) 2011) 2014) 2015) 2007

3.30

2008

3.40

2.35

2009

3.50

2.50

1.00

2010

1.10

2.65

1.40

1.10

2011

1.40

1.00

1.80

1.40

1.00

2012

1.70

1.20

1.00

1.70

1.20

2013

1.00

1.40

1.20

1.00

1.40

2014

1.20

1.00

1.40

1.20

1.00

2015

1.40

1.20

0.70

1.40

1.20

0.70

1.40

0.80

1.40

0.80

2016 2017 Matures Nov.

0.90 2017

2018

2019

0.90 2020

2021

2017

20189

324) Payments of $2400 originally scheduled to be paid today, $1200 due 18 months from today, and $3000 due 33 months from today are to be replaced with a single payment due six months from now. Using 6% compounded quarterly as the rate of return money can earn, what payment six months from now would be equivalent to the three scheduled payments?

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325) Jarmila borrowed $3000, $3500, and $4000 from her grandmother on December 1 in each of three successive years at college. They agreed that interest would accumulate at the rate of 4% compounded semiannually. Jarmila is to start repaying the loan on June 1 following the third loan. What consolidated amount will she owe at that time?

326) A four-year $7000 promissory note bearing interest at 10.5% compounded monthly was discounted 18 months after issue to yield 9.5% compounded quarterly. What were the proceeds from the sale of the note?

327) For the 10 years ended December 31, 2014, the annually compounded rate of return on the portfolio of stocks represented by the S&P/TSX Composite Index was 4.7%. For the same period, the compound annual rate of inflation (as measured by the increase in the Consumer Price Index) was 1.68%. a) What was $1000 invested in the S&P/TSX stock portfolio on December 31, 2014, worth 10 years later?

b) What amount of money was needed on December 31, 2014, to have the same purchasing power as $1000 on December 31, 2004? c) For an investment in the Index stock portfolio, what was the percent increase in purchasing power of the original $1000? (Round to the nearest %)

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328) On February 1 of 3 successive years, Roger contributed $3000, $4000, and $3500, respectively, to his RRSP. The funds in his plan earned 9% compounded monthly for the first year, 8.5% compounded quarterly for the second year, and 7.75% compounded semiannually for the third year. What was the value of his RRSP 3 years after the first contribution?

329) A loan contract called for a payment after two years of $1500 plus interest (on this $1500 only) at 8% compounded quarterly, and a second payment after four years of $2500 plus interest (on this $2500) at 8% compounded quarterly. What would you pay to purchase the contract 18 months after the contract date if you require a return of 10.5% compounded semiannually?

330) Payments of $1800 and $2400 were made on a $10,000 variable-rate loan 18 and 30 months after the date of the loan. The interest rate was 11.5% compounded semiannually for the first 2 years and 10.74% compounded monthly thereafter. What amount was owed on the loan after 3 years?

331) A $6500 loan at 11.25% compounded monthly is to be repaid by three equal payments due 3, 6, and 12 months after the date of the loan. Calculate the size of each payment.

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332) Payments of $2300 due 18 months ago and $3100 due in three years are to be replaced by an equivalent stream of payments consisting of $2000 today and two equal payments due two and four years from now. If money can earn 9.75% compounded semiannually, what should be the amount of each of these two payments?

333) A $1000 face value strip bond has 19 years remaining until maturity. What is its price if the market rate of return on such bonds is 5.9% compounded semiannually?

334) Two payments of $5000 are scheduled six months and three years from now. They are to be replaced by a payment of $3000 in two years, a second payment in 42 months, and a third payment, twice as large as the second, in five years. What should the last two payments be if money is worth 9% compounded semiannually?

335) A five-year, compound-interest GIC purchased for $1000 earns 4% compounded annually. a) How much interest will the GIC earn in the fifth year? b) If the rate of inflation during the five-year term is 2.2% per year, what will be the percent increase in the purchasing power of the invested funds over the entire five years? (Round to the nearest 0.01%)

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336) Three equal payments were made one, two, and three years after the date on which a $10,000 loan was granted at 10.5% compounded monthly. If the balance immediately after the third payment was $5326.94, what was the amount of each payment?

337) If the total interest earned on an investment at 2.6% compounded monthly for 3½ years was $618.55, what was the original investment?

338) Four years ago John borrowed $3000 from Arlette. The principal with interest at 10% compounded semiannually is to be repaid six years from the date of the loan. Fifteen months ago, John borrowed another $1500 for 3½ years at 9% compounded quarterly. John is now proposing to settle both debts with two equal payments to be made 2 and 3½ years from now. What should the payments be if money now earns 8% compounded quarterly?

339)

Calculate the periodic interest rate for 3.8% compounded quarterly.

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340)

Calculate the periodic interest rate for 4.8% compounded monthly.

341) Given a periodic interest rate of 0.9375%, calculate the nominal interest rate if interest is compounded quarterly.

342) Given a periodic interest rate of 0.65%, calculate the nominal interest rate if interest is compounded monthly.

343) What will be the maturity value of $800 invested at 3.75% compounded quarterly after five years?

344) How much interest is earned by investing $2100 for three years at 4.5% compounded monthly?

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345) An investor has a choice of two investments, the first for 5.5% compounded daily, and the second for 5.65% compounded annually. Which rate should the investor choose?

346) Sam invested $3000 at 3.5% compounded quarterly. After one year, the rate changed to 3.75% compounded semiannually. How much will Sam have two years after the initial investment?

347) Maria invested $1200 at 3.25% compounded monthly. After six months, the rate changed to 3.5% compounded quarterly. How much interest will Maria earn after four years?

348) Sam borrowed $2000 at 5.5% compounded quarterly. After one year, he paid $1000 towards the outstanding balance. How much will Sam owe after two years?

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349) Liam borrowed $3500 at 6.5% compounded monthly. After six months and one year, he paid $500 towards the outstanding balance. How much did Liam owe after three years?

350) Interest is 3.75% compounded monthly. If you want to have $4000 in an account in three years, how much should you deposit to that account today?

351) A loan is to be repaid by two equal payments of $2000 in one and three years. What single payment today would pay off the loan at 6.5% compounded quarterly?

352) A loan is to be repaid by two equal payments of $3000 in six months and 30 months. What single payment in two years would pay off the loan if interest is 6.3% compounded monthly?

353) Larissa agreed to repay a loan in two years by making a payment of $2471.84. If interest is 6.5% compounded semiannually, how much did Larissa borrow? Version 1

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354) A loan of $5000 is to be repaid by $2500 in one year, and a final payment in two years. If interest is 6.6% compounded quarterly, what is the size of the final payment?

355) A loan of $7000 is to be repaid by two equal payments in six months, and two years. If interest is 5.4% compounded monthly, what is the size of the payments?

356) A loan of $8000 is to be repaid by three payments of $1500 in one year, and two other payments in two and four years after the date of the loan. The second payment is to be twice that of the third payment. If interest is 4.8% compounded quarterly, what is the size of the last two payments?

357) What quarterly payment will an investor receive from a $5000, two-year GIC earning a nominal rate of 3.8% compounded quarterly?

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358) An investor has a choice of three investments, 6.85% compounded quarterly, 7% compounded annually, and 6.6% compounded monthly. Which rate should the investor choose?

359) A bank offers a five-year escalating rate GIC, paying 2.5%, 2.75%, 2.85%, 3%, and 3.25% respectively, and compounded at the end of each year. How much interest will a $1000 GIC earn?

360) A four-year promissory note with a face value of $2000, bearing interest at 6% compounded quarterly, was sold 1½ years after its issue date to yield the buyer 8% compounded monthly. What amount did the buyer pay for the note?

361) If the rate of inflation is expected to be 2.75% per year for the next five years, what hourly rate would a student earning $10 per hour today have to make in five years in order to have the same purchasing power?

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362) A current study shows that the demand for widgets is expected to decrease by 3% per year over the next seven years. If production is now 450,000 units, how many units does the company expect to produce in seven years? Round to the nearest whole unit.

363) A loan is to be repaid by $1000 in one year and $1500 in three years. The borrower has asked to repay $1000 in two years and a final payment in three years. If money can earn 8% compounded quarterly, what is the size of the final payment?

364) Determine the periodic interest rate for a nominal interest rate of 4.8% compounded semiannually?

365) Determine the periodic interest rate for a nominal interest rate of 4.8% compounded quarterly?

366) Determine the periodic interest rate for a nominal interest rate of 4.8% compounded monthly?

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367)

Determine the nominal rate of interest if the periodic rate is 1.5% per month.

368)

Determine the nominal rate of interest if the periodic rate is 1.5% per quarter.

369)

Determine the nominal rate of interest if the periodic rate is 1.5% per half-year.

370) For a nominal rate of 6.75%, determine the compounding frequency if the periodic interest rate is 0.5625%.

371) For a nominal rate of 6.75%, determine the compounding frequency if the periodic interest rate is 1.6875%.

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372) For a nominal rate of 6.75%, determine the compounding frequency if the periodic interest rate is 3.375%.

373) What is the maturity value of $7,000 invested at 2.0% compounded semiannually for five years?

374) What is the maturity value of $7,000 invested at 4.0% compounded semiannually for five years?

375) What is the maturity value of $7,000 invested at 4.0% compounded quarterly for five years?

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376) What is the maturity value of $7,000 invested at 5.0% compounded semiannually for five years?

377) What is the maturity value of $17,000 invested at 5.0% compounded semiannually for five years?

378) What is the maturity value of $15,000 invested at 2.0% compounded semiannually for fifteen years?

379) What is the maturity value of $17,000 invested at 5.0% compounded quarterly for five years?

380) You receive a loan of $22,000 for 24 months at 5.2% compounded quarterly? How much interest is charged on the loan?

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381) You receive a loan of $22,000 for 36 months at 5.2% compounded quarterly? How much interest is charged on the loan?

382) You receive a loan of $22,000 for 24 months at 5.2% compounded semiannually? How much interest is charged on the loan?

383) You receive a loan of $22,000 for 36 months at 5.2% compounded semiannually? How much interest is charged on the loan?

384) How much more will an investment of $100,000 earning 4% compounded annually be worth after 15 years than after 12 years?

385) How much more will an investment of $100,000 earning 2% compounded annually be worth after 30 years than after 25 years?

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386) How much more will an investment of $50,000 earning 2% compounded quarterly be worth after 13 years than after 12 years?

387) How much more will an investment of $50,000 earning 4% compounded semiannually be worth after 5 years than after 4 years?

388) What amount today is equivalent to $5,000 five years ago, if money earned 7% compounded monthly over the last four years?

389) You won a lawsuit three years ago and were awarded $10,000. If money earned 5% compounded monthly, how much money would you receive today as full payment?

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390) You loaned a friend $5,000 one year ago for tuition. If your friend agreed to pay interest at a rate of 0.5% per month, what payment will pay off the loan today?

391) You loaned a friend $5,000 one year ago for tuition. If your friend agreed to pay interest at a rate of 0.5% per month, how much money will you earn in interest?

392) You borrowed $1,000, $2,500, and $3,000 from your parents on September 1 of three successive years at college. You agreed that interest would accumulate on each amount at the rate of 3% compounded semiannually. You wish to repay the loan one year after the last loan. What consolidated amount will he owe at that time?

393) Maia wishes to plan for her children's education. She wishes for them to have money for college when they turn eighteen. Maia has just deposited $3,000 in each of two savings plans for her kids. They will have access to the accumulated funds on their 18th birthdays. Jacob is 13 years and 5 months while Natasha is 11 years and 4 months old. If the plans earn 4% compounded monthly, what amount will each grandchild receive at age 18?

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394) You wished to start a new business and attended the Small Business Bank. You borrowed $10,000 for 4 years. For the first 1.5 years, the interest rate on the loan was 4.8% compounded monthly. Then the rate became 3.5% compounded semiannually. What total amount was required to pay off the loan if no payments were made?

395) You wished to start a new business and attended the Small Business Bank. You borrowed $10,000 for 4 years. For the first 1.5 years, the interest rate on the loan was 4.8% compounded monthly. Then the rate became 3.5% compounded semiannually. What total amount of interest was accrued in the last 2.5 years?

396) An investment of $4,500 earned interest at 2.8% compounded quarterly for 1.5 years, and then 3.0% compounded monthly for an additional three years. How much interest did the investment earn in the 4.5 years?

397) A loan of $9,000 at 6.5% compounded quarterly requires three payments of $2,000 at twelve twenty-four and thirty-six months after the date of the loan, and a final payment of the full balance after four years. What is the amount of the final payment?

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398) Xindu borrowed $5,000 from his parents to travel to Canada and study engineering. The interest on the loan was to be 1% compounded semiannually for the first three years, and 2% compounded monthly thereafter. If Xindu graduated and wished to pay back the full amount of the loan five years after he received it, how much was the final payment?

399) You borrowed a small amount of money and the credit company calculated you will owe them $8,520.19 two years from now. If the money is discounted at 3.2% compounded annually, how much was the original loan for?

400) You wish to have a down payment in three years for a new house. If you wish to have $25,000 as a down payment, what will you have to invest today if money can earn 1.5% compounded monthly?

401) The maturity value of an investment after 42 months is $5,645.61. What was the original investment, if it earned 3.5% compounded semiannually?

402) What amount today is economically equivalent to $4,000 paid 36 months from now, if money is worth 4.6% compounded quarterly? Version 1

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403) If your company's objective is to have $100,000 in two years for four new trucks, how much should they invest today in an account earning 3.5% compounded semiannually?

404) You have just been notified that the combined principal and interest on your credit card is $4,597.98. The credit card company charges interest at the rate of 18% compounded monthly. If it has been one year since any last payment or charges, how much did you owe on your credit card one year ago?

405) You won a contest that will pay you $10,000 six months from today. You don't wish to wait so you tell your friend they can have the $10,000 six months from now if they give you a lump sum today. If money can earn 4.75% compounded semiannually, how much money would you expect for the prize today?

406) Your company lost a lawsuit and they have to pay $125,000 one year from today. The company wishes to pay off the lawsuit immediately instead of waiting one year. If money can earn 5.6% compounded quarterly, how much should they pay today to clear the debt?

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407) Your friend borrowed money from you nine months ago. If they pay you $2,550 today, how much did they originally borrow from you if money can earn 3.35% compounded quarterly?

408) You can receive a discount on your tuition if you make an early payment instead of waiting until the due date. If you pay six months early, you can earn 5% compounded quarterly. If the amount owed on the due date six months from now is $4,500, how much will you save if you pay early and receive the discount?

409) Your company wishes to replace a payment of $1,600 three months from now with a single payment today. If money can earn 4.2% compounded monthly, what single payment today can replace the future payment of $1,600?

410) You have financial obligations of $2,000 due in twelve months and $1,500 due in two years. Your parents wish to give you the money to pay off your debts. What single payment today can replace the two payments if money can earn 1.75% compounded annually?

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411) What single payment one year from now would be economically equivalent to payments of $1,000 due fifteen months from now and $500 due eighteen months from now? Assume money can earn 3.25% compounded quarterly.

412) A scheduled payment stream consists of three payments: $1,800 due in 1.25 years, $1,300 due in 18 months and $1,700 due in twenty four months. What single payment three months from now would be economically equivalent to the payment stream? Money can earn 2.2% compounded quarterly.

413) Your company has asked you to evaluate a piece of real estate they wish to sell. There are two offers-to-purchase that the company has received. Offer A is an immediate cash payment of $200,000 and Offer B consists of two payments of $50,000—one in six months and one in twelve months. Offer B also includes an immediate down payment of $120,000. If money can earn 2.75% compounded semiannually, which offer should you recommend and how much more (in current dollars) is the better offer worth?

414) You purchased a seven-year, $10,000 compound interest GIC with funds in his RRSP. If the interest rate on the GIC is 1.25% compounded annually, what is the GIC's maturity value? Version 1

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415) Mrs. Landry placed $14,500 in a four-year compound interest GIC earning 2.75% compounded monthly. What is the GIC's maturity value?

416) TD Trust offers two-year compound interest GICs earning 1.85% compounded monthly or 1.9% compounded semiannually. Which rate should an investor choose?

417) If an investor has the choice between rates of 2.4% compounded quarterly and 2.5% compounded semiannually for a six-year GIC, which rate should she choose?

418) Western Financial offers a three-year compound interest GIC earning rates of 0.5%, 0.75% and 1% in successive years. CIBC offers a similar GIC paying rates of 0.75%, 0.75% and.90% in successive years. For a $1,000 investment, which GIC will have the greater maturity value after five years? How much greater?

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419) How, if at all, will the future value of $5,000 invested in a three-year variable-rate GIC differ if it earns 1%, 1.5%, and 2% in successive years instead of 2%, 1.5%, and 1% in successive years?

420) A high-interest GIC will earn 2.3% compounded annually for the first two years and 3.1% compounded annually for the last two years of its four-year term. What will be the maturity value of $10,000 invested in this GIC?

421) $22,000 is invested in a five-year compound interest GIC earning interest rates of 2%, 2.1%, 2.25%, 2.5%, and 2.75% in successive years. What amount will the investor receive at maturity?

422) Fidelity Investments compound interest GIC earns 1.125%, 1.25%, 1.5%, 1.875%, and 1.95% in successive years. How much interest is earned over the life of the GIC if you invest $5,000?

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423) Wells Fargo Financial advertised rates of.9%, 1.0%, 1.2%, 1.4%, and 1.5% for the five successive years of its five-year compound interest GIC. At the same time, the HSBC was offering fixed-rate five-year compound interest GICs yielding 1.25% compounded annually. Which investment would yield more and by how much if you invested $3,000?

424) You currently have $150 extra per month after all expenses to spend on activities. How much will you need 10 years from now to have the same purchasing power if the (compound annual) rate of inflation during the period is 2.2%?

425) If a car today costs $21,999, how much money would have been needed nine years ago to buy the exact same car if the (compound annual) rate of inflation has been 2.7%?

426) If the inflation rate for the next five years is 2.1% per year, what hourly rate of pay in five years will be equivalent to $11.50/hour today?

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427) During a political crisis, the cost of living was rising by 1.2% on a daily basis. If a loaf of bread currently costs $0.99, how much will the same loaf of bread cost 192 days from now if the inflation rate stays the same?

428) You are wishing to retire in five years and believe you will need $35,000 per year in today's dollars to live comfortably. How much money you require in your first year of retirement if the cost of living is averaging an annual increase of 2.25%?

429) According to the 2018 census, the town of North Ashford, had the fastest growing crime rate in Canada, recording 12.5 crimes per 100 people. If the crime rate grows 9.17% per year for the next two years, what will the new crime rate be?

430) A $5,000 face value strip bond has fifteen years remaining until maturity. What is its price if the market rate of return on such bonds is 1.22% compounded semiannually?

431) You wish to purchase a MB Hydro strip bond with seven and a half years to maturity. If the current yield rate is 2.105% compounded semiannually, how much should you pay for the bond for a $1,000 bond? Version 1

126

432) You wish to purchase some 25-year-maturity strip bonds with the $11,874 in cash you now have. If these strip bonds are currently priced to yield 2.125% compounded semiannually, how many $1000 denomination bonds can you purchase?

433) If the current discount rate on 20-year strip bonds is 0.95% compounded semiannually, how many $1000 face value strips can be purchased with $7,000?

434) Scheduled payments of $2,000 due today and $4,000 due in nine months are to be replaced by two payments—$3,000 due in fifteen months and a second payment of undetermined size due in twenty-four months. What must the second payment be for the two streams to be economically equivalent? Assume that money can earn 1.75% compounded quarterly.

435) A two-payment stream consisting of $2,500 due today and $1,900 due in nine months is to be replaced by an economically equivalent stream comprised of an undetermined payment due in ten months and a payment of $2,000 due in twenty-two months. Calculate the unknown replacement payment if money is worth 5% compounded monthly.

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436) You defaulted on payments of $800 due one year ago and $700 due six months ago. A small claims court judgment orders you to make three payments—$200 three months from now, $400 six months from now, and a third payment nine months from now. The third payment is to be determined so that the creditor will end up in the same economic position as if the original payments had been made on time. The court set the fair rate of return at 1.2% compounded quarterly. What should the third payment be?

437) Paula is unable to make a $4500 payment due today. She proposes to settle the obligation by making two equal payments—one in four months and a second in nine months. What must each payment be to make the proposed payment stream equivalent to the scheduled payment if money can earn 3.2% compounded monthly?

438) You work for a development firm and have a residential building lot for sale. You have received two purchase offers. Offer A is offering a $200,000 down payment plus $450,000 payable in one year. Offer B is $150,000 down plus two $250,000 payments due six and twelve months from now. Which offer has the greater economic value if money can earn 4% compounded quarterly and how much greater is the higher offer in todays dollars?

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Answer Key Test name: Chap 09_10ce 1) E 2) A 3) E 4) D 5) C 6) C 7) B 8) D 9) E 10) E 11) D 12) A 13) B 14) C 15) E 16) B 17) A 18) C 19) A 20) B 21) E 22) B 23) A 24) E 25) B 26) D Version 1

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27) C 28) A 29) C 30) C 31) D 32) B 33) C 34) A 35) D 36) E 37) C 38) B 39) D 40) E 41) C 42) B 43) B 44) E 45) D 46) A 47) C 48) D 49) E 50) C 51) B 52) D 53) C 54) B 55) D 56) A Version 1

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57) C 58) D 59) B 60) E 61) A 62) B 63) E 64) B 65) B 66) D 67) A 68) D 69) B 70) C 71) A 72) E 73) C 74) E 75) A 76) B 77) C 78) D 79) E 80) A 81) B 82) B 83) C 84) C 85) D 86) D Version 1

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87) D 88) E 89) A 90) A 91) B 92) B 93) C 94) C 95) C 96) D 97) D 98) E 99) E 100) A 101) A 102) B 103) B 104) C 105) C 106) C 107) C 108) D 109) D 110) E 111) E 112) E 113) E 114) A 115) A 116) B Version 1

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117) B 118) B 119) C 120) C 121) D 122) D 123) D 124) A 125) B 126) B 127) C 128) A 129) B 130) A 131) A 132) A 133) A 134) B 135) B 136) C 137) E 138) E 139) E 140) E 141) A 142) B 143) B 144) A 145) A 146) C Version 1

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CHAPTER 10 1) An investment of $10,000 on January 1, 1970 grew to $300,000 on January 1, 2010. What average annually compounded rate of return was earned? A) 300% B) 10.025% C) 8.778% D) 8.875% E) 9.185%

2) A $25,000 strip bond is purchased for $8235 to yield 8% compounded semiannually. What is the remaining time until maturity? A) 30.53 years B) 12.50 years C) 14.16 years D) 22.28 years E) 56.63 years

3) A $6300 face-value investment earning interest at 10% compounded annually for a sixyear term was sold for $7550. How many years before its maturity date was the note sold if it was discounted to yield 12% compounded monthly? A) 2.73 years B) 3.27 years C) 4.50 years D) 12.38 years E) 39.28 years

At what monthly compounded nominal rate of interest will money triple in eight years?

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A) 13.81% B) 9.59% C) 14.72% D) 1.23% E) 115.10%

5) For a five-year GIC investment, what monthly compounded nominal rate would put you in the same financial position as 8% compounded semiannually? A) 8.02% B) 8.16% C) 7.84% D) 8.21% E) 7.87%

6) No payments were made on a $2,598 loan during its three-year term. What was the annually compounded nominal interest rate on the loan, if the amount owed at the end of the term was $3,398.95? A) 9.37% compounded annually B) 6.37% compounded annually C) 9.73% compounded annually D) 8.37% compounded annually E) 9.37% compounded semiannually

7) What was the semiannually compounded nominal rate of growth if the future value of $2,000 after fifteen years was $5,822?

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A) 7.25% compounded annually B) 7.25% compounded semiannually C) 6.25% compounded semiannually D) 8.25% compounded semiannually E) 14.50% compounded semiannually

8) An initial $3,000 investment was worth $5200 after four years and seven months. What monthly compounded nominal rate of return did the investment earn? A) 11.06% compounded monthly B) 10.06% compounded monthly C) 12.06% compounded monthly D) 13.06% compounded monthly E) 14.06% compounded monthly

9) An invoice indicates that interest at the rate of 1.75% per month will be charged on overdue amounts. What effective rate of interest is being charged? A) 19.21% B) 23.14% C) 24.75% D) 26.67% E) 21.00%

10) Find the monthly compounded nominal interest rate that is equivalent to an effective rate of 21%.

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A) 1.75% B) 23.144% C) 1.929% D) 19.214% E) 1.601%

11) What effective rate of interest is equivalent to a nominal rate of 19.214% compounded monthly? A) 1.210% B) 21.000% C) 14.530% D) 22.000% E) 17.704%

12) A six-year, $20,000 GIC has a maturity value of $29,625. Calculate the semiannually compounded nominal interest rate. A) 6.77% B) 6.66% C) 4.23% D) 6.94% E) 5.44%

13) A $50,000 GIC will earn $70,000 of interest over its 10-year term. What is the monthly compounded nominal rate of interest?

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A) 7.32% B) 9.15% C) 3.37% D) 8.79% E) 3.42%

14)

At what quarterly compounded nominal interest rate will money double in 75 months? A) 11.25% B) 15.06% C) 3.77% D) 28.11% E) 11.73%

15) Albert Greco paid $1,974 for a $10,000 strip bond 16 years before it reached maturity. What semiannually compounded nominal rate will Albert earn on his investment? A) 11.78% B) 3.17% C) 5.22% D) 10.67% E) 10.40%

16) Seven years before it matures the value of a $1,000 strip bond is $672. What is the semiannually compounded nominal interest rate?

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A) 5.76% B) 5.84% C) 3.10% D) 24.40% E) 2.88%

17) At what annually compounded interest rate will an investment of $71,294.69 double in 90 months? A) 6.97% B) 7.23% C) 9.68% D) 9.28% E) 10.55%

18) The Wilsons bought their home 16 years ago for $128,000. Its value now is $141,000. At what annual rate has the value of their home appreciated since they bought it? A) 6.06% B) 7.28% C) 2.41% D) 1.19% E) 0.61%

19) Twenty years ago the population of a village in Newfoundland was 964. Now it is 612. At what average annual rate has the population of the village declined over the last 20 years?

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A) 3.02% B) 7.97% C) 2.25% D) 5.11% E) 1.77%

20) Maury invested $5,000 in a selection of high-tech stocks. After six years of careful trading his investments were worth $79,700. At what quarterly compounded nominal rate did his investments grow? A) 37.45% B) 24.90% C) 12.23% D) 58.64% E) 48.91%

21) A 30-year, $1,000 strip bond was traded for $167, four years after it was issued. What was the semiannually compounded nominal rate at that time? A) 7.13% B) 7.00% C) 25.07% D) 12.52% E) 7.27%

22) Pat and Jamie are twins. Pat will invest $2,500 on their 20th birthday and the money will accumulate at 12% compounded annually until their 60th birthday. Jamie will wait 10 more years, until they are 30 years old, and will then invest the same amount, $2,500. What annually compounded interest rate will Jamie need to achieve for the investment to catch up to Pat's when they are 60 years old?

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A) 18.93% B) 14.14% C) 14.89% D) 15.00% E) 16.31%

23) Your currently have $25,000 and wish to invest it for retirement. If you wish to have $400,000, how long will it take if you can earn 5.75% compounded monthly? A) 36 years and 4 months B) 28 years and 4 months C) 48 years and 4 months D) 48 years and 8 months E) 48 years and 9 months

24) You invest $125,000 today at a rate of return of 3.4% compounded quarterly. Rounded to the nearest month, how long will it take the investment to grow to $225,000? A) 17 years and 6 months B) 17 years and 9 months C) 17 years and 1 months D) 17 years and 4 months E) 17 years and 11 months

25) If money is worth 5% compounded quarterly, how long (to the nearest day) before an investment of $2,000 grows to $2,600? For the purpose of determining the number of days in a partial calendar quarter, assume that a full quarter has 91 days.

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A) 5 years, 3 months and 23 days B) 5 years, 9 months and 11 days C) 5 years, 6 months and 11 days D) 5 years, 3 months and 21 days E) 5 years, 3 months and 11 days

26) What is the term of a compound-interest Guaranteed Investment Certificate if $8,500 invested at 6.1% compounded annually will earn interest totaling $4,365.50? A) 11.25 years B) 10.59 years C) 8.50 years D) 7.75 years E) 7.00 years

27) Rounded to the nearest month, how long will it take for $25,000 to grow to $35,000 at 9% compounded quarterly? A) 3 years, 9 months B) 5 years, 1 month C) 4 years, 4 months D) 5 years, 6 months E) 3 years, 1 month

28) A $50,000 strip bond was discounted to $21,680. The market rate was 7.4% compounded semiannually. How much time was left before the bond reached maturity?

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A) 11.5 years B) 21.9 years C) 11.7 years D) 5.04 years E) 23 years

29) A 30-year, Government of Canada $10,000 strip bond was discounted at 4.9% compounded semiannually and traded for $4,722. How many years earlier had the bond been issued? A) 14.5 years B) 15.0 years C) 15.5 years D) 29.0 years E) 30.0 years

30) At 14% compounded annually, an investment of $50,000 will grow to $1,000,000 in 22.86 years. How much longer will it take at 11% compounded annually? A) 8.33 years B) 3.45 years C) 5.84 years D) 13.78 years E) 28.71 years

31)

At 11.4% compounded quarterly, how long will it take for money to double?

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A) 2 years, 1 month B) 5 years, 4 months C) 5 years, 11 months D) 6 years, 2 months E) 7 years, 6 months

32) Pat and Jamie are twins. They will both invest $2,500 on their 20th birthday. Pat's money will accumulate at 14% compounded annually for 35 years until their 55th birthday. Being less of a risk taker Jamie will select an investment that will provide a return of only 8.5% compounded annually. If when they reach age 55, Jamie decides to leave the money growing at 8.5% how many more years will it take for Jamie's investment to reach the value that Pat's will be at age 55? A) 9.3 years B) 21.2 years C) 14.3 years D) 27.4 years E) 18.4 years

33) Sollozo just made a single payment to repay a loan he had with the Corleone Finance Company. He paid a total of $86,500 which included interest of $56,500 at 48% compounded monthly. How long ago was the money borrowed? A) 19 months B) 63 months C) 27 months D) 34 months E) 47 months

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34) If the population of Green City is growing at a rate of 5% per year, how long will it take to grow from 2,300 to 10,000? A) 17 years B) 20 years C) 23 years D) 25 years E) 30 years

35) If the population of Dodge City is decreasing at a rate of 19% per year, how long will it take to decrease from 7,700 to 2,000? A) 7.75 years B) 6.4 years C) 9.6 years D) 5.8 years E) 4.9 years

36) An investment of $7,500 at 8% compounded monthly is now worth $13,280. How long ago was the investment made? A) 12 years, 9 months B) 11 years, 2 months C) 9 years, 9 months D) 8 years, 6 months E) 7 years, 2 months

37)

Calculate the effective annual rate for 14.4% compounded monthly.

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A) 15.4% B) 12.8% C) 16.4% D) 13.8% E) 17.1%

38)

Calculate the effective annual rate for 9.4% compounded quarterly. A) 13.14% B) 12.88% C) 10.58% D) 9.74% E) 9.98%

39)

Calculate the effective annual rate for 19.2% compounded semiannually. A) 21.72% B) 20.12% C) 23.44% D) 22.72% E) 19.94%

40)

Calculate the effective annual rate for 18% compounded annually. A) 19.8% B) 16.8% C) 18.0% D) 19.0% E) 20.6%

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41) Many department stores charge 2.4% per month on overdue accounts. What is the effective annual rate in this situation? A) 26.8% B) 32.9% C) 25.6% D) 31.8% E) 28.8%

42)

What monthly compounded nominal rate has an effective rate of 14.29%? A) 11.93% B) 13.43% C) 15.26% D) 13.92% E) 13.20%

43) Calculate the effective annual rate if $100 grew to $165 in 11.5 years with quarterly compounding. A) 10.94% B) 4.38% C) 7.87% D) 7.22% E) 4.45%

44) On overdue accounts the telephone company charges 1.25% per month. What is the effective annual rate?

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A) 17.92% B) 17.55% C) 16.33% D) 16.08% E) 15.00%

45) Over six years Craig earned interest of $8,400 on an investment of $20,000. What effective rate of return did he earn? A) 15.56% B) 6.02% C) 7.00% D) 11.53% E) 14.71%

46) Over nine years Craig earned interest of $29,700 on an investment of $16,000. What effective rate of return did he earn? A) 7.11% B) 9.44% C) 10.92% D) 12.37% E) 13.56%

47) Bobby invested $1,000 for five years. For the first two years he earned 9% compounded monthly. For the next two years he earned 11% compounded quarterly. For the final year he earned 14% compounded semiannually. What was his effective rate of return over the five years?

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A) 14.49% B) 11.22% C) 10.80% D) 13.38% E) 13.99%

48) Carlita invested $10,000 for 25 years. For the first 15 years she earned 15% compounded semiannually. For the last 10 years she earned 9.6% compounded monthly. What was her effective rate of return over the 25 years? A) 13.32% B) 10.03% C) 15.56% D) 12.30% E) 14.51%

49) Lansky Finance Company was charging 1.87% per month on overdue accounts but negative publicity and public pressure made them decide to reduce the rate. What monthly finance charge would result in an annual effective rate of 19.99%? A) 1.80% B) 1.67% C) 1.53% D) 1.42% E) 1.37%

50) What is the monthly compounded nominal rate that is equivalent to 7.8% compounded semiannually?

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A) 6.40% B) 7.68% C) 8.12% D) 3.90% E) 5.88%

51) What is the semiannually compounded nominal rate that is equivalent to 10.5% compounded monthly? A) 11.02% B) 8.75% C) 5.37% D) 10.73% E) 11.44%

52) What is the semiannually compounded nominal rate that is equivalent to 16% compounded quarterly? A) 9.91% B) 17.44% C) 15.02% D) 16.32% E) 16.98%

53) What is the quarterly compounded nominal rate that is equivalent to 18% compounded monthly?

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A) 18.53% B) 17.84% C) 16.89% D) 18.64% E) 18.27%

54) What is the monthly compounded nominal rate that is equivalent to 19.56% compounded annually? A) 18.00% B) 15.00% C) 21.41% D) 19.06% E) 18.32%

55) Your company can obtain a business line of credit from a bank at 7.5% compounded semiannually, or from the Small Business Development Bank at 7.45% compounded monthly. If your company requires $100,000 for two years, how much money can you save in interest by choosing the best option? A) $148.81 B) $184.81 C) $128.81 D) $152.81 E) $146.81

56) Your company has extra free cash flow ($200,000) and is looking to invest for a one-year term. You have obtained two quotes, Quote A from the bank is 2.5% compounded semiannually, Quote B is from a credit union and will provide a rate of return of 2.4% compounded monthly. How much extra can you earn in interest if you choose the right quote?

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A) $168.10 B) $178.10 C) $187.10 D) $148.10 E) $198.10

57) Transville Credit Union is offering interest rates on three-year GICs. The effective rate of all of the accounts is 2.5%. What is the monthly, quarterly and semi-annually compounded rates that are quoted? A) 2.49% compounded monthly 2.48% compounded quarterly 2.48% compounded semiannual B) 2.47% compounded monthly 2.49% compounded quarterly 2.49% compounded semiannual C) 2.47% compounded monthly 2.48% compounded quarterly 2.48% compounded semiannual D) 2.45% compounded monthly 2.46% compounded quarterly 2.48% compounded semiannual E) 2.44% compounded monthly 2.48% compounded quarterly 2.50% compounded semiannual

58) To be equivalent to 4% compounded annually, what must be the nominal rate with quarterly compounding?

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A) 6.94% compounded quarterly B) 4.94% compounded quarterly C) 2.94% compounded quarterly D) 3.94% compounded quarterly E) 3.49% compounded quarterly

59)

What quarterly compounded rate is equivalent to 7.5% compounded monthly? A) 4.55% compounded monthly B) 8.55% compounded quarterly C) 7.90% compounded quarterly D) 7.55% compounded monthly E) 7.55% compounded quarterly

60)

What monthly compounded rate is equivalent to 5.5% compounded semiannually? A) 5.44% compounded monthly B) 5.88% compounded monthly C) 5.44% compounded quarterly D) 5.99% compounded monthly E) 4.44% compounded monthly

61) A bank pays a simple interest rate of 4.1% on 30 to 179-day GICs of at least $100,000. What is the effective annualized rate of return: a) On a 40-day GIC? b) On a 160-day GIC? Calculate percentages accurate to the nearest 0.01%.

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A) a) 4.24% b) 4.15% B) a) 4.18% b) 4.51% C) a) 4.18% b) 4.15% D) a) 4.81% b) 4.15% E) a) 4.78% b) 4.51%

62) A T-bill with 125 days remaining to maturity is discounted to yield 4.6% pa simple interest. What is the effective annualized rate of return on the T-bill? Round to the nearest 0.01%. A) 6.67% B) 4.67% C) 5.67% D) 4.98% E) 4.15%

63) A sum of $10,000 invested in a fund at the end of 2003 would have declined to $2961 by the end of 2010. What compound annual rate of return did the fund realize during this period? Calculate the percentage accurate to the nearest 0.01%.

64)

Calculate the nominal rate of interest (to the nearest 0.01%):

Principal

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Maturity Value

Compounding Frequency

Nominal Rate

Term 21

$3400

65)

$4297.91

$1000

3 years

Compounding Frequency Annually

Nominal Rate ?

Term 20 years

Calculate the nominal rate of interest (to the nearest 0.01%):

$1800

Maturity Value

Compounding Frequency

$2299.16

Quarterly

Nominal Rate ?

Term 2 years, 9 months

Calculate the nominal rate of interest (to the nearest 0.01%):

Principal $6100

68)

Maturity Value $4016.94

Principal

67)

Calculate the nominal rate of interest (to the nearest 0.01%):

Principal

66)

Annually

Maturity Value $13,048.66

Compounding Frequency Semiannually

Nominal Rate ?

Term 7 years, 6 months

Calculate the nominal rate of interest (to the nearest 0.01%):

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Principal $950

69)

$4300

$1165.79

Monthly

Maturity Value $10,440.32

Nominal Rate ?

Term 2 years, 5 months

Compounding Frequency Annually

Nominal Rate ?

Term 8 years, 6 months

Calculate the term of the loan or investment:

Principal $1100

71)

Compounding Frequency

Calculate the nominal rate of interest (to the nearest 0.01%):

Principal

70)

Maturity Value

Maturity Value $4483.92

Compounding Frequency Annually

Nominal Rate 6.3%

Term ? years

Calculate the term of the loan or investment:

Principal $4625

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Maturity Value $8481.61

Compounding Frequency Annually

Nominal Rate 7.875%

Term ? years

72)

Calculate the term of the loan or investment:

Principal $5670

73)

$10,365.39

$2000

Semiannually

Nominal Rate 9.5%

Term ? years, ? months

Maturity Value

Compounding Frequency

$3172.42

Annually

Nominal Rate 8.75%

Term ? years, ? months

Calculate the term of the loan or investment:

Principal $2870

75)

Compounding Frequency

Calculate the term of the loan or investment:

Principal

74)

Maturity Value

Compounding Frequency

$3837.30

Monthly

Nominal Rate 10%

Term ? years, ? months

Calculate the term of the loan or investment:

Principal $3250

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Maturity Value

Compounding Frequency

$4456.90

Quarterly

Nominal Rate 7.5%

Term ? years, ? months

76)

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

10.5% compounded semiannually

77)

Effective Rate ?

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

10.5% compounded quarterly

78)

Effective Rate ?

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

10.5% compounded monthly

79)

Effective Rate ?

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

7.5% compounded semiannually

Version 1

Effective Rate ?

80)

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

7.5% compounded quarterly

81)

Effective Rate ?

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

7.5% compounded monthly

82)

Effective Rate ?

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

? compounded semiannually

83)

Effective Rate 10.5%

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

Version 1

Effective Rate

? compounded quarterly

84)

10.5%

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

? compounded monthly

85)

Effective Rate 10.5%

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

? compounded semiannually

86)

Effective Rate 7.5%

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

? compounded quarterly

87)

Effective Rate 7.5%

Calculate the missing interest rate (to the nearest 0.01%)

Version 1

Nominal Rate ? compounded monthly

88)

Effective Rate 7.5%

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

12% compounded monthly

89)

Effective Rate ?

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

18% compounded monthly

90)

Effective Rate ?

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

11.5% compounded quarterly

Version 1

Effective Rate ?

91)

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

9.9% compounded semiannually

92)

Effective Rate ?

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

? compounded semiannually

93)

Effective Rate 10.25%

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

? compounded quarterly

94)

Effective Rate 7%

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

? compounded monthly

Version 1

Effective Rate 10%

95)

Calculate the missing interest rate (to the nearest 0.01%) Nominal Rate

? compounded monthly

Effective Rate 8%

96) What is the effective rate of interest (to the nearest 0.01%) corresponding to a nominal rate of:

a) 8% compounded semiannually? b) 12% compounded quarterly?

97) If an interest rate of 8.9% compounded semiannually is charged on a car loan, what effective rate of interest should be disclosed to the borrower? Calculate the percentage accurate to the nearest 0.01%.

98)

Calculate the equivalent interest rate (to the nearest 0.01%) Given Interest Rate

10% compounded annually

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Equivalent Interest Rate ? compounded semiannually

99)

Calculate the equivalent interest rate (to the nearest 0.01%) Given Interest Rate

10% compounded annually

100)

10% compounded annually

Equivalent Interest Rate ? compounded monthly

Calculate the equivalent interest rate (to the nearest 0.01%) Given Interest Rate

10% compounded semiannually

102)

? compounded quarterly

Calculate the equivalent interest rate (to the nearest 0.01%) Given Interest Rate

101)

Equivalent Interest Rate

Equivalent Interest Rate ? compounded quarterly

Calculate the equivalent interest rate (to the nearest 0.01%) Given Interest Rate

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Equivalent Interest Rate

10% compounded semiannually

103)

Calculate the equivalent interest rate (to the nearest 0.01%) Given Interest Rate

10% compounded semiannually

104)

10% compounded semiannually

? compounded annually

Equivalent Interest Rate ? compounded semiannually

Calculate the equivalent interest rate (to the nearest 0.01%) Given Interest Rate

10% compounded monthly

106)

Equivalent Interest Rate

Calculate the equivalent interest rate (to the nearest 0.01%) Given Interest Rate

105)

? compounded monthly

Equivalent Interest Rate ? compounded annually

Calculate the equivalent interest rate (to the nearest 0.01%)

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Given Interest Rate 10% compounded monthly

107)

10% compounded monthly

Equivalent Interest Rate ? compounded quarterly

Calculate the equivalent interest rate (to the nearest 0.01%) Given Interest Rate

9% compounded semiannually

109)

? compounded semiannually

Calculate the equivalent interest rate (to the nearest 0.01%) Given Interest Rate

108)

Equivalent Interest Rate

Equivalent Interest Rate ? compounded annually

Calculate the equivalent interest rate (to the nearest 0.01%) Given Interest Rate

10% compounded quarterly

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Equivalent Interest Rate ? compounded annually

110)

Calculate the equivalent interest rate (to the nearest 0.01%) Given Interest Rate

8.25% compounded annually

111)

4% compounded monthly

Equivalent Interest Rate ? compounded semiannually

Calculate the equivalent interest rate (to the nearest 0.01%) Given Interest Rate

7.5% compounded semiannually

113)

? compounded monthly

Calculate the equivalent interest rate (to the nearest 0.01%) Given Interest Rate

112)

Equivalent Interest Rate

Equivalent Interest Rate ? compounded quarterly

Calculate the equivalent interest rate (to the nearest 0.01%) Given Interest Rate

6% compounded quarterly

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Equivalent Interest Rate ? compounded monthly

114)

Calculate the equivalent interest rate (to the nearest 0.01%) Given Interest Rate

8.5% compounded quarterly

115)

Equivalent Interest Rate ? compounded semiannually

Calculate the equivalent interest rate (to the nearest 0.01%) Given Interest Rate

10.5% compounded monthly

Equivalent Interest Rate ? compounded quarterly

116) No payments were made on a $3400 loan during its three-year term. To the nearest 0.01%, what was the annually compounded nominal interest rate on the loan if the amount owed at the end of the term was $4297.91?

117) An initial $1800 investment was worth $2299.16 after two years and nine months. To the nearest 0.01%, what quarterly compounded nominal rate of return did the investment earn?

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118) Philippe contributed $4300 to an RRSP eight years and six months ago. The money was invested in a Canadian Equity mutual fund. The investment is now worth $10,440.32. Over the entire period, what monthly compounded nominal rate of return has the investment delivered? Round to the nearest 0.01%.

119) When he died in 1790, Benjamin Franklin left $4600 to the city of Boston, with the stipulation that the money and its earnings could not be used for 100 years. The bequest grew to $332,000 by 1890. What equivalent compound annual rate of return did the bequest earn? Round to the nearest 0.01%.

120) The Templeton Growth Fund has been around since 1954. If you had invested $10,000 in the fund when it was launched in 1954 it would have been worth $5.09 million 54 years later. What compound annual rate of return did the fund realize over this period? Round to the nearest 0.01%.

121) Anders discovered an old pay statement from 11 years ago. His monthly salary at the time was $2550 versus his current salary of $4475 per month. At what (equivalent) compound annual rate has his salary grown during the period? Round to the nearest 0.01%.

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122) Mr. and Mrs. Markovich note that the home they purchased 20 years ago for $70,000 is now appraised at $340,000. What was the (equivalent) annual rate of appreciation in the value of their home during the 20-year period? Round to the nearest 0.01%.

123) Jeb and Chelsea purchased their home 15 years ago for $198,000 and it is now appraised at $430,000. What was the (equivalent) annual rate of appreciation in the value of their home during the 15-year period? Round to the nearest 0.01%.

124) The maturity value of a $5000 four-year compound- interest GIC was $6147.82. What quarterly compounded rate of interest did it earn? Round to the nearest 0.01%.

125) Three years ago Mikhail invested $7000 in a three-year compound-interest GIC. He has just received its maturity value of $7867.34. What was the monthly compounded rate of interest on the GIC? Round to the nearest 0.01%

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126) a) The population of Canada grew from 24,343,000 in 1981 to 35,852,000 in 2015. What was the overall compound annual rate of growth in our population during the period? Round to the nearest 0.01%. b) According to the Canadian Real Estate Association, the average selling price of Canadian homes rose from $67,000 in 1980 to $434,000 at the end of 2015. What has been the overall compound annual appreciation of home prices? Round to the nearest 0.01%.

127) The following table contains 1981 and 2015 population figures for five provinces. Calculate each province's equivalent compound annual rate of population change during the period. Round to the nearest 0.01%. Province

1981 Population

2015 Population

Alberta

2,237,700

4,196,500

British Columbia

2,744,500

4,683,100

Newfoundland

567,700

527,800

Nova Scotia

847,400

943,000

Ontario

8,625,100

13,792,100

128) Monty purchased a strip bond for his RRSP. He paid $3800 for a $5000 face value bond with three years remaining until maturity. What semiannually compounded rate of return will he realize over the three years? Round to the nearest 0.01%.

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129) If the number of workers in the auto industry in Canada declined by 32% from the end of 1999 to the beginning of 2011, what was the compound annual rate of attrition in the industry? Round to the nearest 0.01%.

130) The Canadian Consumer Price Index (based on a value of 100 in 1971) rose from 97.2 in 1970 to 210.6 in 1980. What was the (equivalent) annual rate of inflation in the decade of the 1970s? Round to the nearest 0.01%.

131) The Consumer Price Index (based on a value of 100 in 1986) rose from 67.2 in 1980 to 119.5 in 1990. What was the (equivalent) annual rate of inflation in the decade of the 1980s? Round to the nearest 0.01%.

132) The Consumer Price Index (based on a value of 100 in 1992) rose from 93.3 in 1990 to 113.5 in 2000. What was the (equivalent) annual rate of inflation in the decade of the 1990s? Round to the nearest 0.01%.

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133) The Consumer Price Index (based on a value of 100 in 2002) rose from 93.5 in 2000 to 115.1 in 2010. What was the (equivalent) annual rate of inflation in the first decade of the 2000s? Round to the nearest 0.01%.

134) According to Statistics Canada, Business students in an undergraduate program paid an average of $6525 in tuition fees for the 2014/2015 academic year compared to fees of $1464 for the 1990/1991 year. During the same period, the Consumer Price Index rose from 76.7 to 125.2.

a) What would have been the average tuition fees for the 2014/2015 year if tuition fees had grown just at the rate of inflation since the 1990/1991 year? b) What was the (equivalent) compound annual rate of increase of tuition fees during the period? Round to the nearest 0.01%. c) What was the (equivalent) compound annual rate of inflation during the period? Round to the nearest 0.01%.

135) The Canadian Consumer Price Index (based on a value of 100 in 1971) rose from 97.2 in 1970 to 210.6 in 1980 and (based on a value of 100 in 1986) rose from 67.2 in 1980 to 119.5 in 1990. Calculate the annual rate of inflation for the 1970 -1990 period accurate to the nearest 0.01%.

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136) A five-year promissory note for $5700 plus interest at 6.75% compounded semiannually was sold 18 months before maturity for $6620. What monthly compounded nominal rate of return will the buyer realize on the investment? Round to the nearest 0.01%.

137) A four-year promissory note for $3800 plus interest at 9.5% compounded semiannually was sold 18 months before maturity for $4481. What quarterly compounded (annual) rate of return will the buyer realize on her investment? Round to the nearest 0.01%.

138) A $6000, three-year promissory note bearing interest at 11% compounded semiannually was purchased 15 months into its term for $6854.12. What monthly compounded discount rate was used in pricing the note? Round to the nearest 0.01%.

139) An investor's portfolio increased in value by 93% over a seven-year period in which the Consumer Price Index rose from 95.6 to 115.3. What was the compound annual real rate of return on the portfolio during the period? Round to the nearest 0.01%.

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140) An investment grew in value from $5630 to $8485 during a five-year period. The annual rate of inflation for the 5 years was 2.3%. What was the compound annual real rate of return during the five years? Round to the nearest 0.01%.

141) An investment earned 6% compounded semiannually for two years and 8% compounded annually for the next three years. What was the equivalent annually compounded rate of return for the entire five-year period? Round to the nearest 0.01%.

142) A portfolio earned 20%, -20%, 0%, 20%, and -20% in five successive years. What was the portfolio's five-year equivalent annually compounded rate of return? Round to the nearest 0.01%.

143) A portfolio earned 20%, 15%, -10%, 25%, and -5% in five successive years. What was the portfolio's five-year equivalent annually compounded rate of return? Round to the nearest 0.01%.

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144) At the end of 2014, the RBC Canadian Dividend Fund was the largest equity mutual fund in Canada. The aggregate market value of its holdings at the end of 2014 was $17.0 billion. The fund's annual returns in successive years from 2005 to 2014 inclusive were 21.1%, 15.14%, 2.96%, -27.01%, 27.26%, 11.9%, -2.48%, 10.71%, 17.40% and 12.14% respectively. For the 3year, 5-year, and 10-year periods ending December 31, 2014, what were the fund's equivalent annually compounded returns? Round to the nearest 0.01%.

145) At the end of 2014, the Industrial Alliance (IA) Dividends Fund had the best 10-year compound annual return of any Canadian diversified equity mutual fund. During the 10-year period, this fund invested primarily in the shares of large Canadian companies. The fund's annual returns in successive years from 2005 to 2014 inclusive were 25.51%, 17.48%, 4.38%, -27.37%, 29.91%, 12.47%, -3.35%, 7.84%, 15.22%, and 9.54%, respectively. For 3-year, 5-year, and 10year periods ended December 31, 2014, what were the fund's equivalent annually compounded returns? Round to the nearest 0.01%.

146) BMO's Dividend Fund was launched in 1994 and had annual returns in successive years from 2005 to 2014 inclusive of 20.9%, 12.9%, 1.8%, -26.3%, 19.8%, 9.7%, -2.6%, 6.9%, 17.9%, and 13.5%, respectively. For 3-year, 5-year, and 10-year periods ended December 31, 2014, what were the fund's equivalent annually compounded returns? Round to the nearest 0.01%.

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147) In June of 2006, AIC Limited published full-page advertisements focused on the fact that its AIC Advantage Mutual Fund was Canada's "Best Performing Canadian Equity Fund over the 20 years" ending May 31, 2006. The equivalent annual rate of return during the 20 years was 11.9% compared to 9.9% for the benchmark S&P/TSX Composite Total Return Index. But the advertisement failed to point out that during the second half of that 20-year period, the fund's 9.4% compounded annual return was actually less than the 10.2% growth rate for the S&P/TSX Composite Total Return Index. Furthermore, in the final 5 years of the 20-year period, the fund's 2.4% annual rate of return was far below the index's 9.5% annual growth. The Advantage Fund's five-year performance was even less than the median performance of all Canadian equity mutual funds. In short, AIC was still trying to capitalize on the initial 10 years of truly outstanding performance, even though the Advantage Fund's subsequent 10 years' performance was at best mediocre.

a) What would $10,000 invested in the AIC Advantage Fund on May 31, 1986 have grown to after 20 years? b) What was this investment worth after the first 10 years? c) What compound annual rate of return did the AIC Advantage Fund earn during the first 10 years of the 20-year period? Round to the nearest 0.01%. d) To the nearest 0.01%, what was the overall percent increase in the value of an investment in the AIC Advantage Fund during:

(i) The first 10 years? (ii) The second 10 years?

148) An $1100 investment earning 6.3% compounded annually grew to $4483.92. To the nearest year, what was the term of the investment?

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149) How long, to the nearest year, did it take $4625 earning 7.875% compounded annually to grow to $8481.61?

150) $5000 invested in a GIC earning 3.7% compounded semiannually matured at $5789.73. What was the term, to the nearest year, of the GIC?

151) The current balance on a loan is $3837.30. If the interest rate on the loan is 10% compounded monthly, how long ago was the $2870 loan made? Round to the nearest month.

152) Marilyn was supposed to pay $1450 to Bernice on March 1. Sometime later Marilyn paid Bernice an equivalent payment of $1528.01, allowing for a time value of money of 4.5% compounded monthly. When did Marilyn make the payment?

153) What is the remaining time until the maturity date of a $10,000 strip bond if it is purchased for $4011.33 to yield 6.4% compounded semiannually until maturity? Round to the nearest month.

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154) A number of years ago, your client invested $6000 at a rate of return of 9% compounded annually. If the investment is currently worth $10,968.25, for how many years has she held the investment?

155) A few years ago Avtar invested $6000 in a compound-interest GIC that earned 4.5% compounded semiannually. He recently received the maturity value of $7168.99. What was the term of the GIC, in years?

156)

Rounded to the nearest month, how long will it take a town's population to:

a) Grow from 32,500 to 40,000 if the annual growth rate is 3%? b) Shrink from 40,000 to 32,500 if the annual rate of decline is 3%?

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157)

Rounded to the nearest month, how long will it take an investment to double if it earns:

a) 8.4% compounded annually? b) 10.5% compounded semiannually?

158)

Rounded to the nearest month, how long will it take an investment to triple if it earns:

a) 9% compounded annually? b) 8% compounded quarterly?

159) Rounded to the nearest quarter year, how long will it take an investment to quadruple if it earns:

a) 8% compounded annually? b) 9% compounded semiannually?

160) Rounded to the nearest month, how long before a scheduled payment of $10,000 would a payment of $5000 be an economically equivalent alternative? Assume money is worth 5% compounded annually.

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161) How long before a future payment of $1000 would a payment of just $100 be an economically equivalent alternative? Round your answer to the nearest month. Assume money can earn 4.8% compounded semiannually.

162) Your client wants to invest a $250,000 inheritance and grow it to $325,000. Rounded to the nearest month, how long will this take if the investment earns 7% compounded annually?

163) Your client invests $10,000 today at a rate of return of 7.7% compounded quarterly. Rounded to the nearest month, how long will it take the investment to grow to $22,000?

164) Rounded to the nearest month, how long will it take money to lose half of its purchasing power if the annual inflation rate is:

a) 2.5%? b) 3.5%?

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165) Rounded to the nearest month, how long will it take money to lose 25% of its purchasing power if the annual rate of inflation is:

a) 2%? b) 4%?

166) When discounted to yield 10.5% compounded monthly, a $2600 three-year promissory note bearing interest at 12.25% compounded annually was priced at $3283.57. To the nearest month, how long after the issue date did the discounting take place?

167) The proceeds from the sale of a $4500 five-year promissory note bearing interest at 9% compounded quarterly were $6055.62. To the nearest month, how long before its maturity date was the note sold if it was discounted to yield 10.5% compounded monthly?

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168) A $4000 loan at 7.5% compounded monthly was settled by a single payment of $5000 including accrued interest. Rounded to the nearest day, how long after the initial loan was the $5000 payment made? For the purpose of determining the number of days in a partial month, assume that a full month has 30 days.

169) If money is worth 8% compounded quarterly, how long (to the nearest day) before a scheduled payment of $6000 is $5000 an equivalent payment? For the purpose of determining the number of days in a partial calendar quarter, assume that a full quarter has 91 days.

170) Wilf paid $557.05 for a $1000 face value strip bond. At this price the investment will yield a return of 5.22% compounded semiannually. How long (to the nearest day) before its maturity date did Wilf purchase the bond? Assume that each half-year has exactly 182 days.

171) A $5000 face value strip bond may be purchased today for $1073.36 yielding the purchaser 7.27% compounded semiannually. How much time (to the nearest day) remains until the maturity date? Assume that each half-year has exactly 182 days.

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172) $7500 was borrowed for a four-year term at 9% compounded quarterly. The terms of the loan allow prepayment of the loan based on discounting the loan's maturity value at 7% compounded quarterly. How long (to the nearest day) before the maturity date was the loan prepaid if the payout amount was $9380.24? For the purpose of determining the number of days in a partial calendar quarter, assume that a full quarter has 91 days.

173)

What is the effective interest rate corresponding to a nominal annual rate of:

a) 6% compounded semiannually? b) 6% compounded quarterly? c) 6% compounded monthly? Calculate interest rates accurate to the nearest 0.01%.

174)

What is the effective interest rate corresponding to a nominal annual rate of:

a) 7.5% compounded semiannually? b) 7.5% compounded quarterly? c) 7.5% compounded monthly? Calculate interest rates accurate to the nearest 0.01%.

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175)

What is the effective interest rate corresponding to a nominal annual rate of:

a) 9% compounded semiannually? b) 9% compounded quarterly? c) 9% compounded monthly? Calculate interest rates accurate to the nearest 0.01%.

176)

What is the effective interest rate corresponding to a nominal annual rate of:

a) 4% compounded monthly? b) 8% compounded monthly? c) 12% compounded monthly? Calculate interest rates accurate to the nearest 0.01%.

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177) To have an effective rate of 5%, what must be the corresponding nominal interest rate with:

a) Annual compounding? b) Semiannual compounding? c) Quarterly compounding? d) Monthly compounding? Calculate interest rates accurate to the nearest 0.01%.

178) For the effective rate to be 7%, what must be the corresponding nominal interest rate with:

a) Annual compounding? b) Semiannual compounding? c) Quarterly compounding? d) Monthly compounding? Calculate interest rates accurate to the nearest 0.01%.

179) Which of the flowing nominal interest rates has the highest effective rate: 12% compounded annually, 11.9% compounded semiannually, 11.8% compounded quarterly, or 11.7% compounded monthly?

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180) Which interest rate would you prefer to earn on a three-year GIC: 6% compounded monthly, 6.1% compounded quarterly, 6.2% compounded semiannually, or 6.3% compounded annually?

181) Which interest rate would you prefer to pay on a loan: 9% compounded monthly, 9.1% compounded quarterly, 9.2% compounded semiannually, or 9.3% compounded annually?

182) What is the effective rate of interest, to the nearest 0.01%, on a credit card that calculates interest at the rate of 1.8% per month?

183) If an invoice indicates that interest at the rate of 0.62% per month will be charged on overdue amounts, what effective rate of interest, to the nearest 0.01%, will be charged?

184) If the nominal rate of interest paid on a savings account is 2% compounded monthly, what is the effective rate of interest, to the nearest 0.01%? Version 1

185) A company reports that its sales have grown 3% per quarter for the last eight fiscal quarters. What annual growth rate, to the nearest 0.01%, has the company been experiencing for the last two years?

186) If a $5000 investment grew to $6450 in 30 months of monthly compounding, what effective rate of return, to the nearest 0.01%, was the investment earning?

187) After 27 months of quarterly compounding, a $3000 debt had grown to $3810. What effective rate of interest, to the nearest 0.01%, was being charged on the debt?

188) Lisa is offered a loan from a bank at 7.2% compounded monthly. A credit union offers similar terms but a rate of 7.4% compounded semiannually. Which loan should she accept?

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189) Craig can buy a three-year compound-interest GIC paying 4.6% compounded semiannually or 4.5% compounded monthly. Which option should he choose?

190) Camille can obtain a residential mortgage loan from a bank at 6.5% compounded semiannually, or from an independent mortgage broker at 6.4% compounded monthly. Which source should she pick if other terms and conditions of the loan are the same?

191) ABC Ltd. reports that its sales are growing at the rate of 1.3% per month. DEF Inc. reports sales increasing by 4% each quarter. What is each company's effective annual rate of sales growth? Round to the nearest 0.01%.

192) Columbia Trust wants its annually, semiannually, and monthly compounded five-year GICs all to have an effective interest rate of 5.75%. What nominal annual rates should it quote for the three compounding options? Calculate interest rates accurate to the nearest 0.01%.

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193) Belleville Credit Union has established interest rates on its three-year GICs so that the effective rate of interest is 7% on all three compounding options. What are the monthly, semiannually, and annually compounded rates? Calculate interest rates accurate to the nearest 0.01%.

194) A department store chain currently charges 18% compounded monthly on its credit card. To what amount should it set the monthly compounded annual rate if it wants to add 2% to the effective interest rate? Round to the nearest 0.01%.

195) An oil company wants to drop the effective rate of interest on its credit card by 3%. If it currently charges a periodic rate of 1.7% per month, at what amount should it set the periodic rate? Round to the nearest 0.01%.

196)

To be equivalent to 10% compounded annually, what must be the nominal rate with:

a) Semiannual compounding? b) Quarterly compounding? c) Monthly compounding? Calculate interest rates accurate to the nearest 0.01%.

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197)

To be equivalent to 10% compounded semiannually, what must be the nominal rate with:

a) Annual compounding? b) Quarterly compounding? c) Monthly compounding? Calculate interest rates accurate to the nearest 0.01%.

198)

To be equivalent to 10% compounded quarterly, what must be the nominal rate with:

a) Annual compounding? b) Semiannual compounding? c) Monthly compounding? Calculate interest rates accurate to the nearest 0.01%.

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199)

To be equivalent to 10% compounded monthly, what must be the nominal rate with:

a) Annual compounding? b) Semiannual compounding? c) Quarterly compounding? Calculate interest rates accurate to the nearest 0.01%.

200)

What annually compounded interest rate is equivalent to 6% compounded:

a) Semiannually? b) Quarterly? c) Monthly? Calculate interest rates accurate to the nearest 0.01%.

201)

What semiannually compounded interest rate is equivalent to 6% compounded:

a) Annually? b) Quarterly? c) Monthly? Calculate interest rates accurate to the nearest 0.01%.

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202)

What quarterly compounded interest rate is equivalent to 6% compounded:

a) Annually? b) Semiannually? c) Monthly? Calculate interest rates accurate to the nearest 0.01%.

203)

What monthly compounded interest rate is equivalent to 6% compounded:

a) Annually? b) Semiannually? c) Quarterly? Calculate interest rates accurate to the nearest 0.01%.

204) What semiannually compounded rate is equivalent to 4% compounded monthly? Round to the nearest 0.01%.

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205) What quarterly compounded rate is equivalent to 7.5% compounded semiannually? Round to the nearest 0.01%

206) What monthly compounded rate is equivalent to 6% compounded quarterly? Round to the nearest 0.01%.

207) What semiannually compounded rate is equivalent to 8.5% compounded quarterly? Round to the nearest 0.01%

208) What quarterly compounded rate is equivalent to 10.5% compounded monthly? Round to the nearest 0.01%.

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209) For a three-year GIC investment, what nominal rate compounded monthly would put you in the same financial position as 5.5% compounded semiannually? Round to the nearest 0.01%.

210) A trust company pays 2.5% compounded semiannually on its three-year GICs. For you to prefer an annually compounded GIC of the same maturity, what value must its nominal interest rate exceed? Round to the nearest 0.01%.

211) You are offered a loan at a rate of 9% compounded monthly. Below what nominal rate of interest would you choose semiannual compounding instead? Round to the nearest 0.01%.

212) Banks usually quote residential mortgage interest rates on the basis of semiannual compounding. An independent mortgage broker is quoting rates with monthly compounding. What rate would the broker have to give to match 3.45% compounded semiannually available from a bank? Round to the nearest 0.01%.

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213) A credit union pays 5.25% compounded annually on five-year compound-interest GICs. It wants to set the rates on its semiannually and monthly compounded GICs of the same maturity so that investors will earn the same total interest. What should be the rates on the GICs with the higher compounding frequencies? Round to the nearest 0.01%.

214) A bank offers a rate of 2.0% compounded semiannually on its four-year GICs. What monthly compounded rate should the bank offer on four-year GICs to make investors indifferent between the alternatives? Round to the nearest 0.01%.

215) A life insurance company pays investors 5% compounded annually on its five-year GICs. For you to be indifferent as to which compounding option you choose, what would the nominal rates have to be on GICs with:

a) Semiannual compounding? b) Quarterly compounding? c) Monthly compounding? Calculate interest rates accurate to the nearest 0.01%.

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216) In your search for the best rate on a new-car loan, you note that various lenders quote rates with differing compounding frequencies. Your car dealer offers financing at 7.5% compounded monthly. For you to be indifferent as to which lending rate to choose, what would the nominal rate be on a loan from another lender with interest compounded:

a) Annually? b) Semiannually? c) Quarterly? Calculate interest rates accurate to the nearest 0.01%.

217) The home the Bensons purchased 13 years ago for $85,000 is now appraised at $215,000. What has been the annual rate of appreciation of the value of their home during the 13- year period? Round to the nearest 0.01%.

218) If the Consumer Price Index rose from 109.6 to 133.8 over an 8½-year period, what was the equivalent compound annual inflation rate during the period? Round to the nearest 0.01%.

219) Which of the following rates would you prefer for a loan: 7.6% compounded quarterly, 7.5% compounded monthly, or 7.7% compounded semiannually?

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220) A $10,000 investment grew to $12,000 after 39 months of semiannual compounding. What effective rate of return did the investment earn? Round to the nearest 0.01%.

221) In 1859, 24 wild rabbits were released at Barwon Park in southern Victoria, Australia. By 1926, it was estimated that the rabbit population had grown to 400 million times this number. What is the effective compounded growth rate in the rabbit population? Round to the nearest 0.01%.

222) Maxine found an old pay statement from nine years ago. Her hourly wage at the time was $13.50 versus her current wage of $20.80 per hour. At what equivalent (compound) annual rate has her wage grown over the period? Round to the nearest 0.01%.

223) If a company's annual sales grew from $165,000 to $485,000 in a period of eight years, what has been the compound annual rate of growth of sales during the period? Round to the nearest 0.01%.

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224) What monthly compounded nominal rate would put you in the same financial position as 5.5% compounded semiannually? Round to the nearest 0.01%.

225) You are offered a loan at a rate of 10.5% compounded monthly. What would a semiannually compounded nominal rate have to be below to make it more attractive? Round to the nearest 0.01%.

226) A bank offers a rate of 5.3% compounded semiannually on its four-year GICs. What monthly and annually compounded rates should it quote in order to have the same effective interest rate at all three nominal rates? Round to the nearest 0.01%.

227) If an invoice indicates that interest at the rate of 1.2% per month will be charged on overdue amounts, what effective rate of interest will be charged? Round to the nearest 0.01%.

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228) If the nominal rate of interest paid on a savings account is 3% per annum compounded monthly, what is the effective rate of interest paid? Round to the nearest 0.01%.

229) If an interest rate of 6.9% compounded semiannually is charged on a car loan, what effective rate of interest should be disclosed to the borrower? Round to the nearest 0.01%.

230) If a $15,000 investment grew to $21,805 in 4½ years of quarterly compounding, what effective rate of return was the investment earning? Round to the nearest 0.01%.

231) Camille can obtain a residential mortgage loan from a bank at 8.75% compounded semiannually or from an independent mortgage broker at 8.6% compounded monthly. Which source should she pick if other terms and conditions of the loan are the same?

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232) A trust company pays 5.375% compounded annually on its 5-year GICs. What semiannually compounded nominal interest rate would provide the same maturity value? Round to the nearest 0.01%.

233) To the nearest month, how long will it take an investment to increase in value by 200% if it earns 7.5% compounded semiannually?

234) Rounded to the nearest month, how long will it take money to lose one-third of its purchasing power if the annual inflation rate is 3%?

235) An investor paid $4217.17 to purchase a $10,000 face value strip bond for her RRSP. At this price the investment will provide a return of 6.47% compounded semiannually. How long (to the nearest day) after the date of purchase will the bond mature? Assume that each half-year is exactly 182 days long.

236) An investor's portfolio increased in value by 53% over a five-year period while the Consumer Price Index rose from 121.6 to 135.3. What was the annually compounded real rate of return on the portfolio for the 5 years? Round to the nearest 0.01%. Version 1

237) Terry was supposed to pay $800 to Becky on March 1. At a later date, Terry paid Becky an equivalent payment in the amount of $895.67. If they provided for a time value of money of 8% compounded monthly, when did Terry make the payment?

238) To the nearest month, what is the time remaining until the maturity date of a $50,000 strip bond if it has just been purchased for $20,822.89 to yield 5.38% compounded semiannually until maturity?

239) When discounted to yield 9.5% compounded quarterly, a $4500 four-year promissory note bearing interest at 11.5% compounded semiannually was priced at $5697.84. To the nearest month, how long after the issue date did the discounting take place?

240) The population of a mining town declined from 17,500 to 14,500 in a five-year period. If the population continues to decrease at the same compound annual rate, how long, to the nearest month, will it take for the population to drop by another 3000?

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241) To the nearest day, how long will it take a $20,000 investment to grow to $22,000 (including the accrued interest) if it earns 7% compounded quarterly? Assume that a quarter-year has 91 days.

242)

A company's sales dropped 10% per year for 5 years.

a)What annual rate of sales growth for the subsequent 5 years would return the sales to the original level? Round to the nearest 0.01%. b)To the nearest month, how long would it take for sales to return to the original level if they increased at 10% per year?

243) An investor's portfolio increased in value from $35,645 to $54,230 over a six-year period. At the same time, the Consumer Price Index rose by 26.5%. What was the portfolio's annually compounded real rate of return? Round to the nearest 0.01%.

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244) The maturity value of a four-year, $1000 investment, is $1175.65. Calculate the nominal rate of interest paid on the investment if interest was compounded quarterly. Round to the nearest 0.01%.

245) For three successive years, an investment paid annual rates of return of 3.5%, 4.8%, and 2.75%. Calculate the funds equivalent annually compounded rate of return over the three years. Round to the nearest 0.01%.

246) For three successive years, an investment paid annual rates of return of 5.8%, 3.4%, and 2.25%. Calculate the funds equivalent annually compounded rate of return over the three years. Round to the nearest 0.01%.

247) Kristina was earning $10.00 an hour four years ago. Today, she earns $13.50 an hour. At what equivalent compound annual rate has her salary grown over the four years? Round to the nearest 0.01%.

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248) Advances in technology has improved the rate of production of widgets over the last 10 years and the number of plant workers required has declined by 25%. What is the equivalent annual rate of decrease during the period? Round to the nearest 0.01%.

249) To the nearest month, how long will it take a $1000 investment to grow to $1500 if it earns 3.8% compounded annually?

250) To the nearest year, how long will it take a $2000 investment to grow to $2501.50 if it earns 4.5% compounded quarterly?

251) A $5000 investment was purchased for $4220.50. The investment paid interest at a rate of 3.8% compounded semiannually until the maturity date. To the nearest month, what was the term of the investment?

252) To the nearest month, how long will it take an investment to double in value if it earns 4.5% compounded quarterly?

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253) The proceeds from the sale of a $3500 four-year promissory note bearing interest at 5% compounded quarterly were $3612.31. The note was discounted to yield 6.8% compounded semiannually. How many months before maturity was the note sold?

254) Larissa invested $1500 at 3.75% compounded quarterly. If the investment is worth $1693.46 today, when did Larissa make the investment? Round to the nearest month.

255) Calculate the effective rate of interest, to the nearest 0.01%, if $1000 grows to $1459.74 in five years with semiannual compounding.

256) A department store credit card quotes a rate of 2% per month on any unpaid balance. Calculate the effective rate of interest being charged to the nearest 0.01%.

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257) What rate of interest compounded quarterly has an effective rate of 6%? Round to the nearest 0.01%.

258) A department store currently charges an effective rate of 18% on its credit card. The store wants to add 0.25% per month to its monthly compounded rate. What new monthly compounded rate will the store charge? Round to the nearest 0.01%.

259) Enrique wants to borrow $15,000 for a new car. The bank has personal loans at 5.25% compounded monthly, whereas the credit union at his company is offering personal loans at 5.5% compounded annually. Which should Enrique accept?

260) A furniture company has decided to drop the effective rate on its credit card by 2%. The store currently charges a periodic rate of 1.85% per month. What new periodic rate should the store advertise? Round to the nearest 0.01%.

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261) A bank quotes 7.25% compounded monthly on a loan. What is the effective rate of interest charged? Round to the nearest 0.01%.

262) For a two-year GIC, what nominal rate compounded quarterly would pay the same amount of interest as 3.8% compounded annually? Round to the nearest 0.01%.

263) For a three-year investment, what rate compounded semiannually is equivalent to 4.6% compounded quarterly? Round to the nearest 0.01%.

264) For 5% compounded annually, calculate the equivalent nominal rate of interest compounded monthly. Round to the nearest 0.01%.

265) Kristina can invest in a two-year GIC for 5.85% compounded monthly or 6% compounded annually. Which option pays the most interest?

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266) No payments were made on a $2,598 loan during its three-year term. What was the annually compounded nominal interest rate on the loan, if the amount owed at the end of the term was $3,398.95?

267) What was the semiannually compounded nominal rate of growth if the future value of $2,000 after fifteen years was $5,822?

268) An initial $3,000 investment was worth $5200 after four years and seven months. What monthly compounded nominal rate of return did the investment earn?

269) A strip bond that will mature 12 years from now at its $3,000 face value can be purchased today for $1842. What rate of return (compounded semiannually) will this strip bond provide to an investor?

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270) The amount owed on a promissory note for $750 after one year and three months is $952. What quarterly compounded nominal rate of interest was charged on the debt?

271) Sean contributed $1,800 to an RESP six years and four months ago. The money was invested in a Asian Small Cap mutual fund. The investment is now worth $2,400. Over the entire period, what monthly compounded nominal rate of return has the investment delivered?

272) When he died in 1891, Sir John A Macdonald left $5,200 to a new university to be built in Eastern Canada. The only stipulation was that the money and its earnings could not be used for fifty years. The bequest grew to $212,000 by 1941. What (equivalent) compound annual rate of return did the bequest earn during the fifty-year period?

273) The Northern Educational Growth Fund has been around since 1968. If the government had invested $25,000 in the fund when it was launched in 1968 it would have been worth $1.24 million fifty years later. What compound quarterly rate of return did the fund realize over this period?

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274) Your co-worker discovered an old pay statement from seven years ago. Their monthly salary at the time was $3,540 versus their current salary of $5,200 per month. At what (equivalent) compound annual rate has their salary grown during the period?

275) Your parents purchased your childhood home twenty years ago for $58,000. It is now appraised at $340,000. What was the (equivalent) annual rate of appreciation in the value of their condo during the twenty-year period?

276) Your grandparents purchased a small apartment building thirty years ago for $78,000 and it is now appraised at $1,130,000. What was the (equivalent) annual rate of appreciation in the value of the apartment building during the thirty year period?

277) The maturity value of a $2,000 two-year compound interest GIC was $2,047.82. What monthly compounded rate of interest did it earn?

278) You invested $12.000 in a thirty-six month compound interest GIC. You just received its maturity value of $12,235.34. What was the monthly compounded rate of interest on the GIC?

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279) For an investment to double in value during a five-year period, what annually compounded rate of return must it earn?

280) For an investment to triple in value during a seventy-two month period what annually compounded rate of return must it earn?

281) The population of Canada grew from 20,744,000 in 1968 to 37,060,000 in 2018. What was the overall compound annual rate of growth in our population during the period?

282) Your father purchased a strip bond for his RRSP. He paid $1,800 for a $3,000 face value bond with five years remaining until maturity. What semiannually compounded rate of return will he realize over the five years?

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283) If the number of teachers in Canada increased by 17% from 1999 to the beginning of 2018, what was the compound annual rate of increase in teachers during this period?

284) A loaf of bread rose from $0.59 in 1990 to $1.99 in 2018. What was the (equivalent) annual rate of inflation for this loaf of bread?

285) You signed a $19,000, two-year promissory note bearing interest at 13% compounded semiannually to help pay for your college education. At the one year mark, the promissory note was sold for $22,925. What monthly compounded discount rate was used in pricing the note?

286) Your portfolio increased in value by 78% over a seven-year period in which the Consumer Price Index rose from 82.6 to 105.3. How much more of a return did your portfolio receive than the CPI?

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287) An investment grew in value from $5630 to $5785 during a one-year period. The annual rate of inflation for the year was 2.3%. What was the compound annual real rate of return during the year?

288) CIBC's Oil & Gas Fund was launched in 2005 and had annual returns in successive years from 2005 to 2009 inclusive of 19.83%, 9.71%, -8.75% and -6.78%, respectively. What were the fund's equivalent annually compounded returns?

289) You invested $800 earning 2.3% compounded annually grew to $856.48. What was the term of the investment?

290) How long did it take $1,298 earning 2.75% compounded semiannually to grow to $1,339.46?

291) You invested $2.500 in a GIC earning 1.7% compounded semiannually matured at $2,750.78. What was the term of the GIC?

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292) The current balance on a credit card is $4,200. If the interest rate on the loan is 18% compounded monthly, how long ago was the $5,250.97 balance owed? Assume no payments were made.

293) You borrowed $1,000 to pay off a school loan. The balance on the loan is $1,046.85 when you make the payment to clear the loan. Allowing for a time value of money of 2.5% compounded monthly, how long after the loan was issued did you make the final payment?

294) If you purchase a Manitoba Hydro strip bond for $9,000 face value, what is the remaining time until the maturity date if it is purchased for $8,631.09. The bond will yield 1.4% compounded semiannually until maturity?

295) You are a financial advisor and a number of years ago, your client invested $3,000 at a rate of return of 7.25% compounded annually. If the investment is currently worth $4,681.96, for how long has she held the investment?

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296) A few months ago you invested $600 in a compound interest GIC that earned 2.55% compounded monthly. You recently received the maturity value, which included interest of $6.40. What was the term of the GIC?

297) Rounded to the nearest month, how long will it take the town of Waterton's population to grow from 12,500 to 14,000 if the annual growth rate is 2.5%?

298) Rounded to the nearest month, how long will it take an investment to double if it earns 2.5% compounded monthly?

299) Rounded to the nearest year, how long will it take an investment to quadruple if it earns 9% compounded annually?

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300) Rounded to the nearest quarter year, how long will it take an investment to double if it earns 2.75% compounded semiannually?

301) Your currently have $25,000 and wish to invest it for retirement. If you wish to have $400,000, how long will it take if you can earn 5.75% compounded monthly?

302) You invest $125,000 today at a rate of return of 3.4%% compounded quarterly. Rounded to the nearest month, how long will it take the investment to grow to $225,000?

303) If money is worth 5% compounded quarterly, how long (to the nearest day) before an investment of $2,000 grows to $2,600? For the purpose of determining the number of days in a partial calendar quarter, assume that a full quarter has 91 days.

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304) Your sister paid $267.05 for a $1,000 face value strip bond. At this price the investment will yield a return of 4.22% compounded semiannually. How long (to the nearest day) before its maturity date did your sister purchase the bond? Assume that each half-year has exactly 182 days.

305) A $10,000 face value strip bond may be purchased today for $9,424 yielding the purchaser 3.45% compounded semiannually. How much time (to the nearest day) remains until the maturity date? Assume that each half-year has exactly 182 days.

306) If money is worth 18% compounded monthly, how long (to the nearest day) before a balance of $2,500 will grow to $4,235? For the purpose of determining the number of days in a partial calendar month, assume that a full month has 30 days.

307) What is the effective interest rate corresponding to a nominal annual rate of 2% compounded semiannually?

308) What is the effective interest rate corresponding to a nominal annual rate of 7.5% compounded quarterly? Version 1

309) What is the effective interest rate corresponding to a nominal annual rate of 4.5% compounded annually?

310) What is the effective interest rate corresponding to a nominal annual rate of 5% compounded monthly?

311) To have an effective rate of 4.2%, what must be the corresponding nominal interest rate with semiannual compounding?

312) Which of the following nominal interest rates has the highest effective rate: 3.85% compounded annually, 3.76% compounded semiannually, 3.56% compounded quarterly, or 3.55% compounded monthly?

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313) Which interest rate would you prefer to earn on a three-year GIC: 1.98% compounded monthly, 1.96% compounded quarterly, 1.94% compounded semiannually, or 1.99% compounded annually?

314) Which interest rate would you prefer to pay on a loan: 4.55% compounded monthly, 4.56% compounded quarterly, 4.299% compounded semiannually, or 4.22% compounded annually?

315) What is the effective rate of interest on a credit card that calculates interest at the rate of 1.65% per month?

316) If an invoice indicates that interest at the rate of 0.54% per month will be charged on overdue amounts, what effective rate of interest will be charged?

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317) If the nominal rate of interest paid on a small business loan is 1.5% compounded monthly, what is the effective rate of interest?

318) A company reports that its expenses have grown 1.25% per quarter for the last four fiscal quarters. What annual increase in expenses has the company been experiencing for the last year?

319) If a $22,000 loan grew to $24,450 in twenty-four months of monthly compounding, what effective rate of return was the investment earning?

320) After eighteen months of quarterly compounding, a $2,500 investment had grown to $2,710. What effective rate of interest was being charged on the debt?

321) You are offered a loan from a bank at 2.2% compounded monthly. A credit union offers similar terms, but at a rate of 2.35% compounded semiannually. Which loan should she accept?

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322) Your manager asks you to compare two investments. You can buy a three-year compound interest GIC paying 1.6% compounded semiannually or 1.5% compounded monthly. Which option should he choose?

323) Your company can obtain a business line of credit from a bank at 7.5% compounded semiannually, or from the Small Business Development Bank at 7.45% compounded monthly. If your company requires $100,000 for two years, how much money can you save in interest by choosing the best option?

324) Your company has extra free cash flow ($200,000) and is looking to invest for a one-year term. You have obtained two quotes, Quote A from the bank is 2.5% compounded semiannually, Quote B is from a credit union and will provide a rate of return of 2.4% compounded monthly. How much extra can you earn in interest if you choose the right quote?

325) Transville Credit Union is offering interest rates on three-year GICs. The effective rate of all of the accounts is 2.5%. What is the monthly, quarterly and semi-annually compounded rates that are quoted?

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326) To be equivalent to 4% compounded annually, what must be the nominal rate with quarterly compounding?

327)

What quarterly compounded rate is equivalent to 7.5% compounded monthly?

328)

What monthly compounded rate is equivalent to 5.5% compounded semiannually?

329)

What semiannual compounded rate is equivalent to 18% compounded monthly?

330)

What semiannually compounded rate is equivalent to 14.25% compounded quarterly?

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331) For a one-year GIC investment, what nominal rate compounded quarterly would put you in the same financial position as 1.5% compounded annually?

332) A trust company pays 2.5% compounded semiannually on its three-year GIC. For you to prefer a monthly compounded GIC of the same maturity, what value must its nominal interest rate exceed?

333) You are offered a loan at a rate of 8.24% compounded semiannually. Below what nominal rate of interest would you choose monthly compounding instead?

334) Banks usually quote residential mortgage interest rates on the basis of semiannual compounding. An independent mortgage broker is quoting rates with monthly compounding. What rate would the broker have to give to match 2.965% compounded semiannually available from a bank?

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335) Wells Fargo Bank pays 4.25% compounded annually on two-year compound interest term deposits. It wants to set the rates on its semiannually and monthly compounded GICs of the same maturity so that investors will earn the same total interest. What should the rates be on the GICs with the higher compounding frequencies?

336) Toronto Dominion Bank offers a rate of 7.5% compounded semiannually on its high risk loans. What monthly compounded rate should the Toronto Dominion Bank offer to make investors indifferent between the alternatives?

337) Your credit card charges you 18% compounded monthly. You wish to add it to your bank loan and the bank says they quote loans on a semiannual compounded basis. What semiannually compounded rate would be equivalent to the credit card rate?

338) In your search for the best rate on new motorcycle loan, you note that various lenders quote rates with differing compounding frequencies. Honda Canada offers financing at 4.5% compounded monthly. For you to be indifferent as to which lending rate to choose, what would the effective rate be on a loan from your bank?

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339) You realize you won't be able to pay off your credit card in time. The current introductory rate is 3.5% compounded monthly and will rise to 19% compounded monthly. If you wish to borrow money to pay off the credit card, matching the introductory rate, which rate would you wish to receive from your bank if they compound their loans semiannually?

340) You wish to borrow money to pay your annual student membership dues or you will have to pay interest on the late dues at 6.78% compounded weekly. If you borrow money to pay the dues with a one-year payback period, at what semiannually compounded rate of interest will the loan cost them less in interest?

341) Your RRSP balance on March 1, 2012 was $65,780. On April 11, 2013, the balance increased to $65,868.

342) You currently own shares in the Asia Pacific Growth Fund, an equity mutual fund. The fund has increased in price from $12.12 to $12.56 over a six-month period. What were the simple and effective annualized rates of return during the period?

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343) If the Consumer Price Index rose by 1% over a two-month period, what were the simple and effective annualized rates of inflation during the two-month period? Calculate percentages accurate to the nearest 0.01%

344) If an Index declined from 9614 to 9238 over a 50-day period, what were the simple and effective annualized rates of decline in the Index during the period? Calculate percentages accurate to the nearest 0.01%.

345) If the Halifax Real Estate Board reports that house prices increased by 8% during the first seven months of the year, and if prices continue to rise at the same rate for the subsequent five months, what will be the (compounded) increase for the entire year? Calculate the percentage accurate to the nearest 0.01%.

346) A financial institution pays a simple interest rate of 6.7% on 30 to 179-day GICs of at least $100,000. To the nearest 0.01%, what is the effective annualized rate of return:

a) On a 40-day GIC? b) On a 160-day GIC?

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347) A bank pays a simple interest rate of 4.1% on 30 to 179-day GICs of at least $100,000. What is the effective annualized rate of return:

a) On a 40-day GIC? b) On a 160-day GIC? Calculate percentages accurate to the nearest 0.01%.

348) A T-bill with 125 days remaining to maturity is discounted to yield 4.6% pa simple interest. What is the effective annualized rate of return on the T-bill? Round to the nearest 0.01%.

349) Neil's common stock portfolio increased in value over a two-month period from $78,900 to $84,300. What were the simple and effective annualized rates of total return over the period? Calculate percentages accurate to the nearest 0.01%.

350) Danielle's shares in the Industrial Growth Fund (an equity mutual fund) dropped in price from $12.86 to $12.56 over a three-month period. What were the simple and effective annualized rates of return during the period? Calculate percentages accurate to the nearest 0.01%.

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Answer Key Test name: Chap 10_10ce 1) D 2) C 3) B 4) A 5) E 6) A 7) B 8) C 9) B 10) D 11) B 12) B 13) D 14) A 15) E 16) A 17) C 18) E 19) C 20) E 21) B 22) E 23) C 24) D 25) E 26) E Version 1

27) A 28) A 29) A 30) C 31) D 32) B 33) C 34) E 35) B 36) E 37) A 38) D 39) B 40) C 41) B 42) B 43) E 44) D 45) B 46) D 47) B 48) A 49) C 50) B 51) D 52) D 53) E 54) A 55) A 56) B Version 1

57) C 58) D 59) E 60) A 61) C 62) B

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CHAPTER 11 1) Saminder quit smoking and saves $80 per month previously spent on cigarettes. He invests the money at 5% compounded monthly. How much will he have in 10 years? A) $7542.51 B) $17,919.63 C) $12,422.58 D) $11,898.88 E) $12,474.34

2) Mr. Sandhu has made payments of $1250 at the end of each quarter into an RRSP for the last four years. Interest at 12% compounded quarterly was earned. He decides to leave the accumulated money in the RRSP for another two years and not make any further payments to his RRSP. How much money will he have in his RRSP two years from now if the interest rate remains the same? A) $2540.99 B) $40,492.10 C) $31,917.67 D) $9531.96 E) $43,033.09

3) Fredrico made 12 end-of-month deposits of $250 into a mutual fund earning 16% compounded monthly. How much will he have in his account two years after his last deposit if the fund continues to earn 16% compounded monthly? A) $4438.83 B) $3756.45 C) $19,399.58 D) $9770.65 E) $6014.20

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4) If $1000 per month is invested at 12% compounded monthly for the first three years and 16% compounded monthly thereafter, what will be the accumulated amount immediately after the 120th investment. The first investment will be made one month from now. A) $43,076.88 B) $1,602,487.93 C) $284,219.98 D) $230,038.69 E) $292,580.55

5) You can purchase a residential building for $100,000 cash or $20,000 down and quarterly payments of $3000 for 10 years. The first payment would be due three months after the purchase date. If money can earn 10% compounded quarterly during the next 10 years, which option should you choose? A) Both are equally as good so choose either one. B) $100,000 cash C) Neither option can earn 10% compounded quarterly so do nothing. D) Not enough information to decide. E) $20,000 down and $3000 per quarter for 10 years.

6) Acme class B preferred shares pay quarterly dividends of $2.50. The shares must be redeemed at $100 by Acme 10 years from now when the last dividend is paid. At what price should the shares trade today if the rate of return required by the market on similar preferred shares is 12% compounded quarterly?

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A) $57.79 B) $60.00 C) $88.44 D) $20.83 E) $83.33

7) What is the following prize worth today if money can earn 9% compounded monthly: $5000 payable two years from now, and a series of eleven $100 monthly payments beginning one month from now? A) $5231.22 B) $7124.26 C) $3240.98 D) $3265.29 E) $8620.56

8) If you want to purchase an annuity providing an income of $2000 at the end of each month for five years, how much will it cost if the purchase funds earn 18% compounded monthly? A) $192,429.30 B) $78,760.54 C) $80,681.00 D) $4886.44 E) $818.60

9) If you make 30 semiannual deposits of $2000 into a fund that earns 10% compounded quarterly, how much money will be in the fund two years after the last deposit?

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A) $172,275.22 B) $171,931.59 C) $209,481.94 D) $199,387.93 E) $163,646.96

10) Jasmine won a prize: the right to receive 36 payments of $100 per month with the first payment one month from today. If money is worth 6% compounded monthly, what is the economic value of these payments one year from today? A) $3287.10 B) $3933.61 C) $3489.84 D) $3600.00 E) $2256.29

11) Mr. Mikhail made 24 monthly deposits of $250 into an account that earns 8% compounded quarterly. How much will be in the account three years after his last deposit? A) $6522.87 B) $8272.57 C) $7021.41 D) $8218.15 E) $7014.11

12) Quarterly contributions of $700 are made to an RRSP that earns 6% compounded monthly. How much will be in the plan immediately after the twentieth deposit?

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A) $14,685.38 B) $16,198.55 C) $12,190.19 D) $16,442.74 E) $12,009.15

13) How much money would you have at the end of 10 years if you made deposits of $4,000 at the end of every three months into an investment that accumulated at 9% compounded quarterly? A) $60,772 B) $168,781 C) $255,145 D) $1,351,530 E) $667,273

14) At the end of every year for 45 years Sabrina invested $500 into her retirement plan. The plan has earned 13% compounded annually over the 45 years. She made the last deposit today. How much money has she accumulated? A) $1,783,603 B) $937,082 C) $480,583 D) $318,675 E) $157,950

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15) Kunal has determined that he can save at least $6 per day by quitting smoking and cutting out one cup of coffee or one can of pop per day. Therefore, he has decided to make contributions of $175 to his Retirement Savings Plan (RSP) at the end of each month for 35 years. He anticipates that his RSP will earn 13.2% compounded monthly. He is 20 years old now and therefore he will be only 55 when this plan is completed. How much money will be in his RSP when he is 55 years of age? A) Less than $500,000 B) Between $500,000 and $1,000,000 C) Between $1,000,000 and $1,500,000 D) Between $1,500,000 and $2,000,000 E) More than $2,000,000

16) Justina has decided to make contributions of $250 to her Retirement Savings Plan (RSP) at the end of each month for 30 years. She anticipates that her RSP will earn 12.75% compounded monthly. She is 20 years old now and therefore he will be only 50 when this plan is completed. How much money will be in her RSP when she is 50 years of age? A) $284,671 B) $641,893 C) $962,357 D) $1,033,348 E) $2,763,932

17) How much money would you have at the end of five years if you made deposits of $450 at the end of every month into an investment that accumulated at 18% compounded monthly? A) $116,843 B) $43,297 C) $31,860 D) $27,000 E) $17,721

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18) Fatima has made investments of $10,000 at the end of every three months for the last 8 years. She has earned 11% compounded quarterly. What is the value of the investments today? A) $97,427 B) $211,003 C) $320,000 D) $460,792 E) $502,699

19) What is the future value of a series of 15 annual payments of $750 starting in one year and earning 7% compounded annually? A) $6,831 B) $12,038 C) $17,673 D) $18,847 E) $32,848

20) Terri and Larry plan to invest $5,000 at the end of each year in an individual retirement account earning a rate of return of 11% compounded annually. What will be the value of the account after 15 years? A) $119,864 B) $172,027 C) $198,215 D) $214,739 E) $359,543

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21) Elias spends $60 per month on beer and $60 per month on cigarettes. He is going to quit smoking and cut his beer expense in half by making his own beer at the local U-Brew. At the end of every month the money he saves is going to go into an investment plan earning 12% compounded monthly. How much money should he have after 40 years? A) $250,560 B) $443,946 C) $892,605 D) $1,058,830 E) $1,411,772

22) Sparky will invest $7,500 into his RRSP at the end of each year for 30 years. How much more money will he have in 30 years if he is able to earn 13% compounded annually rather than 11% compounded annually? A) $149,266 B) $219,899 C) $304,261 D) $589,114 E) $706,338

23) Asphine already has $15,500 saved for a down payment for a house and she plans to save another $400 at the end of each month for the next three years. If she earns 8.4% compounded monthly how large will her down payment be in three years? A) $36,123 B) $36,237 C) $37,680 D) $19,924 E) $16,312

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24) Omar will contribute $200 to his RRSP at the end of each month for 15 years and then raise his monthly contribution to $500 at the end of each month for the subsequent 20 years. If his investments earn 11.7% compounded monthly, what will be the value of the investments after the last $500 contribution is made 35 years from now? A) $1,186,877 B) $572,207 C) $1,471,930 D) $521,751 E) $285,054

25) What amount will an ordinary annuity be worth in 25 years if quarterly payments of $1,750 are made and the interest rate is 14% compounded quarterly for the first 15 years and 10% compounded quarterly for the final 10 years? A) $384,999 B) $461,859 C) $1,509,570 D) $1,062,754 E) $1,041,360

26) Martina has already accumulated $32,000 in her RRSP. If she contributes $2,500 at the end of every six months for the next 12 years and $400 at the end of every month for the subsequent eight years, how much will she have at the end of the 20 years? Assume that her plan will earn 6% compounded semiannually for the first 12 years and 6% compounded monthly for the last 8 years. A) $293,054 B) $200,247 C) $204,132 D) $154,398 E) $217,873

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27) At the end of every six months for the last six years Vincent has borrowed $1,000 from Charley at an interest rate of 11% compounded semiannually. He has not made any payments to reduce his debt. How much, including interest, does Vincent owe Charley now? A) $19,920 B) $16,386 C) $22,714 D) $8,618 E) $15,536

28) What amount of money will Kevin need to have in 20 years when he retires if his goal is to purchase an ordinary annuity of $1,000 per month for 30 years after he retires? Assume that after he retires the interest rate will be 7.2% compounded monthly. A) $226,581 B) $350,550 C) $104,728 D) $147,321 E) $360,000

29) Calculate the present value of an ordinary annuity consisting of payments of $5,000 each, made at the end of every three months for six years. Assume that money is worth 7.2% compounded quarterly. A) $46,070 B) $76,295 C) $96,748 D) $105,186 E) $122,517

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30) How much money could Louie borrow if he can afford to make monthly payments of $350 for four years at an interest rate of 9% compounded monthly? A) $14,065 B) $13,593 C) $10,752 D) $8,915 E) $3,827

31) What amount could you borrow at 6.6% compounded monthly if you can afford to make monthly payments of $775 for 25 years? A) $40,688 B) $92,867 C) $101,106 D) $113,725 E) $217,155

32) What amount would you have to invest now at 10% compounded semiannually in order to make withdrawals of $3,500 every half-year for eight years? The first withdrawal is to be made in six months. A) $52,224 B) $28,000 C) $37,932 D) $36,126 E) $8,255

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33) Calculate the difference in the current economic values of the following two annuities: #1: Payments of $300 made at the end of every month for the next five years. #2: Payments of $200 made at the end of every month for the next 10 years. Use an interest rate of 14.4% compounded monthly for both annuities. A) Annuity #1 is worth $398 more than Annuity #2. B) Annuity #1 is worth $95 more than Annuity #2. C) The current economic values are within $10 of each other. D) Annuity #2 is worth $95 more than Annuity #1. E) Annuity #2 is worth $398 more than Annuity #1.

34)

Calculate the difference in the current economic values of the following two annuities:

Annuity "A": Payments of $50 made at the end of each month for the next 30 years, using 9.6% compounded monthly. Annuity "B": Payments of $600 made at the end of every year for the next 50 years using 9.6% compounded annually. A) Annuity "A" is worth $291 more than Annuity "B." B) Annuity "A" is worth $103 more than Annuity "B." C) The current economic values are within $50 of each other. D) Annuity "B" is worth $103 more than Annuity "A." E) Annuity "B" is worth $291 more than Annuity "A."

35) Calculate the difference in the current economic values of the following two annuities: Annuity "X": Payments of $10,000 made at the end of each year for the next 35 years. Annuity "Y": Payments of $10,000 made at the end of each year for the next 55 years. Use an interest rate of 13% compounded annually for both annuities.

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A) Annuity "Y" is worth $70,248 more than Annuity "X." B) Annuity "Y" is worth $26,225 more than Annuity "X." C) Annuity "Y" is worth $8,672 more than Annuity "X." D) Annuity "Y" is worth $975 more than Annuity "X." E) Annuity "Y" is worth $203 more than Annuity "X."

36) What amount would you have to invest now at 7% compounded annually in order to make withdrawals of $20,000 once per year for 25 years? The first withdrawal is to be made one year from now. A) $233,072 B) $1,264,981 C) $544,343 D) $197,226 E) $427,561

37) The winner of a "Ten-million dollar" lottery prize is actually entitled to payments of $33,333.33 at the end of every month for 25 years. The winner can select to receive a single lump sum payment equal to the present value of these payments calculated using a rate of 8.1% compounded monthly. What would be the amount of the single payment? A) $9,190,000 B) $5,606,219 C) $4,282,000 D) $3,749,371 E) $1,328,950

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38) The winner of a "Fifty-million dollar" lottery prize is actually entitled to payments of $500,000 at the end of every six months for 50 years. The winner can select to receive a single lump sum payment equal to the present value of these payments calculated using a rate of 9.8% compounded semiannually. What would be the amount of the single payment? A) $5,101,597 B) $10,118,727 C) $20,118,147 D) $34,079,370 E) $39,453,072

39) Safa is planning to have a retirement income of $2,000 at the end of every month for the first 10 years that she is retired and then increase it to $3,000 per month for the next 20 years. If her retirement funds earn 7.8% compounded monthly, how much money must she have when she retires? A) $960,000 B) $530,350 C) $333,598 D) $283,418 E) $64,099

40) Omar is planning to have a retirement income of $7,000 at the end of every three months for the first 15 years that he is retired and then increase it to $10,000 every three months for the next 10 years. If his retirement funds earn 9.0% compounded quarterly, how much money must he have when he retires? A) $491,177 B) $117,279 C) $298,171 D) $256,814 E) $820,000

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41) At the end of every year for the next 45 years a trust fund has to pay out $250,000. The money in the fund will be earning 9% compounded annually for the first 25 years and 6% compounded annually for the last 20 years. In order to be able to make these payments, how much money would have to be in the trust fund now? A) $2,788,180 B) $5,323,125 C) $5,601,917 D) $7,017,445 E) $11,125,000

42) A pension fund has to pay out $750,000 to the retirees at the end of every month for the next 50 years. The fund will be earning 9.6% compounded monthly for the first 30 years and 7.2% compounded monthly for the last 20 years. In order to be able to make these payments, how much money would have to be in the pension fund now? A) $86,591.739 B) $183,683,039 C) $37,500,000 D) $148,521,416 E) $93,835,532

43) The owner of a certain investment is entitled to receive $38 at the end of every six months for 11 years plus an additional single payment of $1,000 in 11 years. Mandy is thinking about purchasing this investment. If Mandy requires a rate of return of 8.4% compounded semiannually what is the value of this investment to her?

Version 1

A) $1,538.79 B) $1,240.49 C) $943.28 D) $989.22 E) $1,093.56

44) A guaranteed contract entitles Jon to receive $525 at the end of every six months for the next nine years plus an additional single payment of $10,000 in nine years. If Jon sells the contract to The Corleone Finance Company now, for a price that would provide Corleone with a rate of return of 7.4% compounded semiannually, what would that price be? A) $14,649.75 B) $16,811.17 C) $9,408.82 D) $12,010.92 E) $19,450

45) Heather is planning to retire in 10 years. She will then need an income of $1,500 at the end of every month for the subsequent 25 years. She is going to make one investment today to provide all of the money she will eventually collect. Her investments will earn 12% compounded monthly. How much should she invest today? A) $43,152.46 B) $67,449.00 C) $92,461.46 D) $139,437.52 E) $167,687.74

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46) Harold is planning to retire in 21 years. After that he will need an income of $4,500 at the end of every month for the subsequent 25 years. He is going to make one investment today to provide all of the money he will eventually collect. His investments will earn 9% compounded monthly. How much should he invest today? A) $103,817 B) $104,397 C) $81,582 D) $82,194 E) $205,390

47) Calculate the equivalent periodic interest rate per payment interval for the following annuity: Semiannual payments earning 6% compounded monthly. A) 5.00000% B) 0.83161% C) 3.03775% D) 2.97233% E) 3.08771%

48) Calculate the equivalent periodic interest rate per payment interval for the following annuity: Monthly payments discounted at 11% compounded annually. A) 0.87346% B) 1.11572% C) 0.88793% D) 0.91667% E) 1.00078%

49) Calculate the equivalent periodic interest rate per payment interval for the following annuity: Monthly payments discounted at 8.4% compounded semiannually. Version 1

A) 0.69444% B) 1.35337% C) 1.27999% D) 0.70000% E) 0.68806%

50) Calculate the equivalent periodic interest rate per payment interval for the following annuity: Semiannual payments earning 11% compounded quarterly. A) 5.48991% B) 5.57563% C) 5.56812% D) 5.35654% E) 5.42639%

51) If $2,000 is invested at the end of every three months, what will be the total value after 10 years? The investments earn 13% compounded annually. A) $96,748 B) $159,643 C) $129,067 D) $154,359 E) $143,836

52) How much money could be borrowed at 7% compounded semiannually if the borrower can make monthly payments of $875 for 25 years?

Version 1

A) $124,926 B) $69,770 C) $24,999 D) $116,782 E) $123,801

53) If Kelly can make monthly payments of $725 for 20 years, how much money could she borrow at 6.9% compounded semiannually? A) $117,324 B) $94,241 C) $118,197 D) $87,497 E) $94,956

54) James already has $13,000 in his savings account and he is going to invest $700 more at the end of every three months for five more years. In total, how much will he have in five years if his savings account earns 11% compounded annually? A) $31,911 B) $40,047 C) $40,704 D) $38,880 E) $23,766

55) Hank Toms is going to start his Retirement Savings Plan (RSP) by depositing $2,500 at the end of every six months for 20 years. Also, seven years from now, he is going to receive the $45,000 proceeds from a trust fund that will go directly into the RSP at that time. If his Plan earns 12% compounded monthly, how much money will Hank Toms have in the RSP in 20 years?

Version 1

A) $389,215 B) $447,005 C) $614,499 D) $892,170 E) $937,331

56) If $500 is deposited into an investment at the end of every month for five years and the money is then left to accumulate without any more deposits for another five years, what will be the total value of the investment if it earns a rate of 8% compounded quarterly? A) $187,103 B) $104,519 C) $91,201 D) $57,026 E) $54,516

57) Fred and Ethel are going to take out a business loan on which they will make annual payments of $7,500 for six years. At that point in time they will also pay off the remaining balance which will be $37,155. Their interest rate is 7.6% compounded semiannually. What is the amount that Fred and Ethel borrowed? A) $82,155 B) $58,691 C) $54,666 D) $69,278 E) $91,821

58) Kerry's mortgage loan will require payments of $855 at the end of every month for four years and at that time her loan balance outstanding will be $78,591. The interest rate is 7.7% compounded semiannually. To the nearest $100, how much did she borrow?

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A) $93,400 B) $93,000 C) $92,000 D) $109,900 E) $112,700

59) J. Spaulding Wilson's mortgage loan will require payments of $1,132 at the end of every month for six years and at that time his loan balance outstanding will be $133,040. The interest rate is 6.2% compounded semiannually. How much did J. Spaulding Wilson borrow? A) $201,100 B) $159,700 C) $147,200 D) $160,300 E) $148,700

60) What amount would you have after 10 years by investing $500 at the end of every month if your investment earns 14% compounded quarterly? A) $129,534 B) $74,407 C) $128,294 D) $116,024 E) $87,398

61) What amount did you borrow at 15% compounded annually if your loan payments are $3,800 per month for 10 years?

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A) $235,535 B) $244,193 C) $318,782 D) $327,896 E) $378,625

62) You invest a fixed amount at the end of each year and the invested funds will earn 4% compounded annually. What will be the future value of the investments after fifteen years if the periodic investment is $2,000 per year? A) $40,047.18 B) $40,470.18 C) $44,047.18 D) $40,677.18 E) $41,047.18

63) If you invest $1,000 at the end of each year and can earn 7% compounded annually. Calculate the future value of the investment after the tenth payment. A) $15,816.45 B) $13,816.45 C) $13,766.45 D) $12,816.45 E) $13,616.45

64) Calculate the future value after fifteen years if $200 is invested at end of each month earning 5.6% compounded monthly.

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A) $58,221.95 B) $56,421.95 C) $56,221.95 D) $56,621.95 E) $54,221.95

65) You plan on contributing the maximum payment of $5,500 every year to your TFSA (assume the maximum payment amount doesn't change). What is the future value after thirty years if the funds earn 3.2% compounded annually? A) $270,389.62 B) $270,399.62 C) $272,309.62 D) $270,309.62 E) $290,309.62

66) You can purchase a new condominium for $190,000 cash, or for $100,000 down and monthly payments of $1,800 for five years. The first payment would be due one month after the purchase date. If the money you would use for a cash purchase can earn 5.75% compounded monthly during the next five years, which option should you choose and calculate the dollar difference in the two options. A) Cash purchase can save you $5,668.20 B) Finance purchase can save you $3,668.20 C) Cash purchase can save you $4,668.20 D) Finance purchase can save you $4,668.20 E) Cash purchase can save you $3,668.20

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67) You have received two offers on the cottage you wish to sell. Offer A is offering $149,000 cash, and Offer B is eight quarterly payments of $19,000, including a down payment of $5,000. Which offer has the greater economic value using a discount rate of 6% compounded quarterly by how much? A) Cash offer by $1,767.43 B) Cash offer by $1,967.43 C) Cash offer by $1,567.43 D) Finance offer by $1,767.43 E) Finance offer by $1,567.43

68) A lottery offers a prize of $1,000,000. If the winner is paid in annual instalments of $25,000 for forty years, what is the actual value of the prize if money is worth 4.5% compounded annually. If you wish to sell the payment stream half way through the payment period, to a finance company for cash, how much in cash would you accept? Money can earn 5.6% at that time? A) $360,039.61 $396,296.45 B) $460,039.61 $296,296.45 C) $560,039.61 $496,296.45 D) $480,039.61 $286,296.45 E) $450,039.61 $294,296.45

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69) For its No Interest for One Year sale, The Block Furniture advertises that customers pay nothing down and the balance may be paid by twelve equal monthly payments with no interest charges. The Block Furniture has an operating loan on which it pays interest at 9.85% compounded monthly. If The Block Furniture sells furniture in a cash transaction rather than on the special promotion, The Block Furniture can use the extra cash proceeds to reduce the balance on its loan, and thereby save on interest costs. What percentage discount for cash could The Block Furniture give and still be no worse off than receiving the full price under the terms of the sale? A) 6.14% B) 10.28% C) 5.14% D) 5.41% E) 4.14%

70) You are offered a new car if you put $3,000 down and end-of-month payments of $568 for five years. What is the purchase price of the car if you financed at the special rate of 0.99% compounded semiannually? A) $38,238.60 B) $37,238.60 C) $36,283.60 D) $36,238.60 E) $36,438.60

71) Your parents are contributing to an educational fund they have set up for their grandchildren. What amount will they have in the account after ten years of contributing $1,500 at the end of every calendar quarter if the plan earns 3.5% compounded monthly? How much of the total amount is interest?

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A) $91,507.49 $10,507.49 B) $73,507.49 $9,507.49 C) $74,507.49 $14,507.49 D) $72,507.49 $12,507.49 E) $71,507.49 $11,507.49

72) How much larger will the value of a retirement fund be at the end of twenty-five years if the fund earns 5.4% compounded quarterly instead of 5.4% compounded monthly? In both cases a contribution of $1,200 is made at the end of every three months. A) $917.02 B) $811.02 C) $921.02 D) $911.02 E) $913.02

73)

Determine the future value:

Periodic Payment

Payment Interval

$500

1 year

74)

Term 13 years

Interest Rate 6.75%

Compounding Frequency Annually

Determine the future value:

Version 1

Periodic Payment

Payment Interval

$100

3 months

75)

Payment Interval

$75

1 month

10%

Compounding Frequency Quarterly

Term 2.5 years

Interest Rate

Compounding Frequency

Monthly

Interest Rate

Compounding Frequency

Determine the future value:

Periodic Payment

Payment Interval

$2000

6 months

77)

5.5 years

Interest Rate

Determine the future value:

Periodic Payment

76)

Term

Term 12.5 years

7.5%

Semiannually

Determine the future value:

Periodic Payment

Payment Interval

$175

1 month

Version 1

Term 8.25 years

Interest Rate 6%

Compounding Frequency Monthly

78)

Determine the future value:

Periodic Payment

Payment Interval

$700

1 quarter

79)

Payment Interval

$3500

6 months

Compounding Frequency

Quarterly

7 yrs, 9 mths

Term

Interest Rate

19 years

Compounding Frequency

9.25%

Semiannually

Interest Rate

Compounding Frequency

8.5%

Monthly

Determine the future value:

Periodic Payment

Payment Interval

$435

1 month

81)

Interest Rate

Determine the future value:

Periodic Payment

80)

Term

Term 6 yrs, 7 mths

Determine the present value of the ordinary annuity:

Periodic Payment

Payment Interval

$500

1 year

Version 1

Term 13 years

Discount Rate 6.5%

Compounding Frequency Annually

82)

Determine the present value of the ordinary annuity:

Periodic Payment

Payment Interval

$100

3 months

83)

Payment Interval

$75

1 month

5.5 years

10%

Compounding Frequency Quarterly

Term

Discount Rate

2.5 years

Compounding Frequency

Monthly

Discount Rate

Compounding Frequency

7.5%

Semiannually

Discount Rate

Compounding Frequency

Monthly

Determine the present value of the ordinary annuity:

Periodic Payment

Payment Interval

$2000

6 months

85)

Discount Rate

Determine the present value of the ordinary annuity:

Periodic Payment

84)

Term

Term 12.5 years

Determine the present value of the ordinary annuity:

Periodic Payment

Payment Interval

$175

1 month

Version 1

Term 8.25 years

86)

Determine the present value of the ordinary annuity:

Periodic Payment Payment Interval $700

87)

Discount Rate

Compounding Frequency

Quarterly

1 quarter 7 yrs, 9 mths

Determine the present value of the ordinary annuity:

Periodic Payment

Payment Interval

$1240

6 months

88)

Term

Discount Rate

9.5 years

Compounding Frequency

9.9%

Semiannually

Discount Rate

Compounding Frequency

8.75%

Monthly

Determine the present value of the ordinary annuity:

Periodic Payment Payment Interval $350

Term

1 month 11 yrs, 5 mths

89) If money can earn 6% compounded monthly, how much more money is required to fund an ordinary annuity paying $200 per month for 30 years than to fund the same monthly payment for 20 years?

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90) An annuity contract pays $2000 semiannually for 15 years. What is the present value of the annuity six months before the first payment if money can earn 6% compounded semiannually for the first six years and 10% compounded semiannually for the next nine years?

91) Calculate the periodic interest rate that matches the payment interval (to the nearest 0.001%): Payment Frequency Annually

Compounding Frequency Quarterly

Nominal Interest Rate 5%

92) Calculate the periodic interest rate that matches the payment interval (to the nearest 0.001%): Payment Frequency Quarterly

Version 1

Compounding Frequency Monthly

Nominal Interest Rate 9%

93) Calculate the periodic interest rate that matches the payment interval (to the nearest 0.001%): Payment Frequency Semiannually

Compounding Frequency Quarterly

Nominal Interest Rate 8%

94) Calculate the periodic interest rate that matches the payment interval (to the nearest 0.001%): Payment Frequency Annually

Compounding Frequency Monthly

Nominal Interest Rate 7.5%

95) Calculate the periodic interest rate that matches the payment interval (to the nearest 0.001%): Payment Frequency Monthly

Compounding Frequency Quarterly

Nominal Interest Rate 6.5%

96) Calculate the periodic interest rate that matches the payment interval (to the nearest 0.001%): Payment Frequency Monthly

Version 1

Compounding Frequency Semiannually

Nominal Interest Rate 9.5%

97) Calculate the periodic interest rate that matches the payment interval (to the nearest 0.001%): Payment Frequency Quarterly

Compounding Frequency Annually

Nominal Interest Rate 7.75%

98) Calculate the periodic interest rate that matches the payment interval (to the nearest 0.001%): Payment Frequency Semiannually

Compounding Frequency Annually

Nominal Interest Rate 9.25%

99) Calculate the periodic interest rate that matches the payment interval (to the nearest 0.001%): Payment Frequency Monthly

Version 1

Compounding Frequency Annually

Nominal Interest Rate 6%

100) Calculate the periodic interest rate that matches the payment interval (to the nearest 0.001%): Payment Frequency Quarterly

101)

Compounding Frequency Semiannually

Nominal Interest Rate 8.5%

Determine the future value (accurate to the cent) of the ordinary general annuity:

Periodic Payment

Payment Interval

Term

Nominal Rate

Compounding Frequency

$400

3 months

11 years

6.5%

Annually

102)

Determine the future value (accurate to the cent) of the ordinary general annuity:

Periodic Payment

Payment Interval

$150

1 month

103)

Term 6.5 years

Nominal Rate 10%

Compounding Frequency Quarterly

Determine the future value (accurate to the cent) of the ordinary general annuity:

Periodic Payment

Payment Interval

$2750

6 months

Version 1

Term 3.5 years

Nominal Rate 8%

Compounding Frequency Monthly

104)

Determine the future value (accurate to the cent) of the ordinary general annuity:

Periodic Payment

Payment Interval

$1500

3 months

105)

13.5 years

Nominal Rate 7.5%

Compounding Frequency Semiannually

Determine the future value (accurate to the cent) of the ordinary general annuity:

Periodic Payment

Payment Interval

$3500

1 year

106)

Term

Term 17 years

Nominal Rate 5.25%

Compounding Frequency Monthly

Determine the future value (accurate to the cent) of the ordinary general annuity:

Periodic Payment

Payment Interval

$950

6 months

Term 8.5 years

Nominal Rate 9%

Compounding Frequency Quarterly

107) An ordinary annuity consists of 25 annual payments of $1000. Calculate its future value if the funds earn:

a) 6% compounded annually. b) 6% compounded quarterly. c) 6% compounded monthly. Version 1

108) Ms. Ho is buying a 25% interest in an accounting partnership by end-of-month payments of $537.66, including interest at 8% compounded semiannually, for 12 years.

a) What valuation was placed on the partnership at the beginning of the payments? (Round to the nearest $100,000) b) What total amount of interest will she pay over the 12 years? (Round to the nearest dollar)

109) What is the value of a contract that will pay $500 at the end of each month for 2 years and $2000 at the end of each quarter for the subsequent 3 years? Use a discount rate of 6% compounded semiannually.

110) Suppose a fixed amount will be invested at the end of each year and that the invested funds will earn 4% compounded annually. What will be the future value of the investments after 25 years if the periodic investment is:

a) $1000 per year? b) $2000 per year? c) $3000 per year?

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111) Suppose $1000 is invested at the end of each year. Assume the investments earn 10% compounded annually. Calculate the future value of the investments after each of the following numbers of payments:

a) 5 b) 10 c) 15 d) 20 e) 25 f) 30

112) Suppose $1000 is invested at the end of each year for 20 years. Calculate the future value if the investments earn an annually compounded rate of return of:

a) 9% b) 10% c) 11% d) 12%

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113)

Calculate the future value after 25 years in each of the following scenarios:

a) $6000 invested at end of each year earning 9% compounded annually. b) $3000 invested at end of each half-year earning 9% compounded semiannually. c) $1500 invested at end of each quarter earning 9% compounded quarterly? d) $500 invested at end of each month earning 9% compounded monthly?

114) Teddy plans on contributing $10,000 every year (the maximum allowable contribution in 2015) to his TFSA. What is the future value after 20 years if the funds earn 4.5% compounded annually?

115) $75 was invested at the end of every month for 2½ years. Calculate the future value if the funds earned 8% compounded monthly.

116) Aaron contributed $2000 to his RRSP at the end of every half-year. What was the value of his RRSP after 12½ years if the RRSP grew at 3.5% compounded semiannually?

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117) Elga plans to invest $175 every month by purchasing units of a diversified equity mutual fund. If the fund generates an overall rate of return of 6% compounded monthly, what will her holdings be worth after 8¼ years?

118) Danica has purchased $700 worth of units in a Global Equity Fund every calendar quarter for the past 7 years and 9 months. On average, the fund has earned 9% compounded quarterly. What were Danica's holdings worth immediately after her last purchase?

119) What will be the future value after 6 years and 7 months of regular month-end investments of $435 earning 8.5% compounded monthly?

120) Assume that your client invests $1000 at the end of each of the next three years. The investments earn 4% compounded annually. What is the future value at the end of the three years?

121) Your client plans to invest $2000 at the end of each year. The rate of return on the investment is 7.5% compounded annually. What will be the value of the investment at the end of 12 years? Version 1

122) Your client has systematically invested $1000 at the end of each half-year for the past 17 years. The invested funds have earned 6.4% compounded semiannually. What is the value of your client's investments today?

123) Markus spends $60 per month on cigarettes. Suppose he quits smoking and invests the same amount at the end of each month for 20 years. If the invested money earns 7.5% compounded monthly, how much will Markus accumulate after 20 years?

124) Pascal has just agreed with his financial planner to begin a voluntary accumulation plan. He will invest $500 at the end of every three months in a balanced mutual fund. How much will the plan be worth after 20 years if the mutual fund earns:

a) 5% compounded quarterly? b) 10% compounded quarterly?

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125)

Calculate the equivalent values eight years from now of the following cash flow streams:

(i) A single payment of $5000 today. (ii) An ordinary annuity starting today with eight annual payments of $910. (iii) An ordinary annuity starting in three years with five annual payments of $1675. Assume that: a) Money can earn 8% compounded annually for the next eight years. b) Money can earn 10% compounded annually for the next eight years.

126) Dave Bidini has saved $20,000 for a down payment on a home and plans to save another $5000 at the end of each year for the next five years. He expects to earn 2.25% compounded annually on his savings. How much will he have in five years' time?

127) How much more will you have in your RRSP at age 65 if you begin annual $1000 contributions to your plan on your twenty-sixth birthday instead of on your twenty-seventh birthday? Assume that the RRSP earns 8% compounded annually, and that the last contribution is on your sixty-fifth birthday. Round your answer to the nearest dollar.

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128) How much more will you have in your RRSP 30 years from now if you start to contribute $1000 per year at the end of this year, instead of waiting five years to begin contributing $1000 at each year-end? Assume that the funds earn 8% compounded annually in the RRSP. Round your answer to the nearest dollar.

129) Dakota intends to save for occasional major travel holidays by contributing $275 at the end of each month to an investment plan. At the end of every three years, she will withdraw $10,000 for a major trip abroad. If the plan earns 6% compounded monthly, what will be the plan's balance after seven years?

130) Amir started contributing $5500 to a TFSA at the end of every year beginning in 2013. In 2015, the maximum allowable annual contribution was increased to $10,000 and Amir planned to continue to contribute the maximum amount at the end of every year for the next 15 years. How much will he have in his TFSA if the maximum allowable annual contribution remains at $10,000 and his average rate of return is 8% compounded annually?

131) Herb has made contributions of $2000 to his RRSP at the end of every six months for the past eight years. The plan has earned 9.5% compounded semiannually. He has just moved the funds to another plan, paying 8% compounded quarterly. He will now contribute $1500 at the end of every three months. What total amount will he have in the plan seven years from now?

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132) Marika has already accumulated $18,000 in her RRSP. If she contributes $2000 at the end of every six months for the next 10 years, and $300 per month for the subsequent five years, what amount will she have in her plan at the end of the 15 years? Assume that her plan will earn 4% compounded semiannually for the first 10 years and 4% compounded monthly for the next five years.

133) Rajeev's new financial plan calls for end-of-quarter contributions of $2000 to his RRSP. In addition, at each year-end, he intends to contribute another $5000 out of the annual bonus he receives from his employer. What will be the amount in his RRSP after four years if it earns 7% compounded quarterly?

134) Howard has been contributing $1200 every three months to an investment plan that has consistently earned 3% compounded quarterly. He did this for 4 ½ years until he lost his job unexpectedly and had to stop contributing to the plan during the 9 months he was unemployed. Once he secured a new job, he re-started his contributions, increasing them to $1500 every three months. If the rate of return on his investment is now 4.5% compounded quarterly, how much can Howard expect to have in his investment plan after contributing for another 10 years in his new job?

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135) Leona contributed $3000 per year to her RRSP on every birthday from age 21 to age 30 inclusive. She stopped employment to raise a family and made no further contributions. Her husband, John, started to make annual contributions of $3000 to his RRSP on his thirty-first birthday and plans to continue up to and including his sixty-fifth birthday. Assuming that both plans earn 8% compounded annually over the years, calculate the amounts in their RRSPs at age 65.

136) Using a discount rate of 5% compounded annually, calculate the present value of 25 endof-year payments of:

a) $1000. b) $2000. c) $3000.

137) Using 7% compounded annually as the discount rate, calculate the present value of an ordinary annuity paying $1000 per year for:

a) 5 years b) 10 years c) 20 years d) 30 years e) 100 years f) 1000 years

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138) For an ordinary annuity consisting of 20 annual payments of $1000, calculate the present value using an annually compounded discount rate of:

a) 5% b) 10% c) 11% d) 15%

139) An ordinary annuity consists of quarterly payments of $100 for 5½ years. What is the annuity's present value, discounting at 10% compounded quarterly?

140) Determine the present value of end-of-month payments of $75 continuing for 2½ years. Use 8% compounded monthly as the discount rate.

141) How much will it cost to purchase an ordinary annuity delivering semiannual payments of $2000 for 12½ years if the money used to purchase the annuity can earn 7.5% compounded semiannually?

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142) A contract requires end-of-month payments of $175 for another 8¼ years. What would an investor pay to purchase this contract if she requires a rate of return of 3% compounded monthly?

143) A new loan at 9% compounded quarterly requires quarterly payments of $727.88 for seven years. Rounded to the nearest dollar, what amount was borrowed?

144) Semiannual payments of $1240 will pay off the balance owed on a loan in 9½ years. If the interest rate on the loan is 5.9% compounded semiannually, what is the current balance on the loan?

145) The original lender wishes to sell a loan contract delivering month-end payments of $350 for another 11 years and 5 months. At what price would an investor be prepared to buy the contract in order to "build in" a rate of return of 8.75% compounded monthly?

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146) Your client is scheduled to receive $2000 at the end of each year for the next 10 years. If money is currently worth 7% compounded annually, what is the present value of the annuity?

147) Determine the present value of payments of $100 at the end of each month for 20 years. Use a discount rate (interest rate) of 6% compounded monthly.

148) What is the present value of end-of-quarter payments of $2500 for seven years? Use a discount rate of 6% compounded quarterly.

149) Imperial Life Inc. is quoting a rate of return of 5.2% compounded quarterly on 15-year annuities. How much will you have to pay for a 15-year annuity that pays $5000 (at the end of) every three months?

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150) The rate of return offered by Reliance Insurance Co. on its 20-year annuities is 4.8% compounded monthly. What amount is required to purchase a 20-year annuity with month-end payments of $1000?

151) Mr. and Mrs. Dafoe are doing some estimates of the amount of funds they will need in their RRSP to purchase an annuity paying $5000 at the end of each month. For each combination of term and monthly compounded interest rate in the following table, calculate the initial amount required to purchase the annuity. Monthly Compounded Interest Rate Term of Annuity

20 years 25 years

152) If money can earn 6% compounded monthly, how much more money is required to fund an ordinary annuity paying $200 per month for 30 years than to fund the same monthly payment for 20 years?

153) Isaac wishes to purchase a 25-year annuity providing monthly payments of $1000 for the first 15 years and $1500 for the remaining 10 years. An insurance company has quoted him a rate of return of 4.8% compounded monthly for such an annuity. How much will he pay for the annuity? Version 1

154) Harold and Patricia Abernathy made a loan to their son, Jason, to help him purchase his first car. To repay the loan, Jason made payments of $2000 at the end of each year for 5 years. If the interest rate on the loan was 5% compounded annually, what was the amount of the original loan?

155) Gabriela's monthly payments of $567.89 will pay off her mortgage loan in 7 years and 5 months. The interest rate on her mortgage is 6.6% compounded monthly. What is the current balance on the loan?

156) A 20-year loan requires semiannual payments of $1037.33 including interest at 6.8% compounded semiannually.

a) What was the original amount of the loan? b) What will be the loan's balance 8½ years later (just after the scheduled payment)?

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157)

The monthly payments on a five-year loan at 7.5% compounded monthly are $200.38.

a) What was the original amount of the loan? (Round to the nearest dollar) b) What is the balance after the 30th payment?

158) Kent sold his car to Carolynn for $2000 down and monthly payments of $295.88 for 3½ years, including interest at 7.5% compounded monthly. What was the selling price of the car? Round to the nearest dollar.

159) Manuel purchased a boat for $2000 down with the balance to be paid by 36 monthly payments of $224.58 including interest at 10% compounded monthly.

a) What was the purchase price of the boat? Round to the nearest dollar. b) What is the balance owed just after the ninth payment?

160) A conditional sale contract between Classic Furniture and the purchaser of a dining room set requires month-end payments of $250 for 15 months. Classic Furniture sold the contract to Household Finance Co. at a discount to yield 19.5% compounded monthly. What price did Household pay Classic Furniture?

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161) 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 yield 18% compounded monthly?

162) The Ottawa Senators fired their coach two years into his five-year contract, which paid him $90,000 at the end of each month. If the team owners buy out the remaining term of the coach's contract for its economic value at the time of firing, what will be the settlement amount? Assume that money can earn 7.5% compounded monthly.

163) The Montreal Canadiens have just announced the signing of Finnish hockey sensation Gunnar Skoroften to a 10-year contract at $3 million per year. The media are reporting the deal as being worth $30 million to the young Finn. Rounded to the dollar, what current economic value would you place on the contract if Skoroften will be paid $250,000 at the end of each month and money can earn 6% compounded monthly?

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164) Your client has the following choices for an insurance benefit: She can receive $2000 at the end of each year for the next five years or one "lump" sum today. If the current interest rate is 4.5% compounded annually, what lump payment today is equivalent to the five payments?

165) You can purchase a residential building lot for $90,000 cash or for $20,000 down and quarterly payments of $5000 for four years. The first payment would be due three months after the purchase date. If the money you would use for a cash purchase can earn 8% compounded quarterly during the next four years, which option should you choose? What is the economic advantage in current dollars of the preferred alternative?

166) You have received two offers on the used car you wish to sell. Mr. Lindberg is offering $9500 cash, and Mrs. Martel's offer is five semiannual payments of $2000 including one on the purchase date. Which offer has the greater economic value using a discount rate of 6% compounded semiannually? What is the economic advantage in current dollars of the preferred alternative?

167) A Government of Canada bond will pay $50 at the end of every six months for the next 15 years and an additional $1000 lump payment at the end of the 15 years. What is the appropriate price to pay if you require a rate of return of 6.5% compounded semiannually?

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168) François and Pat wish to structure the payments from a 20-year annuity so that the endof-quarter payments increase by $500 every five years. Maritime Insurance Co. will pay 5% compounded quarterly on funds received to purchase such an annuity. How much must François and Pat pay for an annuity in which the quarterly payments increase from $2000 to $2500 to $3000 to $3500 in successive five-year periods?

169) What is the maximum price you should pay for a contract guaranteeing month-end payments of $500 for the next 12 years if you require a rate of return of at least 8% compounded monthly for the first five years and at least 9% compounded monthly for the next seven years?

170) A mortgage broker offers to sell you a mortgage loan contract that will pay $800 at the end of each month for the next 3½ years, at which time the principal balance of $45,572 is due and payable. What is the highest price you should pay for the contract if you require a return of at least 7.5% compounded monthly?

171) A lottery offers the winner the choice between a $150,000 cash prize or month-end payments of $1000 for 12½ years, increasing to $1500 per month for the next 12½ years. Which alternative would you choose if money can earn 8.25% compounded monthly over the 25-year period?

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172) For its "No Interest for One Year Sale," Flemming's Furniture advertises that customers pay only a 10% down payment. The balance may be paid by 12 equal monthly payments with no interest charges. Flemming's has an operating loan on which it pays interest at 8.4% compounded monthly. If Flemming's sells furniture in a cash transaction rather than on the 10%-down-and-nointerest promotion, Flemming's can use the extra cash proceeds to reduce the balance on its loan, and thereby save on interest costs. What percentage discount for cash could Flemming's give and still be no worse off than receiving full price under the terms of the sale? Round to the nearest 0.01%

173) An individual qualifying for Canada Pension Plan benefits may elect to start collecting the CPP monthly retirement benefit at any time between the ages of 60 and 70. If the retirement benefit starts after age 65, the pension payments are increased (from the amount that would otherwise be paid at age 65) by 0.7% for each month after age 65. For example, if the retiree chooses to begin receiving the benefit after turning 68, the CPP payments will be increased by (36 months) × (0.7%) = 25.2%. The average life expectancy of a man aged 65 is another 15 years. If a man aged 65 lives just the expected 15 years, calculate the economic values at age 65 of the two alternatives of collecting a 100% pension from age 65 versus a 125.2% pension from age 68. Assume that money is worth 7.5% compounded monthly.

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174) The British Columbia Teachers' Pension Plan allows a teacher to begin collecting a retirement pension before age 60, but the pension is reduced by 3% for each year the retiring teacher's age is under 60. For example, a teacher retiring at age 56 would receive 100% - 4(3%) = 88% of the monthly pension that she would receive at age 60 (with the same number of years of service). The reduction is permanent, extending to payments beyond age 60. Suppose that a female teacher will live the average life expectancy of 28 additional years for a woman aged 55. Calculate the economic values at age 55 of the two alternatives of collecting an 85% pension from age 55 versus collecting a 100% pension from age 60. Assume that money is worth 7.5% compounded monthly.

175) The nominal interest rate associated with an ordinary general annuity is 3% compounded annually. Rounded to the nearest 0.001%, what is the corresponding periodic rate of interest that matches the payment interval for:

a) Semiannual payments? b) Quarterly payments? c) Monthly payments?

176) The nominal interest rate associated with an ordinary general annuity is 7% compounded semiannually. Rounded to the nearest 0.001%, what is the corresponding periodic rate of interest that matches the payment interval for:

a) Annual payments? b) Quarterly payments? c) Monthly payments?

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177) The nominal interest rate associated with an ordinary general annuity is 4% compounded quarterly. Rounded to the nearest 0.001%, what is the corresponding periodic rate of interest that matches the payment interval for:

a) Annual payments? b) Semiannual payments? c) Monthly payments?

178) The nominal interest rate associated with an ordinary general annuity is 8% compounded monthly. Rounded to the nearest 0.001%, what is the corresponding periodic rate of interest that matches the payment interval for:

a) Annual payments? b) Semiannual payments? c) Quarterly payments?

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179) Suppose $1000 is invested at the end of each year for 25 years. Calculate the future value if the invested funds earn:

a) 6% compounded annually. b) 6% compounded semiannually. c) 6% compounded quarterly. d) 6% compounded monthly.

180) What minimum initial amount will sustain a 25-year annuity paying $1000 at the end of each year if the initial amount can be invested to earn:

a) 6% compounded annually? b) 6% compounded semiannually? c) 6% compounded quarterly? d) 6% compounded monthly?

181) An ordinary annuity consists of quarterly payments of $400 for 11 years. Based on a nominal rate of 6.5% compounded annually, calculate the annuity's:

a) Present value. b) Future value.

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182) An annuity consists of end-of-month payments of $150 continuing for 6½ years. Based on a nominal rate of 10% compounded quarterly, calculate the annuity's:

a) Present value. b) Future value.

183) An ordinary annuity consists of semiannual payments of $2750 for a 3½-year term. Using a nominal rate of 4% compounded monthly, calculate the annuity's:

a) Present value. b) Future value.

184) Payments of $1500 will be made at the end of every quarter for 13½ years. Using a nominal rate of 7.5% compounded semiannually, calculate the annuity's:

a) Present value. b) Future value.

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185) Payments of $3500 will be made at the end of every year for 17 years. Using a nominal rate of 5.25% compounded monthly, calculate the annuity's:

a) Present value. b) Future value.

186) An annuity consists of semiannual payments of $950 for a term of 8½ years. Using a nominal rate of 9% compounded quarterly, calculate the ordinary annuity's:

a) Present value. b) Future value.

187) Lacey purchased a car with $1200 down and end of month payments of $352 for 4 years. What is the purchase price of the car if she has financed it at 7.55% compounded semiannually?

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188) Mr. and Mrs. Krenz are contributing to a Registered Education Savings Plan (RESP) they have set up for their children.

a) What amount will they have in the RESP after eight years of contributing $500 at the end of every calendar quarter if the plan earns 6% compounded monthly? b) How much of the total amount is interest?

189) What is the future value eight years from now of each of the following cash-flow streams if money can earn 4% compounded semiannually?

a) A single payment of $5000 today. b) An ordinary annuity starting today with eight annual payments of $900. c) An ordinary annuity starting in three years with 20 quarterly payments of $400.

190) How much larger will the value of an RRSP be at the end of 25 years if the RRSP earns 9% compounded monthly instead of 9% compounded annually? In both cases a contribution of $1000 is made at the end of every three months.

191) What amount will be required to purchase a 20-year annuity paying $2500 at the end of each month if the annuity provides a return of 4.75% compounded annually?

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192) An Agreement for Sale contract on a house requires payments of $4000 at the end of every six months. The contract has seven years to run. The payee wants to sell her interest in the contract. What will an investor pay in order to realize an annually compounded rate of return on the purchase price of:

a) 8%? b) 10%?

193) Kent sold his car to Carolynn for $2000 down and monthly payments of $259.50 for 3½ years, including interest at 7.5% compounded annually. To the nearest dollar, what was the selling price of the car?

194) LeVero's monthly payments of $567.89 will pay off his mortgage loan in 4 years and 7 months. The interest rate on his mortgage is 6.6% compounded semiannually. What is the current balance on the loan?

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195) How much larger will the value of an RRSP be at the end of 25 years if the contributor makes month-end contributions of $300 instead of year-end contributions of $3600? In both cases the RRSP earns 8.5% compounded semiannually.

196) Mr. Eusanio contributed $1500 to his TFSA on March 1 and on September 1 of each year for 25 years. The funds earned 6% compounded monthly for the first 10 years and 7% compounded annually for the next 15 years. What was the value of his TFSA after his contribution on September 1 of the 25th year?

197) A savings plan requires end-of-month contributions of $100 for 25 years. What will be the future value of the plan if it earns 7% compounded quarterly for the first half of the annuity's term and 8% compounded semiannually for the last half of the term?

198) Year-end contributions of $1000 will be made to a TFSA for 25 years. What will be the future value of the account if it earns 7½% compounded monthly for the first 10 years and 8% compounded semiannually thereafter?

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199) Monty expects to contribute $300 at the end of every month to his RRSP for the next five years. For the subsequent 10 years, he plans to contribute $2000 at the end of each calendar quarter. How much will be in his RRSP at the end of the 15 years if the funds earn 8% compounded semiannually?

200) Gloria has just made her ninth annual $2000 contribution to her TFSA. She now plans to make semiannual contributions of $2000. The first contribution will be made six months from now. How much will she have in her TFSA 15 years from now if the plan has earned and will continue to earn 8% compounded quarterly?

201) The Toronto Raptors announce the signing of their top draft pick to a "7-year deal worth $43.2 million." The player will earn $400,000 at the end of each month for the first three years, and $600,000 at the end of each month for the subsequent four years. To the nearest $1000, what is the current economic value of the deal if money can earn 7% compounded annually?

202) Micheline wishes to purchase a 25-year annuity providing payments of $1000 per month for the first 15 years and $1500 per month for the remaining 10 years. Sovereign Insurance Co. has quoted her a rate of return of 5% compounded annually for such an annuity. How much will it cost Micheline to purchase the annuity from Sovereign?

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203) Joshua wants to structure a 20-year annuity so that its end-of-quarter payments are $2000 for the first 10 years and $2500 for the next 10 years. Pacific Life Insurance Co. offers to sell this annuity with a 4.8% compounded monthly rate of return to the annuitant. What amount must Joshua pay to Pacific for the annuity?

204) What will be the amount in an RRSP after 25 years if contributions of $3000 are made at each year-end for the first seven years and month-end contributions of $500 are made for the subsequent 18 years? Assume that the plan earns 8% compounded quarterly for the first 12 years and 7% compounded semiannually for the subsequent 13 years.

205)

Calculate the amounts that will be accumulated after 20 years if:

a) $1000 is invested at the end of every six months at 5.5% compounded semiannually. b) $2000 is invested at the end of every year at 5.5% compounded annually.

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206) Louiselle purchased a motor home for $9000 down, with the balance to be paid by 60 monthly payments of $1176.40 including interest at 6% compounded monthly.

a) What was the purchase price of the motor home? b) If the principal balance may be prepaid at any time, what is the payout amount two years after the purchase date (not including the scheduled payment on that date)?

207) What price will a finance company pay for a conditional sale contract requiring 15 monthly payments of $180.50 if the company requires a rate of return of 21% compounded semiannually? The first payment is due one month from now.

208) You can purchase a residential building lot for $60,000 cash or for $10,000 down and month-end payments of $1000 for five years. If money is worth 7.5% compounded monthly, which option should you choose?

209) A victim of a car accident won a judgment for wages lost over a two-year period ended nine months before the date of the judgment. In addition, the court awarded interest at 3% compounded monthly on the lost wages from the date they would have otherwise been received to the date of the judgment. If the monthly salary was been $5500, what was the total amount of the award (on the date of the judgment)?

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210) Dr. Wilson is buying a 50% partnership in a veterinary practice by end-of-month payments of $714.60, including interest at 7% compounded semiannually for 15 years.

a) To the nearest dollar, what valuation was placed on the partnership at the beginning of the payments? b) To the nearest dollar, what total amount of interest will she pay over the 15 years?

211) What minimum amount of money earning 2.5% compounded semiannually will sustain withdrawals of $1000 at the end of every month for 12 years?

212) A 15-year loan requires monthly payments of $587.33 including interest at 8.4% compounded monthly.

a) To the nearest dollar, what was the original amount of the loan? b) What is the balance on the loan after half of the payments have been made?

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213) Calculate the future value of an ordinary annuity consisting of monthly payments of $300 for five years. The rate of interest was 9% compounded monthly for the first two years and will be 7.5% compounded monthly for the last three years.

214) How much larger will the value of an RRSP be at the end of 20 years if the contributor makes month-end contributions of $500 instead of year-end contributions of $6000? In both cases the RRSP earns 7.5% compounded semiannually.

215) Dr. Krawchuk made deposits of $2000 to his RRSP at the end of each calendar quarter for 6 years. He then left general practice for specialist training and did not make further contributions for 2½ years. What amount was in his RRSP at the end of this period if the plan earned 10% compounded quarterly over the entire 8½ years?

216) A Province of Ontario bond has 14½ years remaining until it matures. The bond pays $231.25 interest at the end of every six months. At maturity, the bond repays its $5000 face value in addition to the final interest payment. What is the fair market value of the bond if similar provincial bonds are currently providing investors with a return of 7.8% compounded semiannually?

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217) A court-ordered award for family support calls for payments of $800 per month for five years, followed by payments of $1000 per month for 10 more years. If money is worth 6% compounded monthly, what is the economic value of the award one month before the first payment?

218) Calculate the future value of investments consisting of payments of $800 at the end of each calendar quarter for seven years. The rate of interest earned will be 10% compounded quarterly for the first 30 months and 9% compounded semiannually for the remainder of the annuity's term.

219) Norma is planning a trip to India when she retires 9 years from now and has calculated that she will need $30,000 in her savings to support her travels. If she contributes $800 to her savings at the end of every 3 months for the first 4 years of savings and $200 at the end of every month for the following five years, how close to her goal will she get if money can earn 3.5% compounded quarterly for the entire 9 years?

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220) Charlene has made contributions of $3000 to her RRSP at the end of every half year for the past seven years. The plan has earned 9% compounded semiannually. She has just moved the funds to another plan earning 7.5% compounded quarterly, and will now contribute $2000 at the end of every three months. What total amount will she have in the plan five years from now?

221) What percentage more funds will you have in your RRSP 20 years from now by making fixed contributions of $3000 at the end of every six months for the next 20 years, instead of waiting 10 years and making semiannual contributions that are twice as large for half as many years? Assume that the RRSP earns 8% compounded semiannually. Round to the nearest 0.01%

222) A mortgage broker offers to sell you a mortgage loan contract that will pay $900 per month for the next 2¾ years. At that point, the principal balance of $37,886 is due and payable. What should you pay for the contract if you require a return of 7.2% compounded monthly?

223) What is the appropriate price to pay for a contract guaranteeing payments of $1500 at the end of each quarter for the next 12 years? You require a rate of return of 6% compounded quarterly for the first five years and 7% compounded quarterly for the next seven years.

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224) Suppose Evan contributes $2000 to his RRSP at the end of every quarter for the next 15 years and then contributes $1000 at each month's end for the subsequent 10 years. How much will he have in his RRSP at the end of the 25 years? Assume that the RRSP earns 8% compounded semiannually.

225) Surinder is saving $50 per month. How much will she have in her account in five years if her account is earning 3.5% compounded monthly?

226)

Sam invests $5000 per year in an RRSP.

a) What will be the value of the plan after 30 years if interest is 4.5% compounded annually. b) How much interest did Sam's investment earn?

227) Liam is investing $2000 per year into his RRSP for five years at 3.5% compounded annually. Then he will add $1500 every six months for the next five years at 3.75% compounded semiannually. How much will Liam have in his account in total after 10 years?

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228) What is the future value of deposits of $1000 per year for 10 years earning 5.75% compounded annually?

229) Larissa plans to deposit $1500 per year into a savings account paying 4.75% yearly for 10 years. She will leave the accumulated amount in the account for another 10 years at 5.25% compounded semiannually. How much will Larissa have in the account after 20 years?

230) Kristina is deciding whether to deposit $1000 per year for 10 years into an RRSP, or to wait five years, and then deposit $2000 per year. If interest is 4.25% compounded yearly, which option should Kristina choose? What is the economic advantage of her choice?

231) What is the present value of monthly loan payments of $250 for five years, if interest is 7.5% compounded monthly?

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232) Rainder is paying $325 per month for a car over four years. If interest is 3.8% compounded monthly:

a) What was the purchase price of the car? b) How much interest will Rainder pay overall?

233) Anil has two offers to buy his is motorcycle. The first offer is a cash price of $15,000. The second offer is a down payment of $5000, and quarterly payments of $725 for four years. If his money can earn 5.5% compounded quarterly, which option should Anil choose? What is the economic advantage?

234) What is the cash price of a dining set if monthly payments of $200 are made for three years at an interest rate of 8.5% compounded monthly?

235) A 20-year mortgage requires payments of $1194.85 per month at an interest rate of 7.8% compounded monthly. To the nearest dollar, what was the amount of the mortgage?

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236) A 20-year mortgage requires payments of $1409.88 per month at an interest rate of 5.8% compounded monthly.

a) To the nearest dollar, what was the amount of the mortgage? b) What is the outstanding balance of the mortgage after 12 years?

237) What is the present value of $300 monthly loan payments for two years if money earns 7.5% compounded quarterly?

238) What is the future value of deposits of $250 monthly for five years into an account that pays 3.75% compounded quarterly?

239) Anil is saving $100 per month. How much will he have in his account at the end of five years if his account earns 3.8% compounded quarterly?

240) Jenna is making monthly payments of $450 for four years for a car at an interest rate of 5.5% compounded semiannually. What was the purchase price of the car? Version 1

241) Kristina is saving $150 every two weeks into an account that earns 3.75% compounded quarterly.

a) How much will she have in the account after five years? b) What amount of interest will Kristina earn from this account?

242) Claude has a business bank loan in which he makes quarterly payments of $2821.40. The loan is for five years, at 4.75% compounded semiannually.

a) To the nearest dollar, what was the amount of the loan? b) What amount of interest will Claude pay on his loan?

243) Calculate the periodic interest rate for quarterly payments earning 4.5% compounded annually, correct to five decimal places.

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244) Mrs. Henry wants to receive payments of $1000 per month for 20 years when she retires in 15 years. How much should she deposit into an account today to reach her goal if money is worth 5.75% compounded quarterly?

245) Jaspreet is paying $506 per month for a car over five years. She had a down payment of $6000, and is paying interest at 4.8% compounded quarterly.

a) What was the purchase price of the car? b) How much interest will Jaspreet pay overall?

246) An investment consists of deposits of $500 per quarter for 10 years. How much will be in the account after 10 years if interest is 5.5% compounded semiannually?

247) A preferred share pays a dividend of $3.25 per quarter until it is redeemed, at which time the value of the share is $60. What is the fair market value of the share if the redemption date is in 10 years, and shares of this type are currently generating a rate of return of 8% compounded semiannually?

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248) You invest a fixed amount at the end of each year and the invested funds will earn 4% compounded annually. What will be the future value of the investments after fifteen years if the periodic investment is $2,000 per year?

249) If you invest $1,000 at the end of each year and can earn 7% compounded annually. Calculate the future value of the investment after the tenth payment.

250) Calculate the future value after fifteen years if $200 is invested at end of each month earning 5.6% compounded monthly.

251) You plan on contributing the maximum payment of $5,500 every year to your TFSA (assume the maximum payment amount doesn't change). What is the future value after thirty years if the funds earn 3.2% compounded annually?

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252) For your children's college fund, you invest $100 at the end of every month for seven years. Calculate the future value if the funds earned 6% compounded monthly.

253) You contributed $1,500 to your RRSP at the end of every half-year. What was the value of your RRSP after 22.5 years if the RRSP grew at 2.5% compounded semiannually?

254) Lenore plans to invest $250 every month by purchasing units of a Canadian mutual fund. If the fund generates an overall rate of return of 5.675% compounded monthly, what will her holdings be worth after ninety-eight month?

255) Sindhu purchased $400 worth of units in a Canadian Oil and Gas Equity Fund every calendar quarter for the past 5 years and 9 months. On average, the fund has earned 4.75% compounded quarterly. What were Sindhu's holdings worth immediately after his last purchase?

256) What will be the future value after 8 years and 2 months of regular month-end investments of $285 earning 3.5% compounded monthly?

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257) Assume that your sister invests $2,900 at the end of each year for the next five years. The investment earns 5.5% compounded annually. What is the future value at the end of the five years?

258) Your parents plan to invest $4,000 at the end of each year for their grandchildren's education. The rate of return on the investment is 3.5% compounded annually. What will be the value of the education fund be at the end of twelve years?

259) Your banker has suggested you invest $500 at the end of each half-year for the next ten years. The invested funds have earned 3.4% compounded semiannually. What would be the value of your investments in ten years?

260) Your younger brother spends $400 per month on alcohol. Suppose he quits drinking and invests the same amount at the end of each month for ten years. If the invested money earns 4.5% compounded monthly, how much will your brother accumulate after ten years?

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261) You spend $200 per month on your phone and data plan. Suppose you can lower your bill to $30 per month and invest the difference at the end of each month for ten years. If the invested money earns 4.5% compounded monthly, how much will you accumulate after ten years by lowering your phone bill?

262) You owe $5,000 today. You wish to put off the loan for two years at a rate of 4.2% compounded monthly. How much interest will you owe in two years if you make no payments.

263) Calculate the equivalent values five years from now of an ordinary annuity starting today with five annual payments of $720. Money can earn 2.5% compounded annually.

264) You wish to save for a new house. You currently have $17,000 for a down payment and you plan to save another $4,000 at the end of each year for the next four years. You expects to earn 2.45% compounded annually on your savings. How much will you have in four years' time?

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265) Calculate the equivalent value six years from now an ordinary annuity starting in three years with three annual payments of $775. Money can earn 3.4% compounded annually.

266) Calculate the equivalent value six years from now an ordinary annuity starting in three years with three annual payments of $2,000. You can also invest immediately $3,000. What is the total value six years from now if money can earn 3.3% compounded annually?

267) You started contributing $3,500 to a TFSA at the end of every year beginning in 2015. In 2017, you can increase your contribution to $5,500. If you plan to continue to contribute $5,500 every year for the next ten years. How much will you have in your TFSA after twelve years if your average rate of return is 3% compounded annually?

268) Your partner has made contributions of $5,500 to their RRSP at the end of every six months for the past four years. The plan has earned 4.5% compounded semiannually. They have just moved the funds to another plan that earns 6% compounded quarterly. They will now contribute $7,500 at the end of every three months. What total amount will your partner have in the plan six years from now?

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269) You have already accumulated $100,000 for a down payment on a house. If you contribute $1,000 at the end of every month for the next five years, and $2,000 per month for the subsequent five years, what amount will you have to purchase a house in ten years? Money can earn 4% compounded monthly for the length of the investment.

270) Your new employer offers a pension plan that calls for end-of-quarter contributions of $1,700. In addition, the employer will contribute 1.5 times that amount at the same time. What will be the amount in your pension plan after four years if it earns 5% compounded quarterly?

271) Your child has been contributing $200 every three months to an investment plan that has consistently earned 2.45% compounded quarterly. They did this for five years until they entered college. While in college, your child stopped contributing for one full year but did not take any money out. The money continued to earn interest. After one full year, they continued making contribution of $300 every quarter for three additional years. When they graduate, how much will they have in their account? Money has consistently earned 2.45% compounded quarterly.

272) In retirement, you wish to receive $2000 at the end of each year for the twenty years. If money is currently worth 5% compounded annually, what is the present value of the fund?

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273) You wish to receive payments of $1,000 at the end of each month for forty years. Use a discount rate (interest rate) of 4% compounded monthly to calculate the present value?

274) What is the present value of end-of-quarter payments of $4,000 for ten years? Use a discount rate of 3% compounded quarterly.

275) Great West Lifeco is quoting a rate of return of 3.2% compounded quarterly on twentyyear annuities. How much will you have to pay for a twenty-year annuity that pays $3,000 (at the end of) every three months?

276) The rate of return offered by Federated Premium Insurance on its fifteen-year annuities is 3.8% compounded monthly. What amount is required to purchase a fifteen-year annuity with month-end payments of $2,500?

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277) If money can earn 5.5% compounded monthly, how much more money is required to fund an ordinary annuity paying $2,000 per month for twenty years than to fund the same monthly payment for thirty years?

278) You wishes to purchase a thirty-year annuity providing monthly payments of $3,000 for the first ten years and $3,500 for the remaining twenty years. An insurance company has quoted you a rate of return of 2.8% compounded monthly for such an annuity. How much will you pay for the annuity?

279) Your parents made a loan to your sister to help purchase a new condominium. To repay the loan, your sister made payments of $1,000 at the end of each month for five years. If the interest rate on the loan was 3% compounded monthly, what was the amount of the original loan?

280) Your monthly payments of $850 will pay off your mortgage loan in five years and seven months. The interest rate on your mortgage is 2.6% compounded monthly. What is the current balance on the loan?

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281) A ten-year loan requires semiannual payments of $2,562 including interest at 3.8% compounded semiannually. What is the loan's balance 8.5 years later (just after the scheduled payment)?

282) The monthly payments on a ten-year loan at 3.5% compounded monthly are $342. What is the balance after the 72nd payment?

283) You purchased a car for $5,000 down and monthly payments of $457 for four years, including interest at 7.5% compounded monthly. What was the selling price of the car?

284) Your father purchased a boat for $20,000 down with the balance to be paid by twentyfour monthly payments of $2,024 including interest at 6% compounded monthly. What was the purchase price of the boat and the balance owed just after the ninth payment?

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285) A conditional sale contract between Tom's Discount Beds and the purchaser of a queen bedroom set requires month-end payments of $300 for twelve months. Tom's Discount Beds sold the contract to Home Trust at a discount to yield 9.5% compounded monthly. What price did Home Trust pay Tom's Discount Beds?

286) Discount Appliance Centre is advertising dishwashers for seven monthly payments of $99, including a payment on the date of purchase. What cash price should Discount Appliance Centre accept if a customer wishes to make a cash offer. Money can yield 8% compounded monthly?

287) The Canadian Olympic Hockey team fired their coach two years into their five-year contract, which paid them $9,000 at the end of each month. If the board of directors buy out the remaining term of the coach's contract for its economic value at the time of firing, what will be the settlement amount? Assume that money can earn 2.5% compounded monthly.

288) The Winnipeg Valour Soccer Club have just announced the signing of English sensation Tommy Lanks to a two-year contract at $57,000 per year. Rounded to the dollar, what current economic value would you place on the contract if Lanss will be paid $4,750 at each month-end, and money can earn 4% compounded monthly? (Round to the nearest whole dollar)

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289) You have an insurance benefit: You can receive $2,000 at the end of each month for the next year or one lump sum today. If the current interest rate is 2.5% compounded annually, what lump payment today is equivalent to the twelve monthly payments?

290) You can purchase a new condominium for $190,000 cash, or for $100,000 down and monthly payments of $1,800 for five years. The first payment would be due one month after the purchase date. If the money you would use for a cash purchase can earn 5.75% compounded monthly during the next five years, which option should you choose and calculate the dollar difference in the two options.

291) You have received two offers on the cottage you wish to sell. Offer A is offering $149,000 cash, and Offer B is eight quarterly payments of $19,000, including a down payment of $5,000. Which offer has the greater economic value using a discount rate of 6% compounded quarterly by how much?

292) A lottery offers a prize of $1,000,000. If the winner is paid in annual instalments of $25,000 for forty years, what is the actual value of the prize if money is worth 4.5% compounded annually. If you wish to sell the payment stream half way through the payment period, to a finance company for cash, how much in cash would you accept? Money can earn 5.6% at that time?

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293) For its No Interest for One Year sale, The Block Furniture advertises that customers pay nothing down and the balance may be paid by twelve equal monthly payments with no interest charges. The Block Furniture has an operating loan on which it pays interest at 9.85% compounded monthly. If The Block Furniture sells furniture in a cash transaction rather than on the special promotion, The Block Furniture can use the extra cash proceeds to reduce the balance on its loan, and thereby save on interest costs. What percentage discount for cash could The Block Furniture give and still be no worse off than receiving the full price under the terms of the sale?

294) You are offered a new car if you put $3,000 down and end-of-month payments of $568 for five years. What is the purchase price of the car if you financed at the special rate of 0.99% compounded semiannually?

295) Your parents are contributing to an educational fund they have set up for their grandchildren. What amount will they have in the account after ten years of contributing $1,500 at the end of every calendar quarter if the plan earns 3.5% compounded monthly? How much of the total amount is interest?

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296) What is the future value eight years from now of each of the following cash flow streams if money can earn 4% compounded semiannually for (a) a single payment of $4,000 today, or (b) an ordinary annuity starting today with five annual payments of $900 or (c) an ordinary annuity starting after three years with semiannual payments of $450? (ten total payments)

297) How much larger will the value of a retirement fund be at the end of twenty-five years if the fund earns 5.4% compounded quarterly instead of 5.4% compounded monthly? In both cases a contribution of $1,200 is made at the end of every three months.

298) You wish to retire and plan on receiving monthly payments for thirty years. What amount will be required to purchase a thirty-year annuity paying $2,500 at the end of each month if the annuity provides a return of 2.75% compounded annually?

299) A lease agreement for a small warehouse requires payments of $12,000 at the end of every quarter. The contract has five years to run. The lessor wants to get out of the contract early and will pay the cash equivalent of one year of payments. What will the lessor be willing to pay in order to realize an annually compounded rate of return of 10%?

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300) You agree to sell your car to your younger sister for $1,000 down and monthly payments of $300 for three years, including interest at 1.5% compounded annually. What was the selling price of the car?

301) You owe a credit card company $10,458.62 after not making payments or making purchases for twelve months. If the credit card agrees to a one-time cash payment and will remove one full year of interest charges, how much will you have to pay if the credit card company charges 18% compounded monthly? How much will you save in interest charges?

302) Monthly contributions of $1,000 will be made to a retirement fund for twenty years. What will be the future value of the fund if it earns 4.3% compounded annually for the first eight years and 5.5% compounded semiannually thereafter?

303) You want to contribute $100 to a RESP at the end of every month for the next five years. For the subsequent seven years, you plan to contribute $400 at the end of each calendar quarter. How much will be in your RESP at the end of the twelve years if the funds earn 4% compounded semiannually?

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304) Isadore has just made her twelfth annual $3,000 contribution to her RRSP. She now plans to make semiannual contributions of $2,000. The first contribution will be made six months from now. How much will she have in her RRSP twenty-five years from now if the plan has earned and will continue to earn 4% compounded quarterly?

305) The London Eagles minor league soccer team announced the signing of one of their players to a "four-year deal worth $2.88 million." The player will earn $50,000 at the end of each month for the first two years, and 70,000 at the end of each month for the subsequent two years. To the nearest $1000, what is the current economic value of the deal if money can earn 4% compounded annually?

306) You are retiring early and wish to purchase a forty-year annuity providing payments of $4,500 per month for the first fifteen years and $4,000 per month for the remaining twenty-five years. Canada Life Insurance Co. has quoted a rate of return of 3.8% compounded annually for such an annuity. How much will it cost you to purchase the annuity from Canada Life, to the nearest dollar?

307) Your company wishes to invest a new building. They will provide a $100,000 down payment and will make payments of $12,000 per month for the first five years and $15,000 per month for the subsequent five years. If the rate of borrowing is 2% compounded semiannually, what is the value of the building when purchased, to the nearest dollar? Version 1

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Answer Key Test name: Chap 11_10ce 1) C 2) C 3) A 4) C 5) E 6) C 7) A 8) B 9) E 10) C 11) D 12) B 13) C 14) B 15) D 16) D 17) B 18) E 19) D 20) B 21) D 22) E 23) B 24) C 25) E 26) A Version 1

27) B 28) D 29) C 30) A 31) D 32) C 33) B 34) E 35) D 36) A 37) C 38) B 39) C 40) C 41) A 42) E 43) C 44) D 45) A 46) C 47) C 48) A 49) E 50) B 51) D 52) A 53) E 54) B 55) C 56) E Version 1

57) B 58) A 59) D 60) C 61) B 62) A 63) B 64) C 65) D 66) E 67) A 68) B 69) C 70) D 71) E 72) D

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CHAPTER 12 1) A life insurance company will sell a 20-year annuity paying $1600 at the end of each month for $175,000. What quarterly compounded nominal rate of interest will the annuitant earn? A) 9.401% B) 8.735% C) 9.226% D) 9.335% E) 9.297%

2) A $10,000 debt is repaid by payments of $800 at the end of each quarter for five years. What semiannually compounded nominal interest rate was charged on the loan? A) 23.10% B) 20.35% C) 11.08% D) 9.81% E) 19.86%

3) Fred must pay a $25,000 obligation one year from now. What end-of-month payments for twelve months would put the creditor in an equivalent financial position if the creditor can earn 9% compounded monthly? A) $2186.29 B) $1863.67 C) $1998.79 D) $2170.01 E) $1983.91

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4) A $12,000 loan is repaid by semiannual payments of $1500 each. Interest on the loan is 10% compounded semiannually. How long will it take to pay off the loan? A) 5.2 years B) 5 years C) 21 years D) 10 years E) 10.4 years

5) A stereo priced at $1057.53 was paid for by 12 monthly payments of $100 with the first payment made one month after the date of purchase. What monthly compounded nominal interest rate was charged? A) 2.00% B) 2.33% C) 27.97% D) 24.00% E) 24.96%

6) A $50,000 mortgage loan requires monthly payments of $520 for 20 years. What is the semiannually compounded nominal rate of interest on the loan? A) 11.3752% B) 11.6987% C) 11.1146% D) 0.9381% E) 11.2573%

7) What quarterly compounded rate of return will allow investments of $800 at the end of every six months to accumulate to $24,000 after 10 years?

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A) 14.876% B) 8.062% C) 8.143% D) 8.309% E) 15.286%

8) An investment of $25,000 is made for a 10-year term. After the term expires, equal withdrawals will be made at the end of every month for 15 years. What will the size of the monthly withdrawal be if the investment earns 9% compounded monthly for both the deposit and withdrawal periods. A) $253.57 B) $161.95 C) $621.58 D) $251.68 E) $616.96

9) What regular investment, made at the end of every three months and earning 10% compounded quarterly, would accumulate to $475,000 in 20 years? A) $3,492.86 B) $17,616.21 C) $7,856.83 D) $1,912.37 E) $7,916.67

10) Marvin hopes to accumulate $1,000,000 in his retirement plan by making equal contributions at the end of each month for 35 years. He is planning to earn 10.8% compounded monthly. What amount should he deposit every month?

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A) $119.90 B) $213.87 C) $569.05 D) $963.27 E) $2,380.95

11) Sally has invested a constant amount at the end of every six months for the last 40 years. She has made wise investment decisions and has earned a return of 16.4% compounded semiannually. Today the value of her savings has reached $2,500,000. What amount has she been investing every half-year? A) $91.66 B) $375.29 C) $5,834.15 D) $61,983.84 E) $205,375.29

12) How much will Clarence have to invest at the end of every year at 11% compounded annually if he is going to accumulate $25,000 in five years? A) $2,758.93 B) $3,870.52 C) $4,014.26 D) $4,989.01 E) $5,562.50

13) A loan of $17,200 at 9% compounded monthly is to be paid off by equal payments to be made at the end of every month for three years. What is the size of the monthly payment?

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A) $561.48 B) $679.49 C) $606.78 D) $477.78 E) $546.96

14) Moses' goal, when he retires from work in seven years, is to have $400,000 in his Retirement Fund. Assuming he achieves his goal and the fund earns 7% compounded semiannually after he retires, what is the amount that Moses will be able to take out of his Retirement Fund at the end of every six months for 25 years after he retires? A) $17,053 B) $24,270 C) $28,984 D) $3,053 E) $6,324

15) Vince has $35,000 to purchase an annuity that will provide him with equal payments at the end of every three months for the next six years. If the funds earn 8% compounded quarterly, what is the size of the quarterly payments he will receive? A) $2,335 B) $1,850 C) $3,734 D) $3,324 E) $7,571

16) The interest rate charged on a loan of $85,000 is 7.75% compounded annually. If the loan is to be paid off over seven years, calculate the size of the annual payments.

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A) $13,084 B) $1,314 C) $9,599 D) $16,187 E) $17,492

17) If the invested funds earn 13% compounded quarterly what amount invested at the end of every six months for 15 years will accumulate to $295,000? A) $23,415 B) $22,838 C) $5,953 D) $1,649 E) $3,352

18) Given the time-value of money of 11% compounded annually, calculate the size of the month-end payments for the next five years that would be equivalent to a single payment of $13,285 payable five years from now. A) $285.42 B) $221.42 C) $169.39 D) $177.76 E) $299.54

19) What annual deposit should Martina make to her RRSP at the end of every year if the funds earn 12% compounded monthly and her goal is to accumulate $1,000,000 at the end of 25 years?

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A) $4,000 B) $6,750 C) $7,500 D) $12,750 E) $13,358

20) Calculate the size of the monthly mortgage loan payment if a $121,500 loan at 7% compounded semiannually is to be paid off over 18 years. A) $983.75 B) $990.84 C) $998.00 D) $598.80 E) $716.44

21) If you have $45,000 earning 9.6% compounded monthly, how much money could you take out of the investment at the end of every year for 10 years? A) $8,820 B) $7,334 C) $2,819 D) $7,198 E) $2,878

22) A loan of $45,000 calls for equal payments at the end of every three months for the next six years. What is the size of the payments if the interest rate is 14% compounded semiannually?

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A) $3,924 B) $2,802 C) $3.817 D) $2,785 E) $3,395

23) Today, Barry reached his 50th birthday and he has $70,000 in his retirement fund. His goal is to have $500,000 on his 65th birthday. He can expect his investments to earn 13% compounded semiannually. How much will he have to invest at the end of every six months for the next 15 years in order to reach his goal? A) $4,978.30 B) $1,722.84 C) $428.30 D) $926.14 E) $2,388.89

24) Heather is planning to invest a constant amount of money at the end of every year for 15 years and then allow her money to accumulate interest for 15 more years without any additional deposits. If her investments earn 11% compounded annually and she must have $650,000 in 30 years, how much will she invest at the end of each of the next 15 years? A) $3,266 B) $2,167 C) $1,889 D) $3,612 E) $3,949

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25) Bosley has $750,000 which is earning 7.2% compounded monthly. At the end of every month for the next 10 years he plans to withdraw $5,000. After that he wants to increase his equal monthly withdrawals to the largest amount possible for 15 more years. What is that amount? A) $5,733 B) $5,917 C) $6,029 D) $6,315 E) $6,977

26) For the next 15 years Andre expects to earn 12% compounded monthly on the Retirement Savings Plan (RSP) that he is starting. For the subsequent 10 years he expects a return of 7% compounded annually. How much money is he planning to have in 25 years if he invests $3,500 at the end of every six months for the 25 years? A) $411,922 B) $610,059 C) $382,600 D) $657,484 E) $1,068,912

27) MaryAnne is taking out a loan of $70,000 at 8% compounded semiannually. Calculate the monthly payments that will reduce her balance owing to $30,000 in five years. A) $2,968 B) $1,005 C) $809 D) $669 E) $666

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28) If $2,000 were invested at the end of every three months, how long would it take to accumulate $475,000 at 10% compounded quarterly? (Round up to the nearest whole year) A) 60 years B) 79 years C) 27 years D) 20 years E) 14 years

29) Marvin's goal is to accumulate $1,000,000 in his retirement plan by making contributions of $250 at the end of each month. He expects to earn 10.8% compounded monthly. How long will it take Marv to reach his goal? (Round up to the nearest whole year) A) 34 years B) 41 years C) 155 years D) 14 years E) 26 years

30) For a long time Sally has been investing $7,000 at the end of every six months and today the value of her savings has reached $2,500,000. She has made wise investment decisions and has earned a return of 16.4% compounded semiannually. How long ago (rounded up to the nearest whole year) did she start this savings plan? A) 17 years B) 22 years C) 27 years D) 32 years E) 41 years

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31) Clarence has been investing $1,000 at the end of every year at 11% compounded annually. With today's contribution his investment has grown to $44,500. To the nearest year, how many years ago did he make the first contribution? A) 26 years B) 49 years C) 17 years D) 31 years E) 12 years

32) A loan of $16,525 at 10.8% compounded monthly is to be paid off by equal monthly payments of $650. To the nearest month, how long will it take to pay off the loan? A) 26 months B) 29 months C) 32 months D) 36 months E) 48 months

33) Moses' goal, when he retires from work in seven years, is to have $400,000 in his Retirement Fund. Assuming he achieves his goal and the fund earns 7% compounded semiannually after he retires, Moses will, at the end of every six months, take $20,000 out of his Retirement Fund. For how long will he be able to do that before the money runs out? A) 15.4 years B) 35.0 years C) 20.0 years D) 12.9 years E) 17.5 years

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34) Vince has $35,000 to purchase an annuity that will provide him with payments of $1,000 at the end of every three months. If the funds earn 8% compounded quarterly, how long will the payments continue? A) 35 years B) 36 years C) 15 years D) 9 years E) 60 years

35) The interest rate charged on an $85,000 loan is 7.75% compounded annually. How long will it take for the loan to be paid off by annual payments of $9,450? A) 8 years B) 12 years C) 16 years D) 20 years E) 24 years

36) If deposits of $9,900 invested at the end of every six months earn 13% compounded quarterly, how long will it take to accumulate $295,000? A) 4.25 years B) 8.5 years C) 17.0 years D) 34.0 years E) 68.0 years

37) Given the time-value of money of 11% compounded annually, calculate the term of an ordinary annuity of $425 monthly payments with a future value of $37,725.

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A) 66.0 years B) 33.0 years C) 14.3 years D) 11.0 years E) 5.5 years

38) Martina's RRSP earns 12% compounded monthly and her goal is to accumulate $1,000,000 by making deposits of $4,100 at the end of every year. How many years will it take to reach her goal? A) 24 years B) 29 years C) 33 years D) 47 years E) 125 years

39) How many monthly payments of $919 will it take to pay off a mortgage loan of $121,500 at 7% compounded semiannually? A) 132 B) 178 C) 212 D) 236 E) 249

40) You have $45,000 earning 9.6% compounded monthly. For how long will you be able to withdraw $5,000 at the end of every year?

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A) 10.7 years B) 13.9 years C) 21.8 years D) 24.4 years E) 29.5 years

41) A loan of $47,000 calls for payments of $2,700 at the end of every three months until the debt is settled. At an interest rate of 14% compounded semiannually, how many payments will be made? A) 14 B) 17 C) 24 D) 27 E) 40

42) A loan of $25,000 is to be repaid by monthly payments of $400. The interest rate is 9% compounded monthly. How many months will it take for the amount owing on the debt to be reduced to less than $10,000? A) 57 B) 68 C) 74 D) 85 E) 92

43) Mr. Johnston has been investing $5,000 into his savings plan at the end of every year for the last 17 years. His investments have earned 10.6% compounded semiannually. If he increases his annual contributions to $6,000, how much longer will it take for his savings plan to reach $1,000,000?

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A) 9 years B) 11 years C) 13 years D) 15 years E) 17 years

44) Clarence has a retirement fund of $300,000 that earns 11% compounded quarterly. His plan is to withdraw $3,000 at the end of every month for 12 years and then increase the monthly withdrawals to $5,000. How many $5,000 withdrawals will he be able to make? A) 30 B) 43 C) 48 D) 51 E) 56

45) What monthly compounded nominal rate of return must Rachel earn in her RRSP in order for month-end contributions of $600 to accumulate to $750,000 in 25 years? A) 8.04% B) 9.65% C) 10.09% D) 11.48% E) 13.50%

46) What would be the effective rate of interest if $100,000 was accumulated by investments of $3,500 made at the end of every three months for five years?

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A) 15.20% B) 14.40% C) 8.65% D) 13.12% E) 34.61%

47) After 15 years of contributions of $3,500 at the end of every six months to a Retirement Savings Plan, the accumulated amount stood at $232,536. What semiannually compounded nominal rate of return was earned by the funds in the RSP? A) 2.5% B) 5.0% C) 7.5% D) 10.0% E) 12.5%

48) What monthly compounded nominal rate of return would one need to achieve in order to have investments of $100 made at the end of every month for 35 years accumulate to $1 million? A) 14.50% B) 14.76% C) 13.62% D) 12.93% E) 11.35%

49) You have the option receiving $4,000 at the end of every six months for 15 years or a single lump sum of $250,000 at the end of the 15 years. What effective interest rate would make the two options equal in value?

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A) 9.500% B) 4.642% C) 9.770% D) 5.250% E) 9.285%

50) A life insurance company advertises that $75,000 will purchase a 25-year annuity paying $456.10 at the end of each month. What monthly compounded nominal rate of return does the annuity investment earn? A) 5.4% B) 6.2% C) 5.7% D) 5.6% E) 4.5%

51) A life insurance company advertises that $50,000 will purchase a 20-year annuity paying $402.80 at the end of each month. What effective rate of return does the annuity investment earn? A) 6.15% B) 6.92% C) 7.76% D) 7.18% E) 7.50%

52) Royal Niagara Golf and Country Club allows members to pay the annual membership fee by a single payment of $11,000 at the beginning of the year or by payments of $1,000 at the end of each month. What monthly compounded nominal rate of interest is being paid by members who select the monthly plan?

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A) 19.166% B) 16.376% C) 15.972% D) 17.663% E) 21.845%

53) A loan of $25,000,000 is to be repaid by annual year-end payments of $3,000,000 for 30 years. What is the effective interest rate on this loan? A) 9.746% B) 43.62% C) 3.600% D) 11.548% E) 21.598%

54) Susan's car loan payments are $265.08 at the end of each month for four years. The amount she borrowed was $12,000. What is the monthly compounded nominal interest rate? A) 6.500% B) 2.900% C) 10.500% D) 4.750% E) 6.000%

55) What annually compounded rate of return must Rachel earn in her RRSP in order for month-end contributions of $450 to accumulate to $750,000 in 25 years?

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A) 12.26% B) 9.43% C) 10.71% D) 11.32% E) 11.93%

56) A lottery winner must decide between receiving $5,000 at the end of every month for 10 years or one lump sum of $1,000,000 after 10 years. What semiannually compounded nominal rate of interest would make the two options equal in value? A) 10.152% B) 7.984% C) 9.774% D) 7.807% E) 9.580%

57) What effective interest rate will Frankie have to earn if his investments of $2,000 at the end of every three months for 20 years are to have a maturity value in 20 years of $1,000,000? A) 11.56% B) 13.81% C) 15.29% D) 16.19% E) 17.49%

58) The Jacksons have agreed to pay $1,419 at the end of every month for 15 years on their mortgage loan of $167,000. What semiannually compounded nominal rate are they paying?

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A) 5.09% B) 7.23% C) 8.11% D) 7.29% E) 6.19%

59) A loan of $88,700 can be paid off by monthly payments of $1,000 for 11 years. What is the semiannually compounded nominal interest rate? A) 9.81% B) 6.45% C) 7.74% D) 7.86% E) 8.02%

60) Malcolm wants to purchase an annuity that will pay him $7,000 at the end of every three months for 15 years. His financial advisor has told Malcolm that this annuity will cost him $250,000. What monthly compounded nominal interest rate was used in this calculation? A) 7.51% B) 9.3% C) 12.60% D) 18.89% E) 22.67%

61) Sandy is planning to accumulate $500,000 after 30 years by making investments of $300 at the end of each month for 20 years and leaving the money to grow at 7% compounded semiannually for 10 more years. What monthly compounded nominal rate will Sandy have to be earning over the 20 years that she makes the monthly deposits?

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A) 8.96% B) 10.75% C) 11.30% D) 12.83% E) 7.12%

62) An advertisement for a new car offers 1.2% compounded monthly financing for the first 24 months of a 5-year, $35,000 loan. The payments are $650 per month for the entire 60 months. What monthly compounded nominal interest rate is being applied to the final three years? A) 10.258% B) 12.01% C) 8.79% D) 11.51% E) 13.73%

63) We plan to have $1,500,000 in 35 years. We will make quarterly deposits of $1,000 at the end of every 3 months for 25 years and then allow the money to accumulate, without more deposits, at 8% compounded annually for the last 10 years. What monthly compounded nominal rate of return will we have to earn over the 25 years that we will be making the quarterly deposits? A) 13.482% B) 12.774% C) 12.641% D) 11.722% E) 10.939%

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64) A new car promotion offers 0.9% compounded monthly interest for the first 36 months on a loan of $57,000. The payments on this loan are $1,000 per month for five years. What annually compounded interest rate is being applied to the loan for the last two years? A) 8.434% B) 10.800% C) 5.331% D) 8.124% E) 10.662%

65) After you settled a lawsuit for wrongful dismissal, the court awarded you $93,600 for one year loss of wages of $7,700 per month plus interest on the lost wages to the end of the year. What effective rate of interest has the court allowed on the lost wages? A) 2.85% B) 2.58% C) 3.85% D) 1.85% E) 2.75%

66) A small gym charges $1,200 (paid in advance) for an annual membership, or $122 per month payable at the end of each month to the front desk of the gym. What is the effective interest rate being charged to the monthly payment subscribers? A) 54.94% B) 45.94% C) 45.12% D) 47.94% E) 48.94%

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67) You purchased a Province of Alberta bond for $900. The bond will pay $45 interest to you at the end of every six months until it matures in ten years. On the maturity date the bond will pay back its $1000 face value (as well as the interest payment due on that date). What semiannually compounded rate of return will you earn during the ten years? A) 10.09% compounded semiannually B) 91.09% compounded semiannually C) 11.09% compounded semiannually D) 11.09% compounded annually E) 11.09% compounded quarterly

68) You are scheduled to receive a single payment of $15,000, fourteen months from now, due to a lawsuit that you won. What end-of-month payments for the next fourteen months should you be willing to accept instead of the lump payment if you can invest the funds at 3.25% compounded annually? A) $1.152.97 B) $1.092.97 C) $1.025.97 D) $1.052.97 E) $1.072.97

69) As of your 54th birthday, you have accumulated $269,000 in your RRSP. What size of end-of-month payments in a twenty-five year annuity will these funds purchase at age sixty-five if you make no further contributions? Assume that his RRSP and the investment in the annuity will earn 4.25% compounded monthly. A) $2,123.89 B) $2,423.89 C) $2,383.89 D) $2,233.89 E) $2,323.89

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70) You were released from your current job and received a settlement of $54,000. The Canada Revenue Agency allows you to place the settlement in an RRSP. Fifteen years from now, you intends to transfer the money from the RRSP to a Registered Retirement Income Fund (RRIF). Thereafter, you will make equal withdrawals at the end of each quarter for fifteen years. If both the RRSP and the RRIF earn 6% compounded quarterly, what will be the amount of each withdrawal? A) $3,350.25 B) $3,550.25 C) $3,380.25 D) $3,150.25 E) $3,320.25

71) A small oil and gas company obtained a $2.5 million low-interest loan from the Government of Saskatchewan to increase R&D in the region. The loan is to be repaid in semiannual payments over forty years, and the first payment is due three years from today, when the firm's operations are expected to be well established. What will the payments be if the interest rate on the loan is 2% compounded semiannually and what is the amount of interest that will be paid over the lifetime of the loan? A) $47,770.49 B) $47,870.49 C) $49,870.49 D) $46,870.99 E) $45,870.99

72) During a "50 years of business" promotion, Lockport Appliance is offering terms of "nothing down and nothing to pay for six months" on all appliances priced above $1,000. Six months after the date of the sale, the first of six equal monthly payments is due. If the customer is to pay interest at the rate of 12% compounded monthly on the outstanding balance from the date of sale, what will be the monthly payments on a new kitchen suite priced at $1,595?

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A) $276.25 B) $287.59 C) $289.25 D) $284.34 E) $281.85

73) Rounded to the next higher month, how long will it take end-of-month deposits of $250 to accumulate $10,000 in an investment account that earns 6.25% compounded monthly? A) 34 months B) 35 months C) 39 months D) 37 months E) 32 months

74) You are about to begin regular month-end contributions of $350 to a retirement fund. The fund's long-term rate of return is expected to be 3.5% compounded semiannually. Rounded to the next higher month, how long will it take you to accumulate $500,000? A) 47 years and 2 months B) 48 years and 4 months C) 48 years and 1 month D) 48 years and 2 months E) 47 years and 6 months

75) How long will your retirement fund of $350,000, in an investment account that earns 4.25% compounded monthly, sustain month-end withdrawals of $2,804.68?

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A) 12 years and 9 months B) 13 years and 9 months C) 11 years and 9 months D) 13 years and 6 months E) 13 years and 4 months

76) You decided to leave your job early and cashed out your pension amount. You currently have $420,000 in the account. If you wish to have $600,000 to retire with, how much time, to the month, must you invest this money if you can earn 5% compounded annually. A) 8 years and 8 months B) 7 years and 3 months C) 7 years and 4 months D) 7 years and 6 months E) 8 years and 4 months

77) If $450,000 is used to purchase an annuity earning 4.5% compounded monthly and paying $3,000 at the end of each month, what will be the term of the annuity, including the final partial payment? A) 19 years and 5 months B) 19 years and 1 month C) 18 years and 7 months D) 18 years and 5 months E) 18 years and 8 months

78)

Calculate the periodic payment for the following ordinary annuity.

Future Value

Payment Interval

$54,511

1 year

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Term 13 years

Nominal Interest Rate Compounded Frequency 5.4%

Annually

79)

Calculate the periodic payment for the following ordinary annuity.

Future Value

Payment Interval

$35,790

3 months

80)

Payment Interval

$4375

1 month

10%

Quarterly

Term 2.5 years

Nominal Interest Rate Compounded Frequency 7.5%

Monthly

Calculate the periodic payment for the following ordinary annuity.

Future Value

Payment Interval

$50,000

6 months

82)

5.5 years

Nominal Interest Rate Compounded Frequency

Calculate the periodic payment for the following ordinary annuity.

Future Value

81)

Term

Term 12.5 years

Nominal Interest Rate Compounded Frequency 8%

Semiannually

Calculate the periodic payment for the following ordinary annuity.

Present Value

Version 1

Payment Interval

Term

Nominal Interest Rate Compounded Frequency

$27,277

83)

1 month

$35,531

1 quarter

Monthly

Term

Nominal Interest Rate

7 yrs, 9 mths 9.9%

Compounded Frequency Quarterly

Calculate the periodic payment for the following ordinary annuity.

Present Value

Payment Interval

$20,049

6 months

85)

Calculate the periodic payment for the following ordinary annuity.

Present Value Payment Interval

84)

8.25 years

Term 19 years

Nominal Interest Rate Compounded Frequency 9.25%

Semiannually

Calculate the periodic payment for the following ordinary annuity.

Present Value Payment Interval $35,104

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1 month

Term

Nominal Interest Rate

6 yrs, 7 mths 8.4%

Compounded Frequency Monthly

86)

Calculate the periodic payment for the following ordinary annuity.

Present Value

Payment Interval

$25,000

3 months

87)

Payment Interval

$50,000

1 month

9.5%

Semiannually

Term 12 years

Nominal Interest Rate Compounded Frequency 8.9%

Annually

Calculate the periodic payment for the following ordinary annuity.

Future Value $100,000

89)

8.5 years

Nominal Interest Rate Compounded Frequency

Calculate the periodic payment for the following ordinary annuity.

Present Value

88)

Term

Payment Interval 1 year

Term 15 years

Nominal Interest Rate Compounded Frequency 9%

Quarterly

Calculate the periodic payment for the following ordinary annuity.

Future Value

Payment Interval

$30,000

6 months

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Term 7 years

Nominal Interest Rate Compounded Frequency 8.25%

Monthly

90) In order to accumulate $500,000 after 25 years, calculate the amounts that must be invested at the end of each year at.

a) 8% compounded annually. b) 7% compounded annually.

91) John has $100,000 available to purchase an annuity. What end-of-month payments can he expect if the funds earn 5.4% compounded monthly and the payments run for?

a) 10 years? b) 20 years?

92) What payments can be expected at the end of each quarter from a 10-year annuity purchased for $100,000 if the funds earn?

a) 6% compounded quarterly? b) 8% compounded quarterly?

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93) The interest rate charged on a $20,000 loan is 9% compounded monthly. Calculate the monthly payments and the total interest paid during the life of the loan if the loan is to be paid off over.

a) 5 years. b) 10 years. c) 15 years. d) 20 years. e) 25 years.

94) The interest rate on a four-year $10,000 loan to purchase a car is 7.2% compounded monthly. What is the amount of the monthly payment?

95) Seth is supposed to pay $10,000 to Megan today. What payments at the end of each quarter for the next two years would be economically equivalent to the scheduled payment if money can earn 7.5% compounded quarterly?

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96) Calculate the nominal and effective rates of interest for the following ordinary annuity. Round to the nearest 0.01% Present Value $27,207.34

Payment Interval 1 year

Periodic Payment $4000

Term 10 years

97) Calculate the nominal and effective rates of interest for the following ordinary annuity. Round to the nearest 0.01% Present Value $100,000

Payment Interval 6 months

Periodic Payment $6918.51

Term 12.5 years

98) Calculate the nominal and effective rates of interest for the following ordinary annuity. Round to the nearest 0.01% Present Value $50,000

Payment Interval 3 months

Periodic Payment $1941.01

Term 7 years, 9 months

99) Calculate the nominal and effective rates of interest for the following ordinary annuity. Round to the nearest 0.01% Present Value $35,820

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Payment Interval 1 month

Periodic Payment $500

Term 8.75 years

100) Calculate the nominal and effective rates of interest for the following ordinary annuity. Round to the nearest 0.01% Future Value $500,000

Payment Interval 6 months

Periodic Payment $3030.02

Term 25 years

101) Calculate the nominal and effective rates of interest for the following ordinary annuity. Round to the nearest 0.01% Future Value $193,132

Payment Interval 3 months

Periodic Payment $2500

Term 13.25 years

102) Calculate the nominal and effective rates of interest for the following ordinary annuity. Round to the nearest 0.01% Future Value $100,000

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Payment Interval 1 month

Periodic Payment $251.33

Term 15 years, 5 months

103) Calculate the nominal and effective rates of interest for the following ordinary annuity. Round to the nearest 0.01% Future Value $112,604

Payment Interval 1 month

Periodic Payment $750

Term 9.25 years

104) Calculate the nominal and effective rates of interest for the following ordinary annuity. Round to the nearest 0.01% Future Value $75,000

Payment Interval 1 month

Periodic Payment $318.07

Term 11 years

105) A $9000, four-year term loan requires monthly payments of $220.77. What are the monthly compounded nominal rate and the effective rates of interest on the loan? Round to the nearest 0.01%

106) Calculate the amount that must be invested at the end of each year at 9% compounded annually in order to accumulate $500,000 after

a) 25 years. b) 30 years.

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107) In order to accumulate $500,000 after 25 years, calculate the amounts that must be invested at the end of each year if the invested funds earn:

a) 6% compounded annually. b) 7% compounded annually. c) 8% compounded annually. d) 9% compounded annually. Also calculate the total earnings in each case.

108) A 20-year annuity is purchased for $400,000. What payment will it deliver at the end of each quarter if the undistributed funds earn:

a) 4% compounded quarterly? b) 5% compounded quarterly? c) 6% compounded quarterly? d) 7% compounded quarterly? In each case, also calculate the total earnings distributed over the life of the annuity.

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109) The interest rate on a $100,000 loan is 7.5% compounded monthly. What must be the monthly payment for the loan to be repaid in:

a) 5 years? b) 10 years? c) 15 years? d) 20 years? Also calculate the total interest paid in each case.

110) Assume that the investments within an RRSP will earn 5% compounded annually. What monthly contribution must be made to the RRSP for it to grow to $750,000 in:

a) 15 years? b) 20 years? c) 25 years? d) 30 years? Also calculate the total earnings within the RRSP in each case.

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111) Marissa intends to make contributions to a TFSA such that the account will accumulate $150,000 after 20 years. What end-of-quarter contributions must be made if the TFSA earns 6% compounded:

a) Annually? b) Semiannually? c) Quarterly? d) Monthly?

112) What monthly payment is required to pay off a $50,000 loan in seven years if the interest rate on the loan is 7.5% compounded:

a) Annually? b) Semiannually? c) Quarterly? d) Monthly?

113) Norman financed the $2800 purchase price of his new washer and dryer with monthly payments at 6.4% compounded monthly made over 2 years. What will be the amount of each payment?

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114) Kyle wants to save $15,000 so he can take a trip to Australia when he graduates from college 3 years from now. How much must he contribute to a savings plan at the end of every month if the plan earns 4% compounded monthly?

115) Your client will retire this year. Currently she has $560,000 in accumulated capital. She wants to invest this capital to provide equal payments at the end of each year for 20 years, at which time the capital will be fully depleted. If her capital earns 7.5% compounded annually, what annual payment will she receive?

116)

Karen obtained a $20,000 loan at 4% compounded semiannually.

a) What monthly payment will repay the loan in 7½ years? b) How much interest will Karen pay over the life of the loan?

117) Brenda and Tom want to save $30,000 over the next four years for a down payment on a house. What amount must they regularly save from their month-end pay cheques if their savings can earn 5.5% compounded semiannually?

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118) Henry can buy a farm for $700,000 with terms of $100,000 down and the balance payable over 20 years by quarterly payments including interest at 8% compounded annually.

a) What will be the size of the payments? b) How much interest will Henry pay over the life of the loan?

119) RBC Royal Bank approved a four-year $20,000 Royal Buy-Back Car Loan to Zaman at 7.5% compounded monthly. The monthly payments are to reduce the balance on the loan to the Royal Bank's guaranteed buy-back value of $7250. Calculate the monthly payment.

120) Ardith is scheduled to make a lump payment of $25,000, 11 months from now, to complete a real estate transaction. What end-of-month payments for the next 11 months should the vendor be willing to accept instead of the lump payment if he can invest the funds at 5.4% compounded monthly?

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121) In order to purchase another truck, Beatty Transport obtained a $50,000 term loan for 5 years at 7.8% compounded semiannually.

a) What are the monthly payments on the loan? b) What will be the loan's balance at the end of the second year? c) How much interest will Beatty pay in the first two years?

122) Mr. Bean wants to borrow $7500 for three years. The interest rate is 5.5% compounded monthly.

a) What quarterly payments are required on the loan? b) What will be the balance owed on the loan at the start of the third year?

123)

The interest rate on a $200,000 loan is 8% compounded quarterly.

a) What payments at the end of every quarter will reduce the balance to $150,000 after 3½ years? b) If the same payments continue, what will be the balance seven years after the date that the loan was received? c) How much interest will be paid during the first seven years?

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124) As of Betty's fifty-sixth birthday, she has accumulated $195,000 in her RRSP. She has ceased contributions but will allow the RRSP to grow at an expected 5.4% compounded monthly until she reaches age 65. Then she will use the funds in the RRSP to purchase a 20-year annuity. What will her end-of-month annuity payments be if the money used to purchase the annuity earns 4.2% compounded monthly?

125) On the date of his granddaughter's birth, Mr. Parry deposited $5000 in a trust fund earning 6.2% compounded annually. After the granddaughter's 19th birthday, the trust account is to make end-of-month payments to her for four years to assist her with the costs of postsecondary education. If the trust account earns 4.8% compounded monthly during these four years, what will be the size of the monthly payments?

126) Elizabeth has been able to transfer a $25,000 retiring allowance into an RRSP. She plans to let the RRSP accumulate earnings at the rate of 5% compounded annually for 10 years and then purchase a 15-year annuity making payments at the end of each quarter. What size of payment can she expect if the funds in the annuity earn 5.2% compounded quarterly?

127) Ken and Barbara have two children, aged 3 and 6. At the end of every six months for the next 12½ years, they wish to contribute equal amounts to a Registered Education Savings Plan (RESP). Six months after the last RESP contribution, the first of 12 semiannual withdrawals of $5000 will be made. If the RESP earns 8.5% compounded semiannually, what must be the size of their regular RESP contributions?

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128) Four years from now, Tim and Justine plan to take a year's leave of absence from their jobs and travel through Asia, Europe, and Africa. They want to accumulate enough savings during the next four years so they can withdraw $3000 at each month-end for the entire year of leave. What amount must they pay into the fund at the end of every calendar quarter for the next four years to reach their goal? The planning assumptions are that their savings will earn 6% compounded quarterly for the next four years and 4.2% compounded monthly during the fifth year.

129) Beth and Nelson want to accumulate a combined total of $600,000 in their RRSPs by the time Beth reaches age 60, which will be 30 years from now. They plan to make equal contributions at the end of every six months for the next 25 years, and then to make no further contributions for the subsequent five years of semi-retirement. For planning purposes, assume that their RRSPs will earn 7% compounded semiannually for the next 30 years.

a) What should be their combined semiannual RRSP contributions? b) What combined monthly amount can they expect if they use the $600,000 in their RRSPs 30 years from now to purchase 25-year ordinary annuities? Assume that the funds used to purchase the annuities will earn 7.2% compounded monthly.

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130) Dr. Collins wants the value of her RRSP 30 years from now to have the purchasing power of $500,000 in current dollars.

a) Assuming an inflation rate of 2% per year, what nominal dollar amount should Dr. Collins have in her RRSP after 30 years? b) Assuming her RRSP will earn 8.5% compounded semiannually, what contributions should she make at the end of every three months to achieve the goal?

131) Harold, just turned 27, wants to accumulate an amount in his RRSP at age 60 that will have the purchasing power of $300,000 in current dollars. What annual contributions on his 28th through 60th birthdays are required to meet this goal if the RRSP earns 8.5% compounded annually and the rate of inflation is 2.5% per year?

132) As of Brice's 54th birthday, he has accumulated $154,000 in his Registered Retirement Savings Plan (RRSP). What size of end-of-month payments in a 20-year annuity will these funds purchase at age 65 if he makes no further contributions? Assume that his RRSP and the investment in the annuity will earn 8.25% compounded monthly.

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133) Leslie received a $40,000 settlement when her employer declared her job redundant. Under special provisions of the Income Tax Act, she was eligible to place $22,000 of the amount in an RRSP. Fifteen years from now, she intends to transfer the money from the RRSP to a Registered Retirement Income Fund (RRIF). Thereafter, Leslie will make equal withdrawals at the end of each quarter for 20 years. If both the RRSP and the RRIF earn 8.5% compounded quarterly, what will be the amount of each withdrawal?

134) A firm obtained a $3 million low-interest loan from a government agency to build a factory in an economically depressed region. The loan is to be repaid in semiannual payments over 15 years, and the first payment is due three years from today, when the firm's operations are expected to be well established.

a) What will the payments be if the interest rate on the loan is 6% compounded semiannually? b) What is the nominal amount of interest that will be paid over the lifetime of the loan?

135) During a one-week promotion, Al's Appliance Warehouse is planning to offer terms of "nothing down and nothing to pay for four months" on major appliances priced above $500. Four months after the date of sale, the first of eight equal monthly payments is due. If the customer is to pay interest at the rate of 12% compounded monthly on the outstanding balance from the date of sale, what will be the monthly payments on an automatic dishwasher priced at $995?

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136) Jack Groman's financial plan is designed to accumulate sufficient funds in his RRSP over the next 28 years to purchase an annuity paying $6000 at the end of each month for 25 years. He will be able to contribute $7000 to his RRSP at the end of each year for the next 10 years. What year-end contribution must he make for the subsequent 18 years to achieve his objective? For these projections, assume that Jack's RRSP will earn 7.5% compounded annually and that the annuity payments are based on a return of 7.5% compounded monthly.

137) Cynthia currently has $31,000 in her RRSP. She plans to contribute $5000 at the end of each year for the next 17 years and then use the accumulated funds to purchase a 20-year annuity making month-end payments.

a) If her RRSP earns 8.75% compounded annually for the next 17 years, and the fund from which the annuity is paid will earn 5.4% compounded monthly, what monthly payments will she receive? b) If the rate of inflation for the next 17 years is 2%, what will be the purchasing power (in today's dollars) of the monthly payments at the start of the annuity?

138) Mr. Parmar wants to retire in 20 years and purchase a 25-year annuity that will make equal payments at the end of every quarter. The first payment should have the purchasing power of $6000 in today's dollars. If he already has $54,000 in his RRSP, what contributions must he make at the end of every half-year for the next 20 years to achieve his retirement goal? Assume that the rate of inflation for the next 20 years will be 2.5%, the RRSP will earn 8% compounded semiannually, and the rate of return on the fund from which the annuity is paid will be 5.5% compounded quarterly.

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139) Semiannual payments of $3874.48 are made on a $50,000 loan at 6.5% compounded semiannually. How long will it take to pay off the loan?

140) The future value of an annuity consisting of end-of-year investments of $1658.87 earning 5.2% compounded annually is $100,000. How many annual investments were made?

141) For $200,000, Jamal purchased an annuity that delivers end-of-quarter payments of $3341.74. If the undistributed funds earn 4.5% compounded quarterly, what is the term of the annuity?

142) If money in a new TFSA earns 8.25% compounded monthly, how long will it take for the plan to reach $30,000 in value based on end-of-month contributions of $209.59?

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143) An endowment fund is set up with a donation of $100,000. If it earns 4% compounded monthly, for how long it will sustain end-of-month withdrawals of $1000? (Include the final smaller withdrawal.)

144) Rounding up the number of contributions, how long will it take an RRSP to surpass $100,000 if it takes in end-of-quarter contributions of $3000 and earns 6% compounded quarterly?

145) Rounding up the number of contributions, for how long has William been making end-ofquarter contributions of $1200 to his RRSP if the RRSP has earned 4.75% compounded annually and is presently worth $74,385?

146) Monthly payments of $315.49 are required on a $20,000 loan at 5.5% compounded quarterly. What is the term of the loan?

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147) How long will it take an RRSP to grow to $700,000 if it takes in month-end contributions of $1000 and it earns:

a) 4% compounded monthly? b) 6% compounded monthly? c) 8% compounded monthly? d) 9% compounded monthly? Round up the number of contributions.

148) How long will it take for monthly payments of $800 to repay a $100,000 loan if the interest rate on the loan is:

a) 6% compounded monthly? b) 7% compounded monthly? c) 8% compounded monthly? d) 9% compounded monthly? Round up the number of payments.

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149) How long will it take for monthly payments of $740 to repay a $100,000 loan if the interest rate on the loan is:

a) 7.5% compounded annually? b) 7.5% compounded semiannually? c) 7.5% compounded quarterly? d) 7.5% compounded monthly? Round up the number of payments.

150) How long will it take an RESP to grow to $200,000 if the plan owner contributes $250 at the end of each month and the plan earns:

a) 8% compounded monthly? b) 8% compounded quarterly? c) 8% compounded semiannually? d) 8% compounded annually? Round up the number of contributions.

151) Rounded to the next higher month, how long will it take end-of-month deposits of $500 to accumulate $100,000 in a savings account that pays interest of 5.25% compounded monthly?

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152) Silas is about to begin regular month-end contributions of $500 to a bond fund. The fund's long-term rate of return is expected to be 6% compounded semiannually. Rounded to the next higher month, how long will it take Silas to accumulate $300,000?

153) Rounded to the next higher month, how long will $500,000, in an investment account that earns 3.25% compounded monthly, sustain month-end withdrawals of $3000?

154) Farah has $600,000 in her RRSP and wishes to retire. She is thinking of using the funds to purchase an annuity that earns 5% compounded annually and pays her $3500 at the end of each month. If she buys the annuity, for how long will she receive payments? Round the number of payments up.

155) If $300,000 is used to purchase an annuity earning 7.5% compounded monthly and paying $2500 at the end of each month, what will be the term of the annuity? Round the number of payments up.

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156) a) How long will it take monthly payments of $400 to repay a $50,000 loan if the interest rate on the loan is 8% compounded semiannually? b) How much will the time to repay the loan be reduced if the payments are $40 per month larger? Round the number of payments up.

157) How many months longer will it take month-end RRSP contributions of $500 to accumulate $500,000 than month-end contributions of $550? Assume that the RRSP earns 7.5% compounded monthly. Round the time required in each case to the next higher month.

158) Suppose that you contribute $400 per month to your RRSP. Rounding up to the nearest month, how much longer will it take for the RRSP's value to reach $500,000 if it earns 7.5% compounded annually than if it earns 7.5% compounded monthly?

159) How much longer will it take to pay off a $100,000 loan with monthly payments of $1000 than with monthly payments of $1100? The interest rate on the loan is 10.5% compounded monthly. Round up the number of payments.

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160) How much longer will it take monthly payments of $1000 to pay off a $100,000 loan if the monthly compounded rate of interest on the loan is 10.5% instead of 9.75%? Round up the number of payments.

161) What duration of annuity paying $5000 at the end of every quarter can be purchased with $200,000 if the invested funds earn 5.5% compounded semiannually? Round up the number of payments.

162) Bonnie and Clyde want to take a six-month leave of absence from their jobs to travel extensively in South America. Rounded to the next higher month, how long will it take them to save $40,000 for the leave if they make month-end contributions of $700 to their employer's salary deferral plan? The salary deferral plan earns 7.5% compounded semiannually.

163) Finest Furniture will sell a colour television set priced at $1395 for $50 down and payments of $50 per month, including interest at 13.5% compounded monthly. How long after the date of purchase will the final payment be made? Round up the number of payments.

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164) Rashid wants to use $500,000 from his RRSP to purchase an annuity that pays him $2000 at the end of each month for the first 10 years and $3000 per month thereafter. Global Insurance Co. will sell Rashid an annuity of this sort with a rate of return of 4.8% compounded monthly. For how long will the annuity run? Round up the number of payments.

165) A 65-year-old male can purchase either of the following annuities from a life insurance company for $50,000. A 25-year term annuity will pay $307 at the end of each month. A life annuity will pay $408 at the end of every month until the death of the annuitant. To what age must the man survive for the life annuity to have the greater economic value? Assume that money can earn 6% compounded monthly. Round up the number of payments.

166) A 60-year-old woman can purchase either of the following annuities from a life insurance company for $50,000. A 30-year term annuity will pay $367 at the end of each month. A life annuity will pay $405 at the end of every month until the death of the annuitant. To what age must the woman survive for the life annuity to have the greater economic value? Assume that money can earn 8% compounded monthly. Round up the number of payments.

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167) $10,000 was invested in a fund earning 7.5% compounded monthly. How many monthly withdrawals can be made if the first occurs 3½ years after the date of the initial investment? Count the final smaller withdrawal.

168) Nancy borrowed $8000 from her grandfather to buy a car when she started college. The interest rate being charged is only 4.5% compounded monthly. Nancy is to make the first $200 monthly payment on the loan three years after the date of the loan. How long after the date of the initial loan will she make the final payment? Round up the number of payments.

169) Twelve years ago, Mr. Lawton rolled a $17,000 retiring allowance into an RRSP that subsequently earned 10% compounded semiannually. Three years ago he transferred the funds to an RRIF. Since then, he has been withdrawing $1000 at the end of each quarter. If the RRIF earns 8% compounded quarterly, how much longer can the withdrawals continue? Round up the number of payments.

170) Novell Electronics recently bought a patent that will allow it to bring a new product to market in 2½ years. Sales forecasts indicate that the product will increase the quarterly profits by $28,000. If the patent cost $150,000, how long after the date of the patent purchase will it take for the additional profits to repay the original investment along with a return on investment of 15% compounded quarterly? Assume that the additional profits are received at the end of each quarter. Round up the number of payments.

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171) Helen and Morley borrowed $20,000 from Helen's father to make a down payment on a house. The interest rate on the loan is 8% compounded annually, but no payments are required for two years. The first monthly payment of $300 is due on the second anniversary of the loan. How long after the date of the original loan will the last payment be made? Round up the number of payments.

172) A property development company obtained a $2.5 million loan to construct a commercial building. The interest rate on the loan is 10% compounded semiannually. The lender granted a period of deferral until rental revenues become established. The first quarterly payment of $100,000 is required 21 months after the date of the loan. How long after the date of the original loan will the last payment be made? Round up the number of payments.

173) Bernice is about to retire with $139,000 in her RRSP. She will make no further contributions to the plan, but will allow it to accumulate earnings for another six years. Then she will purchase an annuity providing payments of $5000 at the end of each quarter. Assume that the RRSP will earn 8.5% compounded annually and the funds invested in the annuity will earn 7.5% compounded monthly. How long after the purchase of the annuity will its payments continue? Round up the number of payments.

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174) Harold's RRSP is already worth $56,000. Rounding up the number of payments, how long will it take the RRSP to reach $250,000 if additional contributions of $2000 are made at the end of every six months? Assume the RRSP earns 9.75% compounded monthly.

175) An annuity purchased for $50,000 sustained quarterly withdrawals of $1941.01 for 7 years and 9 months. What nominal rate of return and effective rate of return were the retained funds earning? Round to the nearest 0.01%

176) The present value of an ordinary annuity of $500 per month for 8¾ years is $35,820. Calculate the nominal and effective values for the discount rate. Round to the nearest 0.01%

177) If RRSP contributions of $3030.02 at the end of every six months are projected to generate a plan worth $500,000 in 25 years, what nominal and effective rates of return were assumed in the forecast? Round to the nearest 0.01%

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178) With end-of-month contributions of $251.33, a TFSA is expected to pass $100,000 in value after 15 years and 5 months. Determine the nominal and effective rates of return used in the projection. Round to the nearest 0.01%

179) Monty is checking potential outcomes for the growth of his RRSP. He plans to make contributions of $500 at the end of each month. What nominal rate of return must his RRSP earn for its future value after 25 years to be:

a) $400,000? b) $500,000? c) $600,000? Round to the nearest 0.01%.

180) Morgan 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 annuity payment she can expect to receive, depending on the rate of return earned by the undistributed funds. What nominal rate of return must the funds earn for the monthly payment to be:

a) $3000? b) $3500? c) $4000? Round to the nearest 0.01%.

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181) If $100,000 will purchase a 20-year annuity paying $830 at the end of each month, what monthly compounded nominal rate and effective rate of interest will the invested funds in the annuity earn? Round to the nearest 0.01%

182) If regular month-end deposits of $200 in a savings account amounted to $7727.62 after three years, what monthly compounded nominal rate and effective rate of interest were paid on the account? Round to the nearest 0.01%

183) After 10½ years of contributions of $2000 at the end of every six months to an RRSP, the accumulated amount stood at $65,727.82. What semiannually compounded nominal rate and effective annual rate of return were earned by the funds in the RRSP? Round to the nearest 0.01%

184) What quarterly compounded nominal rate and effective rate of interest are being charged on a $5000 loan if quarterly payments of $302.07 will repay the loan in 5½ years? Round to the nearest 0.01%

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185) If TFSA contributions of $10,000 at the end of every year are projected to generate a plan worth $1,000,000 in 25 years, what effective rate of return was assumed in the forecast? Round to the nearest 0.01%

186) A finance company paid a furniture retailer $1050 for a conditional sale contract requiring 12 end-of-month payments of $100. What effective rate of return will the finance company realize on the purchase? Round to the nearest 0.01%

187) For $150,000, Continental Life Insurance Co. will sell a 20-year annuity paying $1200 at the end of each month. What effective rate of return does the annuitant earn? Round to the nearest 0.01%

188) In an insurance settlement for bodily injury, a court awarded Mr. Goodman $103,600 for two years' loss of wages of $4000 per month plus interest on the lost wages to the end of the two years. What effective rate of interest has the court allowed on the lost wages? Round to the nearest 0.01%

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189) A major daily newspaper charges $260 (paid in advance) for an annual subscription, or $26 per month payable at the end of each month to the carrier. What is the effective interest rate being charged to the monthly payment subscribers? Round to the nearest 0.01%

190) Vijay purchased a Government of Nova Scotia bond for $1050. The bond will pay $35 interest to Vijay at the end of every six months until it matures in seven years. On the maturity date the bond will pay back its $1000 face value (as well as the interest payment due on that date.) What semiannually compounded rate of return will Vijay earn during the seven years? Round to the nearest 0.01%

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191) Another type of sales promotion for vehicles is to advertise the choice between a "Cash Purchase Price" or "0% Purchase Financing." The tiny print at the bottom of a GM Canada fullpage advertisement included the statement: " The GMAC purchase finance rates are not available with and are not calculated on the 'Cash Purchase Price' shown. The difference between the price for the GMAC purchase finance offer and the 'Cash Purchase Price' offer is deemed under provincial laws to be a cost of financing." In other words, there are two prices for a vehicle-a lower price if you pay cash and a higher price if you want to take advantage of the "0% financing." An additional disconcerting aspect of this type of promotion is that the higher price for the 0% financing is usually not quoted in the advertisement. Rather, it must be negotiated with the dealer. Suppose the Cash Purchase Price of a car is $23,498, and the price that qualifies for full 0% financing (with 48 monthly payments) turns out to be $26,198. What effective interest rate will you be paying for the "0% financing?" Round to the nearest 0.01%

192) An advertisement for Hyundai cars offered "2.9% 12-month financing or $1000 cash back." A car buyer financed $17,000 at the low interest rate instead of paying $16,000 cash (after the $1000 rebate). What was the effective rate of interest on the loan if the foregone cash rebate was treated as part of the cost of financing? (The 2.9% interest rate was a monthly compounded nominal annual rate.) Round to the nearest 0.01%

193) A Ford advertisement offered "$1250 cash back or 1.9% factory financing over 48 months" to purchasers of new Ford vans. A customer financed $20,000 at the low interest rate instead of paying $18,750 cash (after the $1250 rebate). What was the effective rate of interest on the loan if the foregone cash rebate was treated as part of the cost of financing? (The 1.9% interest rate was a monthly compounded nominal annual rate.) Round to the nearest 0.01%

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194) Calculate the amount that must be invested at the end of every six months at 3.75% compounded semiannually in order to accumulate $500,000 after 20 years.

195) What monthly payment for 15 years will pay off a $50,000 loan at 8.25% compounded monthly?

196) For $100,000, Royal Life Insurance Co. will sell a 20-year annuity paying $802.76 at the end of each month. What monthly compounded nominal rate and effective rate of return does the annuitant earn on the invested funds? Round to the nearest 0.01%

197) If $400,000 accumulated in an RRSP is used to purchase an annuity earning 7.2% compounded monthly and paying $4500 at the end of each month, what will be the term of the annuity? Round up the number of payments.

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198) After contributing $2000 at the end of each quarter for 13¾ years, Foster has accumulated $205,064 in his RRSP. What effective annual rate of return was earned by the RRSP over the entire period? Round to the nearest 0.01%

199) What semiannually compounded rate and effective rate of interest are being charged on a $12,000 loan if semiannual payments of $1204.55 will repay the loan in seven years? Round to the nearest 0.01%

200) The interest rate on a $100,000 loan is 6% compounded monthly. Rounding up the number of payments, how many months longer will it take to pay off the loan with monthly payments of $1000 than with monthly payments of $1050?

201) If $100,000 will purchase a 20-year annuity paying $739 at each month's end, what monthly compounded nominal rate and effective rate of interest are earned by the funds? Round to the nearest 0.01%

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202) An annuity purchased for $175,000 pays $4000 at the end of every quarter. Rounding up the number of payments, how long will the payments continue if the funds earn 4% compounded semiannually?

203) A finance company paid a furniture retailer $1934 for a conditional sale contract requiring 12 end-of-month payments of $175. What effective rate of return does the finance company earn on the purchase? Round to the nearest 0.01%

204) Howardson Electric obtained a $90,000 loan at 6.75% compounded monthly. What size of semiannual payments will repay the loan in 10 years?

205)

The interest rate on a $30,000 loan is 7.5% compounded monthly.

a) What monthly payments are required to pay off the loan in eight years? b) What monthly payments would be required to reduce the balance to $10,000 after five years?

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206) How much sooner will a $65,000 loan at 7.2% compounded monthly be paid off if the monthly payments are $625 instead of $600? What will be the approximate saving in total interest costs over the life of the loan? Round up the number of payments.

207) $2000 will be contributed to an RRSP at the end of every six months for 20 years. What effective rate of return must the funds in the plan earn if it is to be worth $250,000 at the end of the 20 years? Round to the nearest 0.01%

208) What payments must be made at the end of each quarter to an RRSP earning 7.5% compounded annually so that its value 8½ years from now will be $15,000?

209) The McGowans are arranging a $90,000 mortgage loan from their bank. The interest rate on the loan will be 7.9% compounded semiannually.

a) What will the monthly payments be if the loan has a 20-year term? b) If the McGowans choose to pay $800 per month, how long will it take to pay off the loan? Round up the number of payments.

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210) A series of $500 contributions were made at three-month intervals to a fund earning 3.5% compounded quarterly. The accumulated amount continued to earn 3.5% compounded quarterly for three years after the last contribution, ending the period at $9701.66. How many $500 contributions were made?

211) Weston Holdings Ltd. loaned $3.5 million to a subsidiary to build a plant in Winnipeg. No payments are required for two years, to allow the operations of the plant to become well established. The first monthly payment of $40,000 is due two years after the date the loan was received. If the interest rate charged on the intercompany loan is 9% compounded monthly, how long (measured from the date of the first payment) will it take the subsidiary to pay off the loan? Round up the number of payments.

212) Mr. Sandstrom's will directed that $20,000 be placed in each of two investment trusts for his grandchildren, Lena and Axel. On each grandchild's 18th birthday, he or she is to receive the first of a series of equal quarterly payments running for 15 years. Lena has just turned 13, and Axel's age is 8 years, 6 months. If the funds earn 9.25% compounded semiannually, what size of payment will each grandchild receive?

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213)

The interest rate on a $100,000 loan is 7.5% compounded quarterly.

a) What quarterly payments will reduce the balance to $75,000 after five years? b) If the same payments continue, what will be the balance 10 years after the date that the loan was received?

214) Mr. Braun wants the value of his RRSP 25 years from now to have the purchasing power of $400,000 in current dollars.

a) Assuming an inflation rate of 4% per year, what nominal dollar amount should Mr. Braun have in his RRSP after 25 years? b) What contributions should he make at the end of every three months to achieve the goal if his RRSP earns 7.5% compounded semiannually?

215) a) How long will it take monthly payments of $600 to repay a $65,000 loan if the interest rate on the loan is 9.5% compounded semiannually? b) How much will the time to repay the loan be reduced if the payments are $50 per month larger? Round up the number of payments.

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216) A 70-year-old male can purchase either of the following annuities for the same price from a life insurance company. A 20-year-term annuity will pay $394 at each month-end. A life annuity will pay $440 at the end of each month until the death of the annuitant. Beyond what age must the man survive for the life annuity to have the greater economic value? Assume that money can earn 7.2% compounded monthly. Round up the number of payments.

217) Noreen's RRSP is currently worth $125,000. She plans to contribute for 10 more years and then let the plan continue to grow through internal earnings for an additional five years. If the RRSP earns 8% compounded annually, how much must she contribute at the end of every six months during the 10-year period to have $500,000 in the RRSP 15 years from now?

218) $30,000 is placed in a fund earning 7% compounded quarterly. How many quarterly withdrawals of $2000 can be made if the first withdrawal occurs three years from today? Count the final withdrawal, which will be less than $2000.

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219) Georgina is about to retire with $188,000 in her RRSP. She will make no further contributions to the plan, but will allow it to accumulate earnings for another five years. Then she will purchase an annuity providing payments of $6000 at the end of each quarter. What will be the annuity's term if the RRSP earns 8% compounded annually and the funds invested in the annuity earn 7.5% compounded monthly? Round up the number of payments.

220) By the time he turns 60, Justin (just turned age 31) wants the amount in his RRSP to have the purchasing power of $250,000 in current dollars. What annual contributions on his 32nd through 60th birthdays inclusive are required to meet this goal if the RRSP earns 8% compounded annually and the rate of inflation is 2% per year?

221) An advertisement for Ford trucks offered "2.9% financing (for 48 months) or $2000 cash back." A truck buyer financed $20,000 at the low interest rate instead of paying $18,000 cash (after the $2000 rebate). What was the effective rate of interest on the loan if the foregone cash rebate is treated as part of the cost of financing? (The 2.9% interest rate is a monthly compounded nominal annual rate.) Round to the nearest 0.01%

222) What monthly payment is required to accumulate to a future value amount of $5000 in four years if money earns 3.75% compounded monthly?

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223) What quarterly payment is required to accumulate to a future value amount of $10,000 in eight years if money earns 4.5% compounded quarterly?

224) What semiannual payment would be required to pay off a loan of $5000 at 8.5% compounded semiannually over five years?

225) What monthly payment would be required to pay off a loan of $3000 at 7.25% compounded monthly over three years?

226) A car loan of $20,000 is to be repaid over five years at 6.8% compounded quarterly. What is the amount of the monthly payment?

227) A personal loan of $15,000 is to be repaid over four years at 7.75% compounded semiannually. What is the amount of the monthly payment?

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228) Jane wants to save $25,000 in five years. If money earns 3.75% compounded quarterly, how much should she deposit monthly to reach her goal?

229) Cliff has $25,000 in his savings account now. He wants to accumulate another $25,000 within the next five years, so that he has a total of $50,000 for a down payment on a house. If his account pays 4.75% compounded quarterly, how much should Cliff deposit to his account monthly to reach his goal?

230) Jane and Julian borrowed $25,000 for home renovations from their bank at 6.5% compounded semiannually. What monthly payment will reduce their loan to $10,000 after five years?

231) Susan bought a car for $25,000 and is making monthly payments at 7.25% compounded quarterly over four years. At the end of four years, Susan will owe $8000. What is the amount of Susan's monthly payment?

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232) Marcie bought a car for $32,000, put $5000 down, and is making monthly payments at 3.8% compounded semiannually for five years.

a) What is the amount of Marcie's monthly payment? b) How much interest will Marcie pay overall?

233) Larissa is saving each month to accumulate $10,000 in six years. Her account pays 4.25% compounded quarterly.

a) What amount should Larissa deposit monthly to reach her goal? b) How much interest does Larissa earn?

234) Jinny is buying new windows for her house. The contractor is offering "no money down, and no payments for six months." The total cost of the windows is $12,500 and Jinny will be making monthly payments starting in six months at 9.5% compounded annually for four years. What is Jinny's monthly payment?

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235) Kristina has saved $3500 so far, but wants to have $8000 in three years. If her account pays 4.5% compounded semiannually, how much should Kristina save each month to reach her goal?

236) The Bay is offering "no money down, and no payments for a year." The total cost of a purchase of electronic equipment is $3500 including taxes.

a) What monthly payment is required to pay off this debt in two years, if payments start in one year, and the Bay charges interest at 2% per month? b) What is the amount of interest that the purchaser pays overall?

237) Jacob is depositing $125 per month into his RRSP at an interest rate of 4.5% compounded monthly. How long will it take for his RRSP to accumulate to $10,000? Round up the number of deposits.

238) James is making payments of $275 per month for his car. The purchase price of the car was $15,000 and James paid a down payment of $4000. How long will James take to repay the car loan if interest is 7.5% compounded quarterly? Round up the number of payments.

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239) Matthew wants to buy a motorcycle. He feels he will need $20,000 and is saving $500 monthly. If his account earns 5.5% compounded semiannually, how long will it take for Matthew to have $20,000 saved? Round up the number of deposits.

240) A mortgage of $200,000 requires payments of $1395.40 per month at 5.7% compounded quarterly.

a) How long will it take to repay the loan? Round up the number of payments. b) What amount of interest does the purchaser pay?

241) a) A mortgage of $250,000 requires payments of $1681.42 per month at 5.25% compounded quarterly. If the purchaser paid an extra $300 per month towards the mortgage, how much sooner would the mortgage be paid off? Round up the number of payments. b) What amount of interest would the purchaser save?

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242) Marion is receiving payments of $500 per month for 20 years. In order to receive these payments, she deposited $90,000 in to an account with monthly compounding. What nominal rate of interest did the account pay? Round to the nearest 0.01%

243) Marilyn is receiving $3000 per quarter for 30 years. In order to receive these payments, she deposited $305,000 into an account with semiannual compounding.

a) Rounded to the nearest 0.01%, what nominal rate of interest did the account pay? b) How much interest did the account earn?

244) Matthew borrowed $27,000 for his car. He is making payments of $525 per month for five years. If interest is compounded quarterly, what nominal rate of interest is Matthew paying? Round to the nearest 0.01%

245) Ray bought living room furniture at a local department store. The cost of the furniture was $4000 including taxes. Ray is making monthly payments of $155 per month for three years.

a) To the nearest 0.01%, what rate of interest compounded monthly is Ray paying? b) What amount of interest will Ray pay over the three years?

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246) Brian has a mortgage of 150,000 on which he is making monthly payments of $1200 for 20 years. To the nearest 0.01%, what rate of interest compounded quarterly is Brian paying?

247) Calculate the amount that must be invested at the end of month at 5.6% compounded monthly in order to accumulate $50,000 after five years.

248) In order to accumulate $800,000 in your retirement fund after thirty years, calculate the amount that must be invested at the end of each year, if the invested funds earn 3.5% compounded annually.

249) A thirty-year annuity is purchased for $650,000. What is the difference in annual payments if the annuity earns 4% compounded quarterly or 4% compounded monthly?

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250) The interest rate on a $20,000 car loan is 5.5% compounded monthly. What must be the monthly payment for the loan to be repaid in seven years?

251) Assume that the investments within an RRSP will earn 3.5% compounded annually. What monthly contribution must be made to the RRSP for it to grow to $500,000 in twenty years?

252) You intend to make contributions to a TFSA such that the account will accumulate $25,000 after five years. What end-of-quarter contributions must be made if the TFSA earns 3% compounded annually?

253) What monthly payment is required to pay off a $25,000 car loan in four years if the interest rate on the loan is 6.25% compounded quarterly?

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254) You purchased a new home entertainment system and financed the $5,200 purchase price. If you make monthly payments at 9.4% compounded monthly for two years, what will be the amount of each payment?

255) You plan a one-year global tour after you graduate from college. You believe you will require $30,000 to take this trip. If you plan on graduating four years from now, how much must he contribute to a savings plan at the end of every month if the plan earns 4% compounded monthly?

256) Your plan is to retire this year. Currently you have $450,000 in accumulated retirement funds. You want to invest this capital to provide equal payments at the end of each month for thirty years, at which time the capital will be fully depleted. If your fund earns 5.5% compounded annually, what monthly payment will you receive?

257) You obtained a $20,000 loan for college at 2.1% compounded semiannually. If the loan is for five years and you make monthly payments, how much interest will you pay over the life of the loan?

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258) You and your partner wish to make a 20% down payment on a new house. If you plan on spending $300,000 on a new house in five years, what monthly payments will be required from their month-end pay cheques if their savings can earn 4.5% compounded semiannually?

259) Your childhood friend can buy a cottage for $190,000 with terms of $20,000 down and the balance payable over twenty years by monthly payments including interest at 6.5% compounded annually. What will be the size of the payments?

260) Laurentian Bank approved a three-year $20,000 Buy-Back Car Loan to your brother at 7.5% compounded monthly. The monthly payments are to reduce the balance on the loan to the Laurentian Banks's guaranteed buy-back value of $4,500. Calculate the monthly payment.

261) You are scheduled to receive a single payment of $15,000, fourteen months from now, due to a lawsuit that you won. What end-of-month payments for the next fourteen months should you be willing to accept instead of the lump payment if you can invest the funds at 3.25% compounded annually?

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262) As of your 54th birthday, you have accumulated $269,000 in your RRSP. What size of end-of-month payments in a twenty-five year annuity will these funds purchase at age sixty-five if you make no further contributions? Assume that his RRSP and the investment in the annuity will earn 4.25% compounded monthly.

263) You were released from your current job and received a settlement of $54,000. The Canada Revenue Agency allows you to place the settlement in an RRSP. Fifteen years from now, you intends to transfer the money from the RRSP to a Registered Retirement Income Fund (RRIF). Thereafter, you will make equal withdrawals at the end of each quarter for fifteen years. If both the RRSP and the RRIF earn 6% compounded quarterly, what will be the amount of each withdrawal?

264) A small oil and gas company obtained a $2.5 million low-interest loan from the Government of Saskatchewan to increase R&D in the region. The loan is to be repaid in semiannual payments over forty years, and the first payment is due three years from today, when the firm's operations are expected to be well established. What will the payments be if the interest rate on the loan is 2% compounded semiannually and what is the amount of interest that will be paid over the lifetime of the loan?

265) During a "50 years of business" promotion, Lockport Appliance is offering terms of "nothing down and nothing to pay for six months" on all appliances priced above $1,000. Six months after the date of the sale, the first of six equal monthly payments is due. If the customer is to pay interest at the rate of 12% compounded monthly on the outstanding balance from the date of sale, what will be the monthly payments on a new kitchen suite priced at $1,595? Version 1

266) Rounded to the next higher month, how long will it take end-of-month deposits of $250 to accumulate $10,000 in an investment account that earns 6.25% compounded monthly?

267) You are about to begin regular month-end contributions of $350 to a retirement fund. The fund's long-term rate of return is expected to be 3.5% compounded semiannually. Rounded to the next higher month, how long will it take you to accumulate $500,000?

268) How long will your retirement fund of $350,000, in an investment account that earns 4.25% compounded monthly, sustain month-end withdrawals of $2,804.68?

269) You decided to leave your job early and cashed out your pension amount. You currently have $420,000 in the account. If you wish to have $600,000 to retire with, how much time, to the month, must you invest this money if you can earn 5% compounded annually.

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270) If $450,000 is used to purchase an annuity earning 4.5% compounded monthly and paying $3,000 at the end of each month, what will be the term of the annuity, including the final partial payment?

271) How much longer will it take month-end RRSP contributions of $750 to accumulate $300,000 than month-end contributions of $800? Assume that the RRSP earns 5.5% compounded monthly. Round the time required in each case to the next higher month.

272) Suppose that you contribute $700 per month to your RRSP. Rounding up to the nearest month, how much longer will it take for the RRSP's value to reach $400,000 if it earns 4.5% compounded quarterly than if it earns 4.5% compounded annually? Round the time required in each case to the next higher month.

273) How much longer will it take to pay off a $10,000 loan with monthly payments of $900 than with monthly payments of $1,000? The interest rate on the loan is 8.5% compounded monthly.

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274) How much longer will it take monthly payments of $2,000 to pay off a $150,000 loan if the monthly compounded rate of interest on the loan is 12.5% instead of 11.75%?

275) What duration of annuity paying $3,000 at the end of every month can be purchased with $450,000 if the invested funds earn 2.5% compounded semiannually?

276) You and your partner want to take a three-month leave of absence from your jobs to travel extensively in Australia and New Zealand. Rounded to the next higher month, how many months will it take you to save $25,000 for the leave if you make month-end contributions of $950? The savings plan earns 8.5% compounded quarterly.

277) Louis' TV and Stereo Sales sells a HD television set priced at $2,695 for $500 down and payments of $97 per month, including interest at 13.5% compounded monthly. How many payments will be required to fully pay the amount?

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278) Pharma Manitoba recently developed a new cold and flu drug that it will bring to market in two years. Sales forecasts indicate that the product will increase the Monthly profits by $180,000. If the R&D cost was $1.2 million, how long after the product enters the market will it take for the additional profits to repay the original R&D costs? Assume a return on investment of 15% compounded quarterly?

279) You borrowed $50,000 from your parents to make a down payment on a new boat. The interest rate on the loan is 9.75% compounded annually, but no payments are required for two years. The first monthly payment of $800 is due on the second anniversary of the loan. How long after the date of the original loan will the last payment be made?

280) You wish to open a new restaurant and receive a $1.5-million loan to construct a new building. The interest rate on the loan is 10% compounded monthly. The lender granted a period of deferral, meaning that the first monthly payment of $50,000 is not required until nineteen months after the date of the loan. How long after the date of the original loan will the last payment be made?

281) You are about to retire with $289,000 in your RRSP. You will make no further contributions to the plan, but will allow it to accumulate earnings for another six years. Then you will purchase an annuity providing payments of $3,200 at the end of each month. Assume that the RRSP will earn 6.5% compounded annually and the funds invested in the annuity will earn 5.5% compounded monthly. How long after the purchase of the annuity will its payments continue?

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282) If $300,000 will purchase a twenty-five year annuity paying $1,200 at the end of each month, what effective rate of interest will the invested funds earn?

283) If regular month-end deposits of $700 in an investment account amounted to $58,000 after five years, what monthly compounded nominal rate of interest was earned on the account?

284) After eight years of contributions of $4,000 at the end of every six months to an RRSP, the accumulated amount stood at $78,000. What quarterly compounded nominal rate of was earned by the funds in the RRSP?

285) What effective rate of interest is being charged on a $45,000 loan if monthly payments of $1,900 will repay the loan in three years?

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286) If TFSA contributions of $5,500 at the end of every year for six years grew to $42,000, what effective rate of return was earned?

287) A finance company paid a car retailer $10,500 for a conditional sale contract requiring twenty-four end-of-month payments of $600. What effective rate of return will the finance company realize on the purchase?

288) For $600,000, Standard Life Insurance Co. will sell a thirty-year annuity paying $3,000 at the end of each month. What monthly compounded rate of return does the annuitant earn?

289) After you settled a lawsuit for wrongful dismissal, the court awarded you $93,600 for one year loss of wages of $7,700 per month plus interest on the lost wages to the end of the year. What effective rate of interest has the court allowed on the lost wages?

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290) A small gym charges $1,200 (paid in advance) for an annual membership, or $122 per month payable at the end of each month to the front desk of the gym. What is the effective interest rate being charged to the monthly payment subscribers?

291) You purchased a Province of Alberta bond for $900. The bond will pay $45 interest to you at the end of every six months until it matures in ten years. On the maturity date the bond will pay back its $1000 face value (as well as the interest payment due on that date). What semiannually compounded rate of return will you earn during the ten years?

292) You purchased a Province of Ontario bond for $1,100. The bond will pay $35 interest to you at the end of every six months until it matures in five years. On the maturity date the bond will pay back its $1000 face value (as well as the interest payment due on that date). What semiannually compounded rate of return will you earn during the five years?

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Answer Key Test name: Chap 12_10ce 1) E 2) B 3) C 4) A 5) D 6) A 7) B 8) C 9) D 10) B 11) B 12) C 13) E 14) A 15) B 16) D 17) E 18) C 19) B 20) A 21) B 22) D 23) C 24) E 25) C 26) D Version 1

27) B 28) D 29) A 30) B 31) C 32) B 33) E 34) C 35) C 36) B 37) E 38) B 39) E 40) D 41) D 42) A 43) C 44) E 45) B 46) A 47) D 48) C 49) A 50) A 51) C 52) B 53) D 54) B 55) E 56) C Version 1

57) D 58) E 59) D 60) A 61) B 62) A 63) C 64) A 65) A 66) B 67) C 68) D 69) E 70) A 71) B 72) C 73) D 74) A 75) B 76) C 77) D

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CHAPTER 13 1) Rank the economic values of the following cash flow streams from highest to lowest: (i) a single payment of $8000 five years from now; (ii) 40 annual payments of $300 with the first payment today; (iii) 10 annual payments of $900 with the first payment three years from now. Assume money can earn 8% compounded annually. A) iii; ii; i B) ii; iii; i C) iii; i; ii D) ii; i; iii E) i; iii; ii

2) The monthly premium on a five-year insurance policy is $25 payable in advance. What is the economic value today of the premium payments if money is worth 14% compounded monthly? A) $1074.43 B) $2180.02 C) $1086.96 D) $2154.88 E) $1157.75

3) Thirty quarterly deposits of $345 are made to an investment account that earns 12% compounded quarterly. How much is in the savings account three months after the last deposit? A) $16,905.92 B) $17,413.10 C) $16,413.52 D) $19,349.30 E) $20,123.28

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4) An item is purchased for 24 monthly payments of $150. The first payment is due on the date of sale, and the interest rate charged on the balance is 18% compounded monthly. What is the purchase price of the item? A) $4295.03 B) $3049.63 C) $3600.00 D) $3004.56 E) $3409.53

5) What equal payments at the beginning of each quarter for five years are economically equivalent to $20,000 on the date of the first payment if money can earn 6% compounded quarterly? A) $852.13 B) $2693.71 C) $1164.91 D) $2734.12 E) $1147.70

6) Contributions of $800 at the beginning of every three months resulted in an RRSP worth $85,000 after 10 years. What effective rate of interest did the RRSP earn? A) 19.113% B) 16.791% C) 18.313% D) 17.878% E) 17.175%

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7) Monthly payments of $300 are made at the beginning of each month on a lease having a book value of $15,050. What is the term of the lease if the lessee's cost of borrowing is 12% compounded monthly? A) 69 months B) 70 months C) 71 months D) 41 months E) 40 months

8) What is the book value (present value) of a lease requiring payments of $1000 at the beginning of each month for five years if the lessee's cost of borrowing is 10% compounded semiannually? A) $47,672.56 B) $47,286.47 C) $77,653.57 D) $77,024.68 E) $18,929.29

9) What effective rate of interest is being charged if a golf club's $10,000 initiation fee is paid by 12 beginning-of-month payments of $1000? A) 42.038% B) 35.074% C) 41.300% D) 51.162% E) 2.923%

10) To what amount will investments of $2,500 at the beginning of every year for 32 years, earning 11% compounded monthly, accumulate by the end of the 32nd year? Version 1

A) $216,558 B) $686,323 C) $777,285 D) $856,230 E) $578,114

11) Payments of $750 at the start of every month for 10 years are equivalent in value to what single amount at the end of the 10th year if the value of money is 8.4% compounded monthly? A) $177,024 B) $199,588 C) $106,243 D) $141,296 E) $127,945

12) Calculate the value after 20 years of a Retirement Savings Plan that earned 10% compounded quarterly and received deposits of $6,000 at the start of every three months. A) $2,024,717 B) $1,527,554 C) $1,490,296 D) $1,082,519 E) $1,836,348

13) Lucy Ricardo has subscribed to a dollar cost averaging program in which she invests $900 at the beginning of each month. If her rate of return is 12% compounded monthly, what will be the value of her account after 25 years?

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A) $1,707,872 B) $1,275,040 C) $1,889,633 D) $1,728,830 E) $1,689,453

14) St. Therese's Church is going to invest $10,000 at the beginning of every six months into a New Building Fund. We anticipate the fund will earn 10% compounded semiannually. What amount should they have after 15 years? A) $734,933 B) $697,608 C) $821,274 D) $603.518 E) $448,139

15) Red Deer City Council has committed to investing $200,000 into a New Minor Hockey Arena Fund at the beginning of every quarter for the next seven years. The Fund is expected to earn 8% compounded quarterly. What will be the value of the fund at the end of the seven years? A) $5,921,883 B) $6,945,783 C) $7,558,447 D) $8,421,134 E) $9,767.125

16) Donnie will invest $4,000 at the beginning of every year for the next 25 years. His money will earn 11% compounded annually. If he does not withdraw any of the money, how much should he have exactly seven years after he makes the last $4,000 investment?

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A) $1,434,739 B) $950,161 C) $893,562 D) $507,995 E) $1,054,679

17) Jerry Jarezenko has to make a payment of $100,000 in exactly 10 years. He is going to save $3,000 at the beginning of every six months. If Jerry can earn 7% compounded semiannually on his savings, how much more money will he have to add to the savings at the end of the 10th year? A) $9,583.28 B) $11,398.44 C) $24,783.43 D) $6,127.08 E) $12,191.59

18) Fatima pays monthly rent of $520 for her townhouse. If she bought the property, the mortgage loan, property tax and utilities would cost her $920 per month. Using the current mortgage loan rate of 6.6% compounded semiannually, calculate how much money Fatima could accumulate over 10 years if she continues to rent and invests the $400 per month difference. A) $47,845 B) $67,768 C) $15,833 D) $77,085 E) $56,299

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19) What amount will Jasmine need in her Retirement Plan on the day she retires if she wants to receive $3,500 at the beginning of every month for 24 years and the plan earns 6% compounded monthly? A) $237,596 B) $356,897 C) $485,219 D) $536,222 E) $759,883

20) Based on my investments earning 8% compounded quarterly, I have enough money to withdraw $5,700 at the beginning of every three months for 20 years starting now. How much money do I have now? A) $226,544 B) $202,100 C) $231,075 D) $456,000 E) $374,216

21) The monthly lease payments on a new car are $517.44 for seven years. The first payment is payable today. Using an interest rate of 10.8% compounded monthly, what is the value of the lease? A) $30,680 B) $29,773 C) $17,894 D) $33,989 E) $65,120

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22) How much money does Jessica have in her Education Savings plan if, starting today, she can withdraw $350 per month for four years and her plan earns 7.2% compounded monthly? A) $10,782 B) $13,494 C) $11,962 D) $16,800 E) $14,647

23) A Super-Duper lottery's grand prize is $100 million, specifically, $2,000,000 per year for 50 years. The first $2 million is payable today. Using a rate of 8% compounded annually, calculate the single cash payment today that would be of equal value. A) $52,827,732 B) $96,114,437 C) $33,862,955 D) $26,424,327 E) $67,519,638

24) Wilson Furniture will sell a $6,000 dining room suite for 24 monthly payments of $250 each with the first payment due on the date of sale. If Wilson's immediately sells the contract to a finance company at a discount rate of 16.8% compounded monthly, how much money does Wilson's actually receive? A) $4,992.00 B) $7,171.91 C) $5,137.17 D) $5,433.79 E) $3,855.97

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25) What amount would have to be invested today to fund semiannual annuity payments of $50,000 for 15 years? The first payment will be made in six years and the investment will earn 7.8% compounded semiannually. A) $909,330 B) $574,559 C) $286,442 D) $726,835 E) $966,217

26) A lease on an office building calls for a payment of $3,500,000 today and annual payments of $5,000,000 for 40 years. The first of the annual payments will be payable 30 months from now when the building becomes ready for occupancy. Using a discount rate of 9% compounded semiannually, calculate the present value of the lease. A) $18,488,526 B) $29,436,771 C) $135,440,848 D) $56,227,005 E) $49,704,495

27) A 15-year term life insurance policy requires premiums of $45 per month. The first payment is made on the day that the policy is written. The insurance company immediately pays $4,000 into a fund to cover potential claims and this money cannot be recovered by the company. Using an interest rate of 6.6% compounded monthly, what is the present value of the policy to the insurance company? A) $9,162.26 B) $5,133.39 C) $1,836.21 D) $1,161.62 E) $844.60

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28) Tim Crowe has a trust fund that will be worth $75,000 on his 18th birthday. Starting then, he will receive equal monthly payments for five years. The trust fund is expected to earn 9% compounded monthly over the five years. How much will Tim receive each month? A) $1,545.29 B) $1,474.15 C) $1,308.44 D) $1,007.72 E) $986.97

29) In order to accumulate $1,500,000 over 20 years, how much would you have to invest at the beginning of every three months into a fund earning 7.6% compounded quarterly? A) $8,125.47 B) $3,594.26 C) $7,973.96 D) $13,359.69 E) $17,723.01

30) From an $850,000 retirement fund Arthur will receive equal payments at the beginning of every month for 30 years. Using an interest rate of 5.4% compounded monthly, calculate the size of the monthly payments. A) $2,592.55 B) $4,385.02 C) $6,018.77 D) $5,332.61 E) $4,751.63

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31) CorBloc Ltd. is setting up a fund to pay back a $22,000,000 debt in 18 years. To accumulate this money they will make equal annual deposits at the beginning of each year into a fund earning 9% compounded quarterly. What will be the size of the annual deposits? A) $472,715 B) $798,452 C) $1,095,429 D) $807,389 E) $488,688

32) Stamford Leasing invested $62,545 in an automobile that they will lease to a customer who will make a monthly lease payment for 72 months. The first payment is made on the day the lease is signed. What monthly payments does Stamford have to charge in order to recover their investment and earn a return of 11.4% compounded monthly? A) $557 B) $926 C) $1,058 D) $1,192 E) $1,463

33) At the beginning of each of the last 35 years, Lynde has deposited the same amount into an RRSP that earned a return of 13% compounded annually. Now, at the end of the 35th year, the value of her RRSP is $1,150,290. How much did she deposit each year? A) $814 B) $1,862 C) $3,198 D) $4,722 E) $6,617

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34) Lynde has $1,150,290 in her RRSP. At the end of each of the next 20 years she plans to withdraw $50,000 to upgrade her car and/or take a vacation trip. Also at the beginning of each month for 30 years she wants to withdraw a constant amount for her other living expenses. What is the most she can take each month if her investments earn 6% compounded monthly? A) $1,539 B) $897 C) $5,293 D) $3,487 E) $1,624

35) A lease requiring equal payments at the beginning of every three months for eight years is valued as a liability of $83,455 using an interest rate of 7.2% compounded annually. What is the size of the quarterly lease payments? A) $3,3902.48 B) $3,284.64 C) $4,216.11 D) $3,370.77 E) $4,506.65

36) If you save $250 at the beginning of every month how long will it take to accumulate $250,000 at a rate of 9% compounded monthly? A) 286 months B) 551 months C) 99 months D) 376 months E) 177 months

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37) Julian has been investing $1,500 at the beginning of every six months for a long time and earning 11% compounded semiannually. His investments have now accumulated to $766,715. How long ago did he make the first $1,500 payment? A) 31 years ago B) 27 years ago C) 62 years ago D) 44 years ago E) 22 years ago

38) Ten years ago Sandi made a commitment to accumulate $500,000 by investing $350 at the beginning of every month for as long as it takes. For the first 10 years she has been earning 13% compounded semiannually. She is now moving all of her money to a safer investment that will earn 9.6% compounded monthly. She is continuing to invest the $350 per month. How much more time will it take Sandi to reach $500,000? A) 17 years, 11 months B) 21 years, 1 month C) 8 years, 5 months D) 22 years, 7 months E) 15 years, 1 month

39) A landowner and a developer have agreed on a contract that would give the developer an option to purchase a property at a pre-determined price anytime over the length of the contract. The developer is committed to pay the landowner $25,000 at the beginning of every three months throughout the term of this contract. The present value of the contract, calculated with a rate of 13% compounded semiannually is $319,000. For how many years does the developer have an option to purchase this property?

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A) 2 B) 3 C) 4 D) 5 E) 6

40) A Term Life Insurance policy requires premium payments of $63 at the beginning of every month. Using a rate of 15% compounded monthly, the present value of the stream of payments is $4,250. What is the term of the policy? A) 3 years B) 6 years C) 9 years D) 12 years E) 15 years

41) Marktown Mall has leases with tenants that call for payments of $97,400 at the beginning of every month. The present value of the payments has been calculated at $3,682,300, based on a discount rate of 19.2% compounded monthly. What is the term of the lease contracts? A) 24 months B) 33 months C) 48 months D) 57 months E) 66 months

42) For how long will Angela be able to withdraw $5,000 at the beginning of every three months from her retirement fund of $320,000 if she is earning 5.4% compounded monthly?

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A) 10 years B) 36 years C) 14 years D) 15 years E) 18 years

43) Marcellus has been saving $3,600 at the beginning of every year for 27 years. Now, at the end of the 27th year his investments have reached a value of $606,500. What effective annual rate has he earned on his investments? A) 5.894% B) 7.007% C) 9.476% D) 11.332% E) 13.722%

44) Investments of $200 at the beginning of every month have accumulated to $405,515 after 30 years. Expressed as a monthly compounded nominal annual rate, what return have these investments provided? A) 11.673% B) 9.450% C) 8.747% D) 8.041% E) 7.875%

45) Isabel believes that she can accumulate $5,000,000 over 35 years by investing $4,500 at the beginning of every quarter year. What semiannually compounded nominal rate would she need to earn?

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A) 9.506% B) 9.951% C) 9.619% D) 8.926% E) 9.850%

46) An insurance company considers the present value of a 10-year term life insurance policy to be $3,738. The premiums that the company collects are $55 at the beginning of every month for the 10 years. What monthly compounded nominal rate is implied in the calculation of the policy's value? A) 12.900% B) 10.750% C) 13.690% D) 8.473% E) 14.298%

47) The Minnesota Twins Baseball Club has 1.5 years remaining on the lease of a stadium. They are required to pay $950,000 at the beginning of every three months over that time. This is reflected on their balance sheet as a liability of $5,250,000. What is the quarterly compounded nominal rate implied in this calculation? A) 11.553% B) 14.363% C) 18.095% D) 10.447% E) 13.648%

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48) A lottery prize of $2,250,000 per year, payable at the beginning of every year for 20 years can also be collected as a single lump sum payment of $23,500,000. What effective annual rate was used in the calculation of this value? A) 6.115% B) 6.913% C) 7.667% D) 8.233% E) 9.528%

49) Maria expects to have $750,000 in her retirement savings plan when she retires. From that, she plans to take out $4,500 at the beginning of every month for 30 years. What annual effective rate of interest will her money have to earn over the 30 years? A) 5.045% B) 6.054% C) 6.225% D) 7.200% E) 8.008%

50) Your parents plan to invest $4,000 at the beginning of each year for their grandchildren's education. The rate of return on the investment is 3.5% compounded annually. What will be the value of the education fund be after twelve years? A) $64,452.12 B) $60,854.12 C) $60,452.12 D) $61,852.12 E) $62,752.12

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51) Your banker has suggested you invest $500 at the beginning of each half-year for the next ten years. The invested funds have earned 3.4% compounded monthly. What would be the value of your investments in ten years? A) $12,008.55 B) $12,888.55 C) $13,888.55 D) $12,908.55 E) $13,008.55

52) What will be the amount in an RRSP after twenty years if contributions of $4,000 are made at the beginning of each year for the first ten years, and contributions of $5,000 are made at the beginning of each year for the subsequent ten years? Assume that the RRSP will earn 4% compounded quarterly. A) $143,357.10 B) $137,357.10 C) $129,357.10 D) $147,357.10 E) $127,357.10

53) You contributed $5,000 at the end of each year to your RRSP on every birthday from age eighteen to forty inclusive. You then ceased employment to travel and made no further contributions. If you withdraw $2,000 per month, starting on your fortieth birthday, for one year before going back to work, how much money will you have left in your RRSP when you finish your one year of travels? Assume that the rate of return is 6% compounded annually. A) $225,974.83 B) $232,304.83 C) $224,894.83 D) $224,304.83 E) $242,304.83

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54) On the date of its financial statements, a travel company has three years remaining on the lease of a airplane. The lease requires payments of $40,000 at the beginning of every month. What book value is reported for the lease liability if the company pays 3.5% compounded monthly on its medium-term debt, to the nearest dollar? A) $1,369,072 B) $1,679,072 C) $1,692,072 D) $1,923,072 E) $1,540,072

55) If money can earn 3.25% compounded quarterly, what is the value of an annuity consisting of monthly payments of $3,000 continuing for thirty years? The first payment will be received today, to the nearest dollar? A) $678,572 B) $665,782 C) $567,955 D) $722,955 E) $691,955

56) Your parents purchased a new couch under a conditional sale contract that required eighteen monthly payments of $99 with the first payment due on the purchase date. The interest rate on the outstanding balance was 18% compounded monthly. What was the purchase price of the couch?

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A) $1,574.86 B) $1,274.86 C) $1,501.86 D) $1,496.86 E) $1,589.86

57) You just purchased a twenty-year term life insurance policy. For your premium payments, you can choose either beginning-of-month payments of $1,300 or beginning-of-year payments of $15,000. In current dollars, how much will you save during the twenty years by choosing the lower-cost option? Assume that money can earn 4.8% compounded monthly. A) $3,861.27 B) $3,461.27 C) $3,927.27 D) $3,561.27 E) $3,891.27

58) The Red River Book Store accountant set up a long-term lease liability of $5,245 to recognize a new contract for the lease of new shelving. They used the firm's 4.5% monthly compounded cost of borrowing as the discount rate. If the lease payment at the beginning of each month is $300.75, what is the term of the lease? A) 18 months B) 16 months C) 9 months D) 3 months E) 4 months

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59) The payments required on a contractual obligation are $800 per month. The contract was purchased for $9,250 just before a regular payment date. The purchaser determined this price based on a required rate of return of 4.3% compounded monthly. How many payments will be required, include the partial final payment? A) 12 payments B) 24 payments C) 9 payments D) 6 payments E) 18 payments

60) How much longer will a $200,000 fund earning 5% compounded monthly sustain beginning-of-month withdrawals of $2,000 than beginning-of-month withdrawals of $3,000? A) 44 months B) 38 months C) 51 months D) 43 months E) 29 months

61) If a used car retailer offers a financing plan on a $10,500 purchase requiring twelve equal monthly payments of $900 including the first payment on the purchase date, what effective rate of interest is being charged on the unpaid balance? A) 6.38% B) 6.76% C) 5.38% D) 5.98% E) 4.38%

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62) The Red River Book Store accountant set up a long-term lease liability of $5,245 to recognize a new contract for the lease of new shelving. They used the firm's 4.5% monthly compounded cost of borrowing as the discount rate. If the lease payment at the beginning of each month is $300.75, what is the term of the lease? A) 21 months B) 9 months C) 12 months D) 18 months E) 24 months

63) In retirement, you wish to receive $20,000 at the beginning of each year for the twenty years. If money is currently worth 5% compounded annually, what is the present value of the fund? A) $261,872.42 B) $261,912.42 C) $249,706.42 D) $216,706.42 E) $261,706.42

64) You wish to receive payments of $1,000 at the beginning of each month for forty years. Use a discount rate (interest rate) of 4% compounded monthly to calculate the present value? Round your answer to the nearest whole dollar. A) $280,067 B) $240,067 C) $275,067 D) $240,912 E) $240,723

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65) The Red River Book Store accountant set up a long-term lease liability of $5,245 to recognize a new contract for the lease of new shelving. They used the firm's 4.5% monthly compounded cost of borrowing as the discount rate. If the lease payment at the beginning of each month is $300.75, what is the term of the lease? A) 21 months B) 24 months C) 9 months D) 12 months E) 18 months

66) The payments required on a contractual obligation are $800 per month. The contract was purchased for $9,250 just before a regular payment date. The purchaser determined this price based on a required rate of return of 4.3% compounded monthly. How many payments will be required, include the partial final payment? A) 12 payments B) 24 payments C) 18 payments D) 9 payments E) 21 payments

67) How much longer will a $200,000 fund earning 5% compounded monthly sustain beginning-of-month withdrawals of $2,000 than beginning-of-month withdrawals of $3,000? A) 56 months B) 34 months C) 57 months D) 51 months E) 48 months

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68) If a used car retailer offers a financing plan on a $10,500 purchase requiring twelve equal monthly payments of $900 including the first payment on the purchase date, what effective rate of interest is being charged on the unpaid balance? A) 6.95% B) 4.38% C) 6.38% D) 5.48% E) 5.98%

69)

Determine the future value of the annuity due:

Periodic Payment

Payment Interval

$400

1 year

70)

Nominal Rate

11 years

11.5%

Compounding Frequency Annually

Determine the future value of the annuity due:

Periodic Payment

Payment Interval

$150

3 months

71)

Term

Nominal Rate

6.5 years

10%

Compounding Frequency Quarterly

Determine the future value of the annuity due:

Periodic Payment

Payment Interval

$275

1 month

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Term 3.5 years

Nominal Rate 8%

Compounding Frequency Monthly

72)

Determine the future value of the annuity due:

Periodic Payment

Payment Interval

$1500

6 months

73)

Payment Interval

$325

1 month

7.5%

Compounding Frequency Semiannually

Term 7.25 years

Nominal Rate

Compounding Frequency

Monthly

Nominal Rate

Compounding Frequency

Quarterly

Nominal Rate

Compounding Frequency

Determine the future value of the annuity due:

Periodic Payment Payment Interval $950

75)

13.5 years

Nominal Rate

Determine the future value of the annuity due:

Periodic Payment

74)

Term

1 quarter 8 yrs, 9 mths

Determine the future value of the annuity due:

Periodic Payment Payment Interval

Version 1

Term

$329

76)

6 months 8 yrs, 6 mths

Payment Interval

$1000

12 months

Payment Interval

$500

3 months

Nominal Rate

25 years

7.25%

Compounding Frequency Annually

Term

Nominal Rate

12 years

6.5%

Compounding Frequency Annually

Determine the future value of the annuity due:

Periodic Payment

Payment Interval

$200

1 month

79)

Term

Determine the future value of the annuity due:

Periodic Payment

78)

Semiannually

Determine the future value of the annuity due:

Periodic Payment

77)

8.75%

Term

Nominal Rate

7.5 years

10%

Compounding Frequency Quarterly

Determine the future value of the annuity due:

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Periodic Payment

Payment Interval

$3000

6 months

80)

Payment Interval

$1700

3 months

4.5 years

Compounding Frequency

Monthly

Term

Nominal Rate

Compounding Frequency

11.5 years

7.5%

Semiannually

Determine the future value of the annuity due:

Periodic Payment

Payment Interval

$2500

1 year

82)

Nominal Rate

Determine the future value of the annuity due:

Periodic Payment

81)

Term

Nominal Rate

16 years

5.25%

Compounding Frequency Monthly

Determine the future value of the annuity due:

Periodic Payment

Payment Interval

$750

6 months

Term 6.5 years

Nominal Rate 9%

Compounding Frequency Quarterly

83) Hardip has decided to invest $1000 at the beginning of each month for 5 years. If his rate of return is 6% compounded monthly, what will be the value of his investment 5 years later? Version 1

84) Sam Hanna plans to invest $4000 at the beginning of each year in an RRSP. What will be the value of the plan after 12 years if it earns 7.5% compounded annually?

85) What will be the value of an RRSP 25 years from now if $2000 is contributed at the beginning of every six months and the RRSP earns 8¼% compounded annually?

86)

Determine the present value of the annuity due:

Periodic Payment

Payment Interval

$325

1 month

87)

Term

Nominal Rate

7.25 years

Compounding Frequency

Monthly

Nominal Rate

Compounding Frequency

Quarterly

Determine the present value of the annuity due:

Periodic Payment Payment Interval $950

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Term

1 quarter 8 yrs, 9 mths

88)

Determine the present value of the annuity due:

Periodic Payment Payment Interval $329

89)

Compounding Frequency

8.75%

Semiannually

Determine the present value of the annuity due: Payment Interval

$1000

12 months

Term

Nominal Rate

25 years

7.25%

Compounding Frequency Annually

Determine the present value of the annuity due:

Periodic Payment

Payment Interval

$500

3 months

91)

Nominal Rate

½year 8 yrs, 6 mths

Periodic Payment

90)

Term

Nominal Rate

12 years

6.5%

Compounding Frequency Annually

Determine the present value of the annuity due:

Periodic Payment

Payment Interval

$200

1 month

Version 1

Term 7.5 years

Nominal Rate 10%

Compounding Frequency Quarterly

92)

Determine the present value of the annuity due:

Periodic Payment

Payment Interval

$3000

6 months

93)

Payment Interval

$1700

3 months

4.5 years

Compounding Frequency Monthly

Term

Nominal Rate

11.5 years

7.5%

Compounding Frequency Semiannually

Determine the present value of the annuity due:

Periodic Payment

Payment Interval

$2500

1 year

95)

Nominal Rate

Determine the present value of the annuity due:

Periodic Payment

94)

Term

Nominal Rate

16 years

5.25%

Compounding Frequency Monthly

Determine the present value of the annuity due:

Periodic Payment

Version 1

Payment Interval

Term

Nominal Rate

Compounding Frequency

$750

96)

$25,000

$100,000

Quarterly

Payment Interval 6 months

Term

Nominal Rate

8.5 years

Compounding Frequency

6.5%

Semiannually

Payment Interval

Term

Nominal Rate

Compounding Frequency

Quarterly

3 months 15 yrs, 3 mths

Calculate the periodic payment for the annuity due.

Present Value $45,000

99)

Calculate the periodic payment for the annuity due.

Present Value

98)

6.5 years

Calculate the periodic payment for the annuity due.

Present Value

97)

6 months

Payment Interval 1 month

Term

Nominal Rate

11 years

Compounding Frequency Annually

Calculate the periodic payment for the annuity due.

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Future Value

Payment Interval

$150,000

100)

1 year

Term

Nominal Rate

16 years

$22,500

1 month

Quarterly

Nominal Rate

Compounding Frequency

Monthly

Nominal Rate

Compounding Frequency

7.5%

Semiannually

$150.75

Calculate the term, expressed in years, of the annuity due.

Present Value Payment Interval Periodic Payment $13,405

102)

Calculate the term, expressed in years and months, of the annuity due.

Future Value Payment Interval Periodic Payment

101)

Compounding Frequency

6 months

$1000

Calculate the term, expressed in years, of the annuity due.

Future Value $52,033.58

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Payment Interval Periodic Payment Nominal Rate Compounding Frequency 3 months

$1200

7.3%

Annually

103)

Calculate the term, expressed in years, of the annuity due.

Present Value Payment Interval Periodic Payment $20,000

1 month

Nominal Rate

Compounding Frequency

Quarterly

$167.72

104) Calculate the nominal and effective interest rates accurate to the nearest 0.01% for the annuity due. Future Value $75,000

Payment Interval 6 months

Period Payment $1969.40

Term 11 years, 6 months

105) Calculate the nominal and effective interest rates accurate to the nearest 0.01% for the annuity due. Future Value $27,423

Payment Interval 3 months

Period Payment

Term

$500

9.5 years

106) Calculate the nominal and effective interest rates accurate to the nearest 0.01% for the annuity due. Present Value $45,000

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Payment Interval 1 month

Period Payment $386.83

Term 13 years, 8 months

107) Calculate the nominal and effective interest rates accurate to the nearest 0.01% for the annuity due. Present Value

Payment Interval

$66,049

1 year

Period Payment $5000

Term 25 years

108) Heather wants to accumulate $4000 for a trip to Europe one or two years from now. Her investment account earns 6% compounded monthly. What amount must she deposit at the beginning of each month to reach the target in:

a) one year? b) two years?

109) Fletcher's Machine Shop wants to start a fund to accumulate half of the expected $1,000,000 cost of expanding the facilities in nine years. What semiannual amount must be paid into the fund earning 7.5% compounded annually in order to reach the target if the payments are made:

a) at the beginning of every six months? b) at the end of every six months?

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110) The cash price of a Chevy truck is $44,780. The interest rate on a 30-month lease is 1.8% compounded monthly. What is the monthly lease payment assuming a down payment of $4240 and a residual value of $24,405?

111) The $298 monthly payment on a 48-month lease of a Honda Accord was based on a down payment of $3797.29, an interest rate of 3.9% compounded monthly, and a residual value of $12,720. What is the full price (MSRP) for the Honda Accord?

112) With a down payment of $4900, the monthly payment on a four-year lease of a Toyota, (cash price = $32,750) is $399. The interest rate on the lease is 4.9% compounded monthly. What residual value was used in the calculation?

113) A Hyundai (cash price = $22,740) can be leased for $275 per month. This payment is based on an interest rate of 4.0% compounded monthly, a down payment of $500, and a residual value of $8862. What is the term of the lease, in years?

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114) What nominal interest rate, to the nearest 0.01%, is being charged if the monthly payment on a 48-month lease of a mid-size used car (cash price = $27,620) is $328? The required down payment is $2530 and the residual value is $10,774.

115) The cash price for a new Honda is $36,655. The monthly payment on a 48-month lease at 4.9% compounded monthly is $388. The residual value at the end of the lease is $15,840. What down payment was used in the lease calculation?

116) Annual contributions of $1000 will be made to a TFSA for 25 years. The contributor expects investments within the plan to earn 7% compounded annually. What will the TFSA be worth after 25 years if the contributions are made:

a) At the end of each year? b) At the beginning of each year? c) By what percentage does the answer to Part (b) exceed the answer to Part (a)?

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117) 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 TFSA be worth after 15 years if the contributions are made:

a) At the end of each quarter? b) At the beginning of each quarter? c) By what percentage does the answer to Part (b) exceed the answer to Part (a)?

118) What is the future value of $100 invested at the beginning of every month for 25 years if the investments earn:

a) 4% compounded monthly? b) 8% compounded monthly?

119) 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:

a) 25 years? b) 30 years?

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120) Your client plans to invest $10,000 at the beginning of each year for the next 14 years. If the invested funds earn 5.1% compounded annually, what will be the total accumulated value after 14 years?

121) Your client has systematically contributed $3000 to her RRSP at the beginning of every three months for the past 17 years. If the RRSP has earned 8.8% compounded quarterly, what is its value today?

122) 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?

123) Astrid has just opened an RESP for her children with her first quarterly deposit of $1700. What will the RESP be worth 11½ years from now if the investments within the plan earn 7.5% compounded semiannually?

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124)

Salvatore will contribute $500 to a mutual fund at the beginning of each calendar quarter.

a) What will be the value of his mutual fund after 6½ years if the fund earns 7.6% compounded annually? b) How much of this amount represents investment earnings?

125) Monarch Distributing Ltd. plans to accumulate funds for the purchase of a larger warehouse seven years from now. If Monarch contributes $10,000 at the beginning of each month to an investment account earning 4.5% compounded semiannually, what amount (rounded to the nearest dollar) will Monarch accumulate by the end of the seven years?

126) a) If Hans contributes $1500 to his RRSP on February 1, 1990, and every six months thereafter to and including February 1, 2017, what amount will he accumulate in the RRSP by August 1, 2017? Assume that the RRSP will earn 8.5% compounded semiannually. b) How much of the total will be interest?

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127) Many people make their annual RRSP contribution for a taxation year close to the end of the year. Financial advisers encourage clients to contribute as early in the year as possible. How much more will there be in an RRSP at the end of 25 years if annual contributions of $5000 are made at the beginning of each year instead of at the end? Assume that the RRSP will earn:

a) 8% compounded annually. b) 8% compounded monthly.

128) For the past 25 years, Giorgio has contributed $2000 to his RRSP at the beginning of every six months. The plan earned 8% compounded annually for the first 11 years and 7% compounded semiannually for the subsequent 14 years. What is the value of his RRSP today?

129) Keiko has already accumulated $150,000 in her RRSP. She intends to continue to grow her RRSP by making contributions of $500 at the beginning of every month. How much will her RRSP be worth 15 years from now if the RRSP earns 8% compounded annually?

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130) Johan recently received his annual performance bonus from his employer. He has set up an investment savings plan to which he will contribute $2000 each year from his bonus and $400 per month from his regular salary. Johan will make his initial contributions of $2000 and $400 today. Rounded to the nearest dollar:

a) What will the plan be worth after 25 years if it earns 7.5% compounded monthly? b) How much did Johan's contributions earn during the 25 years?

131) What will be the amount in an RRSP after 25 years if contributions of $2000 are made at the beginning of each year for the first 10 years and contributions of $4000 are made at the beginning of each year for the subsequent 15 years? Assume that the RRSP will earn 8% compounded quarterly.

132) Fay contributed $3000 per year to her RRSP on every birthday from age 21 to 30 inclusive. She then ceased employment to raise a family and made no further contributions. Her husband Fred contributed $3000 per year to his RRSP on every birthday from age 31 to 64 inclusive. Assuming that both plans earn 8% compounded annually over the years, calculate the amounts in their RRSPs at age 65.

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133) 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:

a) At the end of each quarter? b) At the beginning of each quarter? c) By what percentage does the answer to Part (b) exceed the answer to Part (a)?

134) Using a discount rate of 6% compounded monthly, calculate the present value of monthly payments of $325 for 7¼ years if the payments are made:

a) At the end of each month? b) At the beginning of each month? c) By what percentage does the answer to Part (b) exceed the answer to Part (a)?

135) What is the present value of an annuity due consisting of semiannual payments of $1000 for 25 years, if money can earn:

a) 4% compounded semiannually? b) 8% compounded semiannually?

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136) Money can earn 6% compounded monthly. What is the present value of beginning-ofmonth payments of $100 if the payments continue for:

a) 25 years? b) 30 years?

137) On the date of its financial statements, a company has 4½ 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% compounded monthly on its medium-term debt?

138) 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.

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139) 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.

a) What was the purchase price of the refrigerator? b) How much interest did Carmella pay during the 30 months?

140) 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 years by choosing the lower-cost option? Assume that money can earn 4.8% compounded monthly.

141) 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 would have had to borrow funds at 9% compounded monthly.

a) What initial liability should Beaudoin report on its balance sheet? b) How much will the liability be reduced during the first year of the lease?

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142) Under the headline "Local Theatre Project Receives $1 Million!" a newspaper article explained that the Theatre Project had just received the first of 10 annual grants of $100,000 from the Hinton Foundation. What is the current economic value of all of the grants if money is worth 7.5% compounded monthly?

143) You have received two offers on the used car you wish to sell. Mr. Lindberg is offering $8500 cash, and Rosie Senario's offer is five semiannual payments of $1900, including a payment on the purchase date. Which offer has the greater economic value at a discount rate of 5% compounded semiannually? What is the economic advantage (in current dollars) of the preferred alternative?

144) 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 yield 18% compounded monthly?

145) 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 years. If his RRIF earns 4% compounded annually, what amount must he have in the RRIF at the time he turns 65?

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146) A rental agreement requires the payment of $900 at the beginning of each month. 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?

147) What minimum amount of money earning 9% compounded semiannually will sustain withdrawals of $1200 at the beginning of every month for 15 years?

148) 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 purchase the workstation.

a) What amount will the lessee initially report in its financial statements as the long-term lease liability? b) What will the liability be at the end of the fourth year?

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149) 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 $60.35 per month for the subsequent five years. In both cases, monthly premiums are payable at the beginning of each month. Which policy is "cheaper" if money can earn 4.8% compounded monthly? In current dollars, how much will Bram save by choosing the less costly policy?

150) 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?

151)

Calculate 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 eight annual payments of $1700. Do the calculations for each of two cases: a) Money can earn 5% compounded annually for the next 16 years. b) Money can earn 10% compounded annually for the next 16 years.

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152) 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 offices, are offering the first year of a seven year lease rent-free. For the subsequent six years the rent would be $2500 per month. All rents are paid at the beginning of each month. Other things being equal, which lease should Heath accept if money is worth 7.5% compounded monthly?

153) 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:

a) 3% compounded annually. b) 6% compounded annually. c) 8% compounded annually. d) 9% compounded annually. Also calculate the total earnings in each case.

154) 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:

a) 3% compounded monthly? b) 4.5% compounded monthly? c) 6% compounded monthly? d) 7.5% compounded monthly? In each case, also calculate the total earnings distributed over the life of the annuity.

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155) 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:

a) 3% compounded quarterly? b) 6% compounded quarterly? c) 8% compounded quarterly? d) 9% compounded quarterly? Round up the number of contributions.

156) For how long will a $100,000 fund sustain beginning-of-month withdrawals of $700 if the fund earns:

a) 4% compounded monthly? b) 5% compounded monthly? c) 6% compounded monthly? d) 7% compounded monthly? Round up the number of withdrawals.

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157) 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, to the nearest 0.01%, must his RRSP earn for its future value after 25 years to be:

a) $400,000? b) $500,000? c) $600,000?

158) 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 return, to the nearest 0.01%, must the funds earn for the beginning-of-quarter payment to be:

a) $10,000? b) $11,000? c) $12,000?

159) Your client currently has accumulated capital of $560,000 and hopes to retire this year. She 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 can she receive and just deplete the capital after 20 years?

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160) Your client 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?

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

162) 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:

a) At the beginning of each year? b) At the end of each year?

163) What maximum annual withdrawals will a $200,000 fund earning 6% compounded annually sustain for 20 years if the withdrawals are made:

a) At the beginning of each year? b) At the end of each year? Version 1

164) Triex Manufacturing wants to accumulate $500,000 for an expansion planned to begin in 5 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?

165) An insurance company wishes to offer customers a monthly instalment 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 monthly on the unpaid balance of the annual premium. What will be the monthly premium per $100 of annual premium?

166) 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 payment on equipment that costs $8500?

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167) 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.

a) What contribution on each birthday from age 25 to 54 inclusive will be required to accumulate the desired amount in his RRSP? b) If he waits five years before starting his RRSP, what contribution on each birthday from age 30 to 54 inclusive will be required to accumulate the target amount?

168) 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 60) instead of at the beginning of each year? Assume that her RRSP will earn 9% compounded annually.

169) 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 quarterly on its investment?

170) Island Water Taxi has decided to lease another boat for five years rather than to finance the purchase of the boat at an interest rate of 7.5% compounded monthly. It is treating the lease as a capital lease and has set up a long-term lease liability of $43,000. What is the lease payment at the beginning of each month? Version 1

171) 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?

172) 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. To the nearest dollar, what is the full price (MSRP) for the car?

173) 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?

174) A Smart For Two 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?

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175) To the nearest 0.01%, what interest rate is being charged if the monthly payment on a 48month lease of a Jaguar XF (MSRP $58,125) is $799? The required down payment is $2999 and the residual value is $24,059.

176) 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?

177) Rentown 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. To the nearest percent, what effective rate of interest is a customer paying to acquire the computer in a rent-to-own transaction?

178) 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 many months will it take him to reach his goal?

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179) 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 the beginning of each month is $295, what is the term of the lease in years?

180) 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 many payments will he receive?

181) 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? Round up the number of withdrawals.

182) How many fewer deposits will it take to accumulate savings of $100,000 with beginningof-month deposits of $220 than with beginning-of-month deposits of $200? The savings earn 5.4% compounded monthly. Round up the number of deposits.

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183) 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, to the nearest 0.01%, is being charged on the unpaid balance?

184) 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, to the nearest 0.01%, has the plan earned?

185) Pembroke Golf Club's initiation fee is $5500. It offers an instalment payment alternative of $1000 down and $1000 at the end of each year for five years. What effective rate of interest, to the nearest 0.01%, is being charged on the instalment plan?

186) 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? Round to the nearest 0.01%

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187) 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 nominal discount rate was used in valuing the lease? Round to the nearest 0.01%

188) 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, to the nearest 0.01%, is being charged to the customer?

189) 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 semiannually compounded nominal rate and the effective rate of return on her investments over the 13 years? Round to the nearest 0.01%

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190) 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% compounded quarterly over the term of the lease. What will be the required lease payments on a machine that cost $25,000 if the lease payments will be received:

a) At the beginning of every month? b) At the beginning of each six month period?

191) Mr. and Mrs. Friedrich have just opened a Registered Education Savings Plan (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 contributions, including one today, must they make for the next nine years if the RESP earns 8.25% compounded semiannually?

192) 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% semiannually compounded rate of return on the unpaid balance of the annual fee. What will be the amounts of the quarterly and monthly payments?

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193) 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? Round up the number of contributions.

194) 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 withdrawals of $300 (or less if a final withdrawal) once he starts college. When will the final withdrawal occur? Round up the number of withdrawals.

195) 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 8.5% compounded quarterly and the funds invested in the annuity earn 7.5% compounded monthly. Round up the number of payments.

196) 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 long will it take to reach the credit limit of $1 million? Round up the number of draws.

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197) Jamshid borrowed $350 from his mother at the beginning of every month for 2½ years while he attended Seneca College.

a) If the interest rate on the accumulating debt was 6% compounded semiannually, what amount did he owe his mother at the end of the 2½ year period? b) If he made the first monthly payment of $175 on the loan at the end of the first month following the 2½ year period, how long after the date he entered college will he have the loan repaid? Round up the number of payments.

198) 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 interest, to the nearest 0.01%, is the club charging the quarterly instalment payers on the unpaid balance of their annual dues?

199) 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, to the nearest 0.01%, is being charged on the instalment plan?

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200) 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 does not increase for the next two years, what effective rate of "return on investment" will be earned by paying for a three-year subscription now instead of three consecutive one-year subscriptions?

201) 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 cheques. What effective rate of interest, to the nearest 0.01%, is charged to those who pay monthly?

202) 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, and monthly premiums of $58.85. In every case, the premiums are payable in advance. What effective rate of interest, to the nearest 0.01%, is the insurance company charging clients who pay their premiums:

a) Semiannually? b) Quarterly? c) Monthly?

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203) A $500,000 life insurance policy for a 26-year-old offers four alternative premium payment plan: an annual premium of $470.00, semiannual premiums of $241.50, quarterly premiums of $123.37, and monthly premiums of $42.30. In every case, the premiums are payable in advance. What effective rate of interest, to the nearest 0.01%, is the insurance company charging clients who pay their premiums:

a) Semiannually? b) Quarterly? c) Monthly?

204) 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 Registered Retirement Income Fund (RRIF) and intends to withdraw equal amounts at the beginning of each month for 15 years. If the funds in the RRIF earn 8.25% compounded monthly, what maximum monthly amount can be withdrawn?

205) 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 paying $491.31 at the beginning of each month. If the RRSP and the annuity earn 8.5% compounded annually, what is the term of the annuity?

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206) 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 6 months before purchasing the annuity. How long did he contribute to the RRSP if it earned 8% compounded annually?

207) Monthly payments were originally calculated to repay a $20,000 loan at 7% compounded monthly over a 10-year period. After one year the debtor took advantage of an option in the loan contract to increase the loan payments by 15%. How much sooner will the loan be paid off? Round up the number of payments.

208) Rentown advertised a television at a cash price of $599.99 and at a rent-to-own rate of $14.79 at the beginning of each week for 78 weeks. What effective rate of interest, to the nearest 0.01%, is a customer paying to acquire the television in a rent-to-own transaction? (Assume that a year has exactly 52 weeks.)

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209) Sheila already has $67,000 in her RRSP. How much longer, to the nearest year, must she contribute $4000 at the end of every six months to accumulate a total of $500,000 if the RRSP earns 5% compounded quarterly?

210) What amount is required to purchase an annuity that pays $5000 at the end of each quarter for the first 10 years and then pays $2500 at the beginning of each month for the subsequent 10 years? The rate of return on the invested funds is 6% compounded quarterly.

211) Natalie's RRSP is currently worth $133,000. She plans to contribute for another seven years and then let the plan continue to grow through internal earnings for an additional 3 years. If the RRSP earns 5.25% compounded annually, how much must she contribute at the end of every six months for the next seven years in order to have $350,000 in the RRSP 10 years from now?

212) Mr. Palmer wants to retire in 20 years and purchase a 25 year annuity that will make endof-quarter payments. The payment size is to be the amount which, 20 years from now, has the purchasing power of $6000 today. If he already has $54,000 in his RRSP, what semiannual contributions must he make for the next 20 years to achieve his retirement goal? Assume that the annual rate of inflation for the next 20 years will be 2.5%, the RRSP will earn 8% compounded semiannually, and the rate of return on the fund from which the annuity is paid will be 5.6% compounded quarterly.

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213) Interprovincial Distributors Ltd. is planning to open a distribution centre in Calgary in five years. It can purchase a suitable piece of land for the distribution warehouse now for $450,000. Annual taxes on the vacant land, payable at the end of each year, would be close to $9000. To the nearest dollar, what price would the property have to exceed five years from now to make it financially advantageous to purchase the property now instead of five years from now? Assume that Interprovincial can otherwise earn 12% compounded semiannually on its capital.

214) Canadian Pacific Class B preferred shares have just paid their quarterly $1.00 dividend and are trading on the Toronto Stock Exchange at $50. What will the price of the shares have to be three years from now for a current buyer of the shares to earn 7% compounded annually on the investment?

215) If Gayle contributes $1000 to her RRSP at the end of every quarter for the next 10 years and then contributes $1000 at each month's end for the subsequent 15 years, how much will she have in her RRSP at the end of the 25 years? Assume that the RRSP earns 8.5% compounded semiannually.

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216) It will cost A-1 Courier $1300 to convert a van from gasoline to natural gas fuel. The remaining useful life of the van is estimated at five years. To financially justify the conversion, what must be the reduction in the monthly cost of fuel to repay the original investment along with a return on investment of 12% compounded monthly? Assume that the fuel will be purchased at the beginning of each month.

217) Conrad has two loans outstanding, which he can repay at any time. He has just made the 11th monthly payment on an $8500 loan at 10.5% compounded monthly for a 3-year term. The 22nd monthly payment of $313.69 was also made today on the second loan, which has a five year term and an interest rate of 9.5% compounded semiannually. Conrad is finding the total monthly payments too high, and interest rates on similar loans are now down to 8.25% compounded monthly. He wishes to reduce his monthly cash outflow by obtaining a debt consolidation loan just sufficient to pay off the balances on the two loans. What would his monthly payment be on a five year term loan at the new rate?

218) Jeanette wishes to retire in 30 years at age 55 with retirement savings that have the purchasing power of $300,000 in today's dollars.

a) If the rate of inflation for the next 30 years is 2% per year, how much must she accumulate in her RRSP? b) If she contributes $3000 at the end of each year for the next five years, how much must she contribute annually for the subsequent 25 years to reach her goal? Assume that her RRSP will earn 8% compounded annually. c) The amount in part ( a) will be used to purchase a 30 year annuity. What will the month-end payments be if the funds earn 6% compounded monthly?

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219)

The average annual costs to support a child born today are estimated as follows:

Years 1 to 6

$12,000

Years 7 to 12

$11,000

Years 13 to 17

$10,000

Years 18 to 19

$15,000

The costs in the early years include child care expenses or foregone earnings of the care-giving parent. a) What is the aggregate total cost (ignoring the time value of money) of raising a child to age 19? b) To the nearest dollar, what is the total economic value, at the date of birth of a child, of these future expenditures, allowing for a time value of money of 6% compounded monthly? Assume that the annual costs are paid in equal end-of-month amounts. c) To the nearest dollar, what will be the economic value at age 19 of the past expenditures, allowing for a time value of money of 6% compounded monthly?

220) To compensate for the effects of inflation during their retirement years, the Pelyks intend to purchase a combination of annuities that will provide the following pattern of month-end income: Calendar Years, Inclusive

Income ($)

2025 to 2029

7,500

2030 to 2034

9,000

2035 to 2039

10,500

2040 to 2050

12,000

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Rounded to the nearest dollar, how much will they need in their RRSPs when they retire at the beginning of 2025 to purchase the annuities, if the annuity payments are based on a rate of return of 6% compounded semiannually?

221) For its "Tenth Anniversary Salebration," Pioneer Furniture is offering terms of 10% down, no interest, and no payments for six months. The balance must then be paid in six equal payments, with the first payment due six months after the purchase date. The conditional sale contract calculates the monthly payments to include interest at the rate of 15% compounded monthly after the end of the interest free period. Immediately after the sale of the furniture, Pioneer sells the contract to Afco Finance at a discount to yield Afco 18% compounded semiannually from the date of the sale. What cash payment will Pioneer receive from Afco on a piece of furniture sold for $2000?

222) Patrick contributes $1000 at the beginning of every quarter to his RRSP. In addition, he contributes another $2000 to the RRSP each year from his year-end bonus. If the RRSP earns 9.5% compounded semiannually, what will be the value of his RRSP after 23 years?

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223) Reg is developing a financial plan that would enable him to retire 30 years from now at age 60. Upon reaching age 60, he will use some of the funds in his RRSP to purchase an eight year annuity that pays $5000 at the end of each month. Then, at age 68, he will use the remaining funds to purchase a 20 year annuity paying $6000 at each month's end. What contributions must he make to an RRSP at the beginning of each quarter for 30 years to achieve his retirement goal if the RRSP and the annuities earn 7.5% compounded monthly?

224) Cynthia currently has $55,000 in her RRSP. She plans to contribute $7000 at the end of each year for the next 17 years and then use the accumulated funds to purchase a 20 year annuity making end-of-month payments.

a) Assume that her RRSP earns 8.75% compounded annually for the next 17 years, and the fund from which the annuity is paid will earn 5.4% compounded monthly. What monthly payments will she receive? b) If the average annual rate of inflation for the next 17 years is 2%, what will be the purchasing power in today's dollars of the monthly payments 17 years from now?

225) A major car manufacturer is developing a promotion offering new car buyers the choice between "below market" 4 year financing at 1.9% compounded monthly or a cash rebate. On the purchase of a $35,000 car, what cash rebate would make a car buyer indifferent between the following alternatives?

--Financing through the car dealer at the reduced interest rate. --Taking the cash rebate and obtaining bank financing at 10.5% compounded monthly for the net "cash" price.

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226) The monthly payments on a $30,000 loan at 10.5% compounded monthly were calculated to repay the loan over a 10 year period. After 32 payments were made, the borrower became unemployed and, with the approval of the lender, missed the next three payments.

a) What amount paid along with the regular payment at the end of the 36th month will put the loan repayment back on the original schedule? b) Instead of the "make-up" arrangement in part ( a), suppose the regular loan payments (beginning with the payment at the end of the 36th month) are recalculated to put the loan back on its 10-year repayment "track." What will be the new payments?

227) Martha's RRSP is currently worth $97,000. She plans to contribute $5000 at the beginning of every six months until she reaches age 58, 12 years from now. Then she intends to use half of the funds in the RRSP to purchase a 20-year annuity making month-end payments. Five years later she will use half of the funds then in her RRSP to purchase another 20-year annuity making month-end payments. Finally, at age 68, she will use all of the remaining funds to purchase a third 20-year annuity also making end-of-month payments. What will be her monthly income at age 65 and at age 70 if her RRSP and the annuities earn 7.5% compounded monthly?

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228) Brunswick Trucking has signed a five-year lease with Ford Credit Canada Ltd. on a new truck. Lease payments of $1900 are made at the beginning of each month. To purchase the truck, Brunswick Trucking would have had to borrow funds at 6.25% compounded monthly.

a) What initial liability should Brunswick report on its balance sheet? b) How much will the liability be reduced during the first year of the lease?

229) What minimum amount of money earning 7% compounded semiannually will sustain withdrawals of $1000 at the beginning of every month for 12 years?

230) What maximum annual withdrawals will a $300,000 fund earning 7.75% compounded annually sustain for 25 years if the withdrawals are made:

a) At the beginning of each year? b) At the end of each year?

231) Regular investments made at the beginning of each quarter earn 6% compounded quarterly. How many more $1000 investments than $1100 investments will it take to accumulate $100,000? Round up the number of investments.

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232) An RRSP is now worth $316,000 after contributions of $3500 at the beginning of every six months for 17 years. What effective rate of return has the plan earned, to the nearest 0.01%?

233)

Calculate the amount that will be accumulated after 20 years if:

a) $1000 is invested at the beginning of every six months at 8.5% compounded semiannually. b) $2000 is invested at the beginning of every year at 8.5% compounded annually.

234) A life insurance company quoted an annual premium of $387.50 (payable at the beginning of the year) for a $250,000 term insurance policy on a 35 year-old male nonsmoker. Alternatively, the insured can pay $33.71 at the beginning of each month by preauthorized cheques. Which payment plan would an applicant choose solely on the basis of money being worth 7.5% compounded monthly?

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235) A seven-year capital lease of an executive jet requires semiannual payments of $200,000 at the beginning of each six-month period. The company can borrow funds for five to 10 years at 7.4% compounded semiannually.

a) What long-term lease liability will the firm set up at the start of the term of the lease? b) What liability will remain halfway through the term of the lease?

236) Suppose that $5000 is contributed at the beginning of each year to an RRSP that earns 5% compounded annually.

a) How many contributions will it take to accumulate the first $500,000? b) How many more contributions will it take for the RRSP to reach $1,000,000? Round up the number of contributions.

237) The membership dues at Shoreline Golf and Country Club are $2820 payable at the beginning of the year, or four payments of $736.56 payable at the beginning of each quarter. What effective rate of interest, to the nearest 0.01%, is the club charging members who pay their dues quarterly?

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238) Excel Leasing calculates the payments on long-term equipment leases so that it earns a rate of return of 15% compounded quarterly on its investment in the equipment. What beginningof-month payments will Excel charge on a 4-year lease of a photocopier costing $7650? (Assume the photocopier has no residual value at the end of the lease.)

239) Apex Fabricating wants to accumulate $800,000 for an expansion expected to begin in four years. If today Apex makes the first of equal quarterly payments into a fund earning 6.75% compounded monthly, what should the size of these payments be?

240) How many more RRSP contributions of $300 at the beginning of every month are required to reach $200,000 if the funds earn 7.5% compounded monthly than if they earn 8.5% compounded monthly? Round up the number of contributions.

241) As of the date of Colony Farm's most recent financial statements, 3½ years remained in the term of a capital lease reported as a long-term liability of $27,400. If the beginning-of-month lease payments are $750, what monthly compounded nominal discount rate was used in valuing the lease? Round to the nearest 0.01%

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242) If a furniture store offers to sell a washer-dryer combination priced at $1395 on a conditional sale contract requiring 12 monthly payments of $125 (including a payment on the date of sale), what effective rate of interest is being charged? Round to the nearest 0.01%

243) Sovereign Life Insurance Company of Canada offers $250,000 of term life insurance to a 45-year-old male for an annual premium of $716 (in advance) or for monthly premium payments (in advance) of $62.50 by preauthorized cheques. What effective rate of interest is charged to those who pay monthly? Round to the nearest 0.01%

244) Fred is about to have his 27th birthday. He has set a goal of retiring at age 58 with $1,000,000 in his RRSP. For planning purposes, he is assuming that his RRSP will earn 8% compounded annually.

a) What contributions on each birthday from age 27 to 57 inclusive will be required to accumulate the desired amount in his RRSP? b) If he waits five years before starting his RRSP, what contributions on each birthday from age 32 to 57 inclusive will be required to reach the target?

245) What is the initial economic value of an annuity due if it consists of 19 semiannual payments of $1500? Money is worth 5% compounded semiannually for the first five years and 6% compounded semiannually thereafter.

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246) What will be the amount in an RRSP after 30 years if contributions of $4000 are made at the beginning of each year for the first 10 years, and contributions of $6000 are made at the beginning of each year for the subsequent 20 years? Assume that the RRSP will earn 8.25% compounded annually.

247) Calculate the future value of an investment plan requiring contributions of $800 at the beginning of each calendar quarter for seven years. Assume that the rate of return will be 8% compounded quarterly for the first 30 months and 7% compounded semiannually for the remainder of the annuity's term.

248) Ms. Bowers wants to be able to purchase a 20-year annuity at age 62 that will pay her $3500 at the beginning of each month. She makes her first quarterly contribution to an RRSP on her 35th birthday and continues them up to but not including her 62nd birthday. What should be the amount of each contribution? Assume that her RRSP will earn 8% compounded quarterly and that the money used to purchase the annuity fund will earn 4.8% compounded monthly.

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249) Mr. and Mrs. Zolob contributed $50 on the first of each month to an RESP they set up for their grandson Jeff. By the time he entered Mohawk College, 14 years and 5 months of contributions had accumulated. The grandparents' contributions stopped, and Jeff started beginning-of-month withdrawals of $500. How long will these payments last if the RESP has earned and will continue to earn 8.25% compounded monthly? Round up the number of payments.

250) A rental agreement requires the payment of $1000 at the beginning of each month. What single payment at the beginning of the rental year should the landlord accept instead of twelve monthly payments if money is worth 8% compounded monthly?

251) Mick contributed $5000 at the beginning of each year for 25 years to his RRSP. Assume that the RRSP earned 8% compounded annually. What percentage, to the nearest 0.1%, of the RRSP's value after 25 years comes from contributions made in the first five years?

252) What amount is required to purchase an annuity that pays $4000 at the end of each quarter for the first five years and then pays $2500 at the beginning of each month for the subsequent 15 years? Assume that the annuity payments are based on a rate of return of 5.6% compounded quarterly.

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253) Suppose that $5000 is contributed at the beginning of each year for 25 years to an RRSP that earns 10% compounded annually. By what percentage, to the nearest 0.1%, would annual contributions have to be increased in order to have the same future value after 25 years if the plan earns only 8% compounded annually?

254) Suppose you contribute $2500 to an RRSP at the beginning of every six months for 25 years, and then use the accumulated funds to purchase an annuity paying $2500 at the beginning of each month. How long after the start of the annuity will the last payment be made? Assume that the RRSP earns 8% compounded semiannually and the funds invested in the annuity earn 5.1% compounded monthly.

255) Capital Leasing leases commercial kitchen equipment to restaurants, hotels, hospitals, and other institutions. Capital Leasing calculates the payments on its four year leases so that it recovers the purchase price of the equipment plus a return on investment of 16% compounded annually over the term of the lease. What will be the required lease payments at the beginning of each quarter on equipment purchased by Capital for $57,000?

256) New Look Fitness Centre offers a one-year membership for $500 in advance or a three month membership for $160 in advance. What effective rate of interest, to the nearest 0.01%, is an individual paying if she buys four consecutive three month memberships instead of a one year membership? Version 1

257) A life insurance company is calculating the monthly premium that it will offer clients as an alternative to paying the full annual premium. With both alternatives, premiums are payable at the beginning of the period of coverage. If the monthly payment by preauthorized cheque is calculated to yield the insurance company 10% compounded semiannually on the unpaid balance of the annual premium, what should be the monthly premium per $100 of annual premium?

258) Mandeep is depositing $250 at the beginning of each month into an RRSP account paying 3.8% compounded monthly. How much will she have in her RRSP account after 40 years?

259) Larissa is depositing $1000 at the beginning of each quarter into an RRSP account paying 4.25% compounded semiannually. How much will she have in her RRSP account after 30 years?

260) Marion is saving $100 at the beginning of each month in an account paying 3.5% compounded monthly. How much interest will the account have earned in 10 years?

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261) Kristina is depositing $125 at the beginning of each month into an account paying 3.75% compounded semiannually. After five years, the account will pay 4% compounded quarterly. How much will she have in her account after 10 years?

262) An investment requires quarterly deposits of $900 and pays 3.5% compounded semiannually. How much will the investment accumulate to after five years?

263) Anil is paying $1200 per month to rent his apartment for one year. If interest is 4.5% compounded quarterly, what lump sum should his landlord accept at the beginning of the rent contract instead of the monthly payments?

264) Susan bought furniture at a department store and made the first payment at the time of purchase. Her monthly payments are $245, which includes 2% interest per month. Susan will be making payments for three years.

a) What was the cost of her furniture? b) What amount of interest will Susan pay overall?

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265) Nick is making mortgage payments of $1500 at the end of each month for 20 years. How much interest would Nick save if he made his payments at the beginning of the month if interest is 5.5% compounded quarterly?

266) What is the present value of payments of $500 made at the beginning of each month for five years if interest earns 6.5% compounded monthly?

267) Monica is making payments of $588 at the beginning of each month for her car. Her loan is for five years at 3.8% compounded quarterly. Monica wants to pay the loan off after two years. What lump sum should she make?

268) A car costing $25,000 is leased at 4.25% compounded quarterly for four years. What is the amount of the monthly lease payment excluding taxes?

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269) Danica is leasing a car costing $37,000. She made a down payment of $5000, and is making monthly payments for five years at 3.95% compounded semiannually. What is the size of her monthly payments excluding taxes?

270) Ray is leasing a car for his business. He is making monthly payments for three years at 4.5% compounded annually. The purchase price of the car is $40,000 with a residual value of $15,000 at the end of the three years. What is the size of the monthly lease payments excluding taxes if Ray makes a down payment of $5000?

271) Safa wants to save $5000 in three years. How much should she deposit into a savings account at the beginning of each month if the account earns 2.75% compounded monthly in order to reach her goal?

272) Brian has $100,000 in his RRSP account now. He wants to triple the amount in 20 years by making monthly deposits into his RRSP account which earns 3.85% compounded quarterly. Brian knows that he will earn more interest by making the deposits at the beginning of the month. How much should Brian deposit each month so that his RRSP account accumulates to $300,000?

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273) Fahad is making quarterly deposits starting today in order to accumulate $20,000 in five years. If money earns 4% compounded semiannually, how much should Fahad deposit each quarter?

274) Fatima wants to have $250,000 in her RRSP account before she retires. She is depositing $450 per month into her account which earns 4.3% compounded quarterly. If Fatima makes her first deposit today, how long will it take her to accumulate $250,000? Round up the number of deposits.

275) Jon is repaying a loan of $4000 by making payments of $175 at the beginning of each month at 5.5% compounded monthly. How long will it take Jon to repay the loan? Round up the number of payments.

276) Francesca is depositing $225 per month starting today into an RRSP account. She plans to have $75,000 in 20 years. What nominal rate of interest, to the nearest 0.01%, must her RRSP account pay for Francesca to reach her goal?

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277) Lease payments of $425 per month on a car costing $35,000 are advertised by a dealer. The down payment required is $5000, and the residual value of the car is $14,000 after four years. What rate of interest compounded monthly is built into the lease? Round to the nearest percent.

278) Petra has two options to finance her mortgage of $200,000. She can pay $1395.40 per month compounded quarterly for 20 years, or $1380.00 at the beginning of each month compounded semiannually for 20 years. Which option offers the better interest rate?

279) Edelyn has $25,000 in her RRSP. She plans to deposit an additional $200 per month at 4.25% compounded quarterly for the next 30 years. At the end of 30 years, Edelyn wants to use the accumulated funds to purchase an annuity that will pay her equal monthly payments paid at the beginning of each month for 20 years. The fund from which the annuity is paid is expected to earn 4.5% compounded semiannually. What monthly payments will she receive?

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280) Sameer wants to finance the purchase of a new car. He has two options. The first is to lease the car from the dealer and buy back the car after four years for $10,000. Monthly lease payments will be $377.89 starting with the day of purchase for four years at an interest rate of $3.8% compounded quarterly. The second option is from the bank and requires a down payment of $5000 and monthly payments of $469.38 for four years at an interest rate of 3.5% compounded quarterly. Which option do you recommend that Sameer take?

281) You plan to invest $1,000 at the beginning of each month for the next four years. If your invested funds earn 3.2% compounded monthly, what will be the total accumulated value of your investment after four years?

282) You have systematically contributed $2,500 to an RRSP at the beginning of every three months for the past seven years. If the RRSP has earned 4.8% compounded quarterly, what is the value of your RRSP today?

283) Today you are making your first annual contribution of $5,500 to a TFSA. How much will the plan be worth nine years from now if it earns 4.575% compounded monthly?

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284) Your brother has just opened an RESP for his children with his first monthly deposit of $400. What will the RESP be worth eight years from now if the investments within the plan earn 3.45% compounded semiannually?

285) Your uncle will contribute $800 to a mutual fund at the beginning of each calendar month. What will be the value of the interest earned after eight years if the fund earns 4.6% compounded annually?

286) Claus Plastics plans to accumulate funds for the purchase of a larger factory four years from now. If Claus Plastics contributes $25,000 at the beginning of each quarter to an investment account earning 5.5% compounded semiannually, what amount (rounded to the nearest dollar) will Claus Plastics accumulate by the end of the four years?

287) If your client contributes $2,000 to their RRSP on February 1, 2019, and every six months thereafter up to and including February 1, 2035, what amount of interest will they accumulate in the RRSP by August 1, 2035? Assume that the RRSP will earn 3.5% compounded semiannually.

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288) You plan on contributing the maximum payment of $5,500 every year to your TFSA, starting immediately. (assume the maximum payment amount doesn't change). What is the future value after thirty years if the funds earn 3.2% compounded annually?

289) For your children's college fund, you invest $100 at the start of every month for seven years. Calculate the future value if the funds earned 6% compounded monthly.

290) You contributed $1,500 to your RRSP at the start of every half-year. What was the value of your RRSP after 22.5 years if the RRSP grew at 2.5% compounded semiannually? Round your answer to the nearest dollar.

291) Starting today, your partner plans to invest $250 every month by purchasing units of a Canadian mutual fund. If the fund generates an overall rate of return of 5.675% compounded annually, what will their holdings be worth after ninety-eight payments?

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292) You purchased $400 worth of units in a Canadian Oil and Gas Equity Fund every calendar quarter for the past five years and nine months. On average, the fund has earned 4.75% compounded quarterly. What were your holdings worth after your last purchase? Assume your first purchase was today.

293) What will be the interest earned be worth after eight years and two months of regular beginning of month investments of $285 earning 3.5% compounded monthly?

294) Assume that your sister invests $2,900 at the beginning of each year for the next five years. The investment earns 5.5% compounded annually. What is the future value at the end of the five years?

295) Your parents plan to invest $4,000 at the beginning of each year for their grandchildren's education. The rate of return on the investment is 3.5% compounded annually. What will be the value of the education fund be after twelve years?

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296) Your banker has suggested you invest $500 at the beginning of each half-year for the next ten years. The invested funds have earned 3.4% compounded monthly. What would be the value of your investments in ten years?

297) What will be the amount in an RRSP after twenty years if contributions of $4,000 are made at the beginning of each year for the first ten years, and contributions of $5,000 are made at the beginning of each year for the subsequent ten years? Assume that the RRSP will earn 4% compounded quarterly.

298) You contributed $5,000 at the end of each year to your RRSP on every birthday from age eighteen to forty inclusive. You then ceased employment to travel and made no further contributions. If you withdraw $2,000 per month, starting on your fortieth birthday, for one year before going back to work, how much money will you have left in your RRSP when you finish your one year of travels? Assume that the rate of return is 6% compounded annually.

299) On the date of its financial statements, a travel company has three years remaining on the lease of a airplane. The lease requires payments of $40,000 at the beginning of every month. What book value is reported for the lease liability if the company pays 3.5% compounded monthly on its medium-term debt, to the nearest dollar?

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300) If money can earn 3.25% compounded quarterly, what is the value of an annuity consisting of monthly payments of $3,000 continuing for thirty years? The first payment will be received today, to the nearest dollar?

301) Your parents purchased a new couch under a conditional sale contract that required eighteen monthly payments of $99 with the first payment due on the purchase date. The interest rate on the outstanding balance was 18% compounded monthly. What was the purchase price of the couch?

302) You just purchased a twenty-year term life insurance policy. For your premium payments, you can choose either beginning-of-month payments of $1,300 or beginning-of-year payments of $15,000. In current dollars, how much will you save during the twenty years by choosing the lower-cost option? Assume that money can earn 4.8% compounded monthly.

303) G3 has signed a three-year lease with GMAC on a new security truck. G3 intends to capitalize the lease and report it as a long-term liability. Lease payments of $700 are made at the beginning of each month. To purchase the truck, G3 would have had to borrow funds at 9% compounded monthly. How much will the liability be reduced during the first year of the lease?

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304) Under the headline "New Hockey Arena Receives $750,000!" a newspaper article explained that the Arena Project had just received the first of five annual grants of $150,000 from the Cottsworth Foundation. What is the current economic value (to the nearest dollar) of all of the grants if money is worth 7.5% compounded monthly?

305) Chips' Appliance Centre is advertising HD Projectors for nine monthly payments of $249, including a payment on the date of purchase. What cash price should Chip accept if it would otherwise sell the conditional sale agreement to a finance company to yield 14% compounded monthly?

306) You have received two offers on the used car you wish to sell. Offer A is $13,000 cash, and Offer B is twelve monthly payments of $1,200, including a payment on the purchase date. Which offer has the greater economic value at a discount rate of 4.7% compounded monthly? What is the economic advantage (in current dollars) of the preferred alternative?

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307) The life expectancy of the average seventy-year-old Canadian male is about eighteen additional years. Your grandfather wants to have sufficient funds in his RRIF at age seventy to be able to withdraw $2,800 at the beginning of each month for the expected survival period of eighteen years. If his RRIF earns 2% compounded annually, what amount must he have in the RRIF at the time he turns seventy?

308) A lease agreement requires the payment of $700 at the beginning of each month. What single payment at the beginning of the lease year should the landlord accept instead of twelve monthly payments if money is worth 6% compounded monthly?

309) What minimum amount of money earning 5.5% compounded quarterly will sustain withdrawals of $1,900 at the beginning of every month for fourteen years? Round your answer to the nearest dollar.

310) The lease contract for a small restaurant requires monthly payments of $4,700 at the beginning of every month for five years. The lessee would otherwise have to pay an interest rate of 7.5% compounded quarterly to borrow funds to purchase the restaurant. What would be the current value of the restaurant, to the nearest dollar?

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311) In retirement, you wish to receive $20,000 at the beginning of each year for the twenty years. If money is currently worth 5% compounded annually, what is the present value of the fund?

312) You wish to receive payments of $1,000 at the beginning of each month for forty years. Use a discount rate (interest rate) of 4% compounded monthly to calculate the present value? Round your answer to the nearest whole dollar.

313) What is the present value of beginning-of-quarter payments of $4,000 for ten years? Use a discount rate of 3% compounded quarterly.

314) Great West Lifeco is quoting a rate of return of 3.2% compounded quarterly on twentyyear annuities. How much will you have to pay for a twenty-year annuity that pays $3,000 (at the beginning of) every three months?

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315) What is the current economic value of an annuity due consisting of forty-eight monthly payments of $1,000 if money is worth 4% compounded quarterly for the first two years, and 3% compounded monthly thereafter?

316) You must choose between two lease alternatives for a new small warehouse you require for the next five years. A real estate investment company offers payments of $10,000 per month for the life of the lease. A small business owner is offering a lease that requires payments of $12,500 per month with no payments for the first year. Which option is cheaper in today's dollars and by how much if money can earn 4% compounded monthly? Round both answers to the nearest whole dollar.

317) You parents have accumulated $380,000 and hope to retire this year. They want to receive an annuity payment at the beginning of each year for the next twenty years. If the money can earn 4.5% compounded annually, what maximum monthly payment can they receive and just deplete the capital after twenty years? Round your answer to the nearest whole dollar.

318) You purchases an annuity for $500,000 that provides beginning-of-month payments for twenty years. If the annuity earns 5.5% compounded annually, what monthly payment will you receive? Round your answer to the nearest whole dollar.

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319) Your sister wants to accumulate $900,000 over the next thirty years by investing the same amount at the beginning of each month. If she can expect a long-term rate of return of 5.5% compounded semiannually, how much must she invest each month? Round your answer to the nearest whole dollar.

320) A company needs to accumulate $400,000 after ten years, what amount must be invested each year if the investment earns 4% compounded annually and the contributions are made at the beginning of each year? Round your answer to the nearest whole dollar.

321) What maximum monthly withdrawals will a $600,000 fund earning 5% compounded annually sustain for forty years if the withdrawals are made at the beginning of each year? Round your answer to the nearest whole dollar.

322) Furnasman Plumbing and Heating wants to accumulate $700,000 for an expansion planned to begin in three years. If today Furnasman makes the first of equal quarterly payments into a fund earning 6.4% compounded annually, what size should these payments be? Round your answer to the nearest whole dollar.

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323) Capital Leasing calculates the monthly payments on its ten-year leases on the basis of recovering the capital cost of the leased tractors and earning 8.5% compounded monthly on its capital investment. What will be the monthly lease payment on a tractor that costs $120,000? Round your answer to the nearest whole dollar.

324) Pepsi Co. leases drink machines to small businesses. What lease payments must Pepsi Co. charge at the beginning of each month of a three-year lease if it is to recover the $50,000 capital cost of the drink machine and earn 12% compounded quarterly on its investment?

325) City Bus has decided to lease another bus for five years rather than finance the purchase of the bus at an interest rate of 3.5% compounded annually. It has set up a long-term lease liability of $243,000. What is the lease payment at the beginning of each month?

326) With a down payment of $2,000, the monthly payment on a two-year lease of a Nissan Micra (MSRP $17,854) is $400.98. The interest rate on the lease is 1.99% compounded semiannually. What residual value was used in the calculation? Round your answer to the nearest whole dollar.

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327) A Ford Fusion sedan (MSRP $27,900) can be leased for $350 per month. This payment is based on an interest rate of 1.9% compounded semiannually, a down payment of $1425, and a residual value of $15,045. What is the term of the lease?

328) What monthly compounded interest rate is being charged if the monthly payment on a thirty-six month lease of a Honda CRV (MSRP $38,500) is $702? The required down payment is $4,000 and the residual value is $24,000.

329) The MSRP for a Chevy Tahoe is $40,999. The monthly payment on a twenty-four month lease at 3.9% compounded semiannually is $800. The residual value at the end of the lease is $22,138. Rounded to the nearest dollar, what down payment was used in the lease calculation?

330) Rent to Own advertised a bedroom set at a cash price of $1,299 and at a rent-to-own rate of $117 at the beginning of each month for twelve months. What effective rate of interest is a customer paying to acquire the bedroom set in a rent-to-own transaction?

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331) You want to save half of the $180,000 purchase price of a new condo by making monthly deposits of $1,200, beginning today, into a savings account earning 5.2% compounded monthly. How long will it take to reach your goal?

332) The Red River Book Store accountant set up a long-term lease liability of $5,245 to recognize a new contract for the lease of new shelving. They used the firm's 4.5% monthly compounded cost of borrowing as the discount rate. If the lease payment at the beginning of each month is $300.75, what is the term of the lease?

333) The payments required on a contractual obligation are $800 per month. The contract was purchased for $9,250 just before a regular payment date. The purchaser determined this price based on a required rate of return of 4.3% compounded monthly. How many payments will be required, include the partial final payment?

334) How much longer will a $200,000 fund earning 5% compounded monthly sustain beginning-of-month withdrawals of $2,000 than beginning-of-month withdrawals of $3,000?

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335) If a used car retailer offers a financing plan on a $10,500 purchase requiring twelve equal monthly payments of $900 including the first payment on the purchase date, what effective rate of interest is being charged on the unpaid balance?

336) Shady Mountain Gym has an introductory one-year fee of $500. It offers an installment payment alternative of $45 at the beginning of each month for one year. What effective rate of interest is being charged on the installment plan?

337) On January 1, 2019, your company had three years remaining in the term of a capital lease reported as a long-term liability of $27,873. If the beginning-of-month lease payments are $500, what monthly compounded annual discount rate was used in valuing the lease?

338) If a stereo store offers to sell a HD DVD player priced at $295 on a conditional sale contract requiring 12 monthly payments of $25 (including a payment on the date of sale), what effective rate of interest is being charged to the customer?

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339) Cougar Home Rentals advertised a full sized whirlpool hot tub at a cash price of $1,899.99 and at a rent-to-own rate of $55.00 at the beginning of each week for thirty-nine weeks. What effective rate of interest is a customer paying to acquire the television in a rent-toown transaction? (Assume that a year has exactly 52 weeks.)

340) You already have $670,000 in your RRSP. How much longer must you contribute $4,000 at the beginning of every three months to accumulate a total of $1,000,000 if the RRSP earns 5.1% compounded quarterly? (Round the time required to the next higher month.)

341) What amount is required to purchase an annuity that pays $3,000 at the beginning of each month for the first ten years and then pays $2,500 at the beginning of each month for the subsequent twenty years? The rate of return on the invested funds is 3% compounded quarterly. Round your answer to the nearest whole dollar.

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Answer Key Test name: Chap 13_10ce 1) E 2) C 3) A 4) B 5) E 6) C 7) A 8) A 9) D 10) C 11) D 12) B 13) A 14) B 15) C 16) B 17) E 18) B 19) D 20) C 21) A 22) E 23) D 24) C 25) B 26) E Version 1

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27) D 28) A 29) C 30) E 31) A 32) D 33) B 34) D 35) D 36) A 37) A 38) E 39) C 40) D 41) D 42) B 43) D 44) B 45) C 46) A 47) E 48) D 49) C 50) C 51) A 52) B 53) D 54) A 55) E 56) A Version 1

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57) B 58) A 59) A 60) C 61) A 62) D 63) E 64) B 65) E 66) A 67) D 68) C

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CHAPTER 14 1) Mrs. O'Halloran gave $130,000 to the University of Northern British Columbia for a perpetual scholarship fund. What amount can be awarded on each anniversary if the scholarship fund earns 7% compounded annually? A) $13,000 B) $1,300 C) $1,857 D) $9,100 E) $91,000

2) What amount can be paid at the end of every month in perpetuity from an endowment of $350,000 which is earning 5.4% compounded monthly? A) $1,575 B) $1,890 C) $2,100 D) $15,750 E) $18,900

3) A donation of $250,000 is made today to the local library for the purchase of new books. What amount can be withdrawn every month in perpetuity if the money is earning 9% compounded monthly and the first payment is to be made immediately? A) $2,250.00 B) $1,875.00 C) $1,861.04 D) $1575.00 E) $1562.77

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4) The National Museum has received a donation of $2,000,000 which is to be used to purchase new exhibits at the end of every three months. If the money earns 12% compounded annually, how much could be paid out every three months in perpetuity? A) $60,000 B) $57,475 C) $24,000 D) $114,704 E) $72,895

5) A $450,000 trust fund earns 8% compounded semiannually. It is to make perpetual payments at the end of every month. What will be the size of the monthly payments? A) $3,000 B) $1,800 C) $1,955 D) $2,453 E) $2,951

6) An endowment fund of $5,000,000 is to pay out grants for medical research. The grants are to be paid once per month and the first one is to be paid today. The fund will earn interest at 11% compounded semiannually. What is the size of the monthly grants? A) $45,833 B) $27,500 C) $39,782 D) $44,419 E) $44,817

7) What amount can be paid at the end of every month, in perpetuity, from an endowment of $75,000 earning 8% compounded monthly? Version 1

A) $800 B) $750 C) $500 D) $400 E) $250

8) What amount can be paid at the end of every six months, in perpetuity, from an endowment of $475,000 earning 7% compounded annually? A) $16,625 B) $16,344 C) $15,682 D) $14,971 E) $11,579

9) The Pithybottoms want to make a donation to set up a scholarship trust fund at Hinose College. The fund is to support payments of $5,000 at the end of every three months in perpetuity. If the fund earns 7.5% compounded quarterly, how much must they donate? A) $666,667 B) $375,000 C) $266,667 D) $66,667 E) $200,000

10) What amount, invested today at 6% compounded monthly, will support perpetual monthly payments of $500? The first payment will be made one month from now.

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A) $500,000 B) $400,000 C) $300,000 D) $200,000 E) $100,000

11) What amount, invested today at 5% compounded quarterly, will support perpetual monthly payments of $800? The first payment will be made one month from now. A) $116,327 B) $192,798 C) $160,000 D) $63,997 E) $322,700

12) The Willie P. Stanton Trust Fund is to pay, $5,000 at the end of every year to the studentathlete voted most deserving based on his or her dedication to the ideals of good citizenship. The Trust Fund earns 7.4% compounded semiannually. What is the present value of this perpetuity? A) $66,340 B) $129,526 C) $72,341 D) $135,135 E) $67,568

13) What is the present value of a trust fund that earns 9% compounded monthly and pays out $950 every month? The next payment will be made today.

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A) $126,667 B) $105,556 C) $141,667 D) $127,617 E) $95,950

14) What is the present value of a trust fund that earns 8.8% compounded annually and pays out $3,500 every three months? The next payment is due to be made today. A) $164,249 B) $745,820 C) $167,749 D) $529,722 E) $526,222

15) A trust fund of $55,000 is invested at 8.4% compounded monthly. It is to be left to accumulate interest for five years after which it is to support, in perpetuity, equal payments to be made at the end of every month. What will be the size of the payments? A) $385 B) $585 C) $741 D) $916 E) $1,126

16) A wealthy benefactor has donated $1,000,000 to establish a perpetuity that is to pay a constant payment once per month. The money will earn 10% compounded annually. The first monthly perpetual payment will be made 28 months from now. Determine the size of the payments.

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A) $9,960 B) $10,000 C) $9,881 D) $8,603 E) $10,047

17) Calculate the present value of a perpetuity that will pay out $1,500 every month and the first payment is to be made 10 years from now. The interest rate earned is 9% compounded annually. A) $81,587 B) $82,199 C) $92,761 D) $88,546 E) $87,913

18) Calculate the present value of a perpetuity that will pay out $7,500 every six months and the first payment is to be made four years from now. The interest rate earned is 8.6% compounded semiannually. A) $174,419 B) $129,898 C) $124,543 D) $119,563 E) $104,826

19) If a donation of $100,000 is expected to pay out scholarships of $10,000 every year and the funds earn 7.5% compounded annually, how long will it be before the first annual payment can be made?

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A) 3 years B) 5 years C) 7 years D) 9 years E) 11 years

20) If an endowment fund of $2,327,000 is to be used to pay out grants of $175,000 at the end of every year in perpetuity what effective rate of interest must the funds earn? A) 11.61% B) 10.06% C) 8.93% D) 7.52% E) 5.44%

21) An 18-year-old college student plans to save a "Buck-A-Day" in a glass jar and after one year, set up a Retirement Savings Plan with $365. One year later he will make his second contribution to the RSP but it will be 10% larger than the first one. He will continue to increase his annual contributions by 10%. He anticipates that his investments can earn an annual return of 12.5% compounded annually. How much money is he expecting to have in the RSP after 40 years? A) $773,510 B) $1,529,444 C) $1,411,823 D) $962,720 E) $284,291

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22) How much money would accumulate over 35 years if the investor makes an investment of $3,500 at the end of the first year and always increases the size of the annual investment by 5% over the previous year? The investments are expected to earn 11% compounded annually. A) $1,195,563 B) $1,928,432 C) $1,010,619 D) $1,624,915 E) $2,311,587

23) An investment of $50 is to be made at the end of this month and that amount is increased by 1% every month for 40 years. The investments are expected to earn 13.2% compounded monthly. What should be the total value of these investments in 40 years? A) $3,607,093 B) $862,680 C) $1,847,397 D) $997,481 E) $2,646,194

24) Mary needs a pension that will pay her $12,000 one year from now and annual payments for 24 more years that are each 5% larger than the previous year. If the funds in her Retirement Fund earn 7.5% compounded annually, how much money must she have there now? A) $188,490 B) $266,540 C) $532,842 D) $213,460 E) $487,671

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25) How much will it cost to purchase a 20-year indexed annuity in which the end of quarter payments starts at $6,000 and grow by 0.5% every quarter? Assume that the money used to purchase the annuity earns 8% compounded quarterly. A) $277,727 B) $480,000 C) $316,842 D) $516,667 E) $326,744

26) Baba Lou plans to retire in 20 years. At that point he plans to collect payments at the end of every six months that are 2% larger than the previous payment and this is to continue for 30 years. The first payment will be $16,500. His retirement plan is expected to earn 7% compounded semi-annually after he retires and 10% compounded annually before he retires. What single investment should he make now to fund the whole retirement plan? A) $68,590 B) $95,411 C) $241,917 D) $316,443 E) $641,877

27) We will make annual RRSP contributions at the end of every year for 35 years and each contribution is going to be 8% larger than the previous one. Our goal is to have $2,000,000 in 35 years. The RRSP will earn 13% compounded annually. How large will the first contribution be? A) $1,048 B) $1,483 C) $1,746 D) $2,295 E) $3,742

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28) We are aiming to have $5,000,000 in 45 years and we plan to get there by making monthly investments that are 1% larger than the previous month's investment. Our funds will earn 14.4% compounded monthly. How much should be invested at the end of the first month? A) $24.29 B) $68.82 C) $103.74 D) $425.16 E) $801.93

29) Barklay has $782,490 in his Retirement Saving Plan and he wants to start receiving income at the end of every three months for the next 22 years. The funds earn 7% compounded quarterly and he wants each payment that he receives to be 1.5% larger than the previous one. How much will the first payment be three months from now? A) $2,675 B) $6,429 C) $10,050 D) $15,829 E) $17,767

30) A loan of $126,500,000 is to be repaid by annual payments for 25 years. The payments will form a constant growth annuity with each payment being 20% larger than the previous one. The interest rate charged on the loan is 11% compounded annually. What is the size of the first payment?

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A) $1,890,589 B) $2,729,835 C) $5,060,000 D) $9,756,417 E) $15,020,641

31) What is the economic value today of 24 monthly payments of $500 with the first payment occurring 10 months from today? Assume that money can earn 12% compounded monthly. A) $9711.84 B) $8973.34 C) $10,621.69 D) $9615.68 E) $13,486.73

32) An individual wants to receive end-of-month payments of $1200 for 20 years after she retires 15 years from now. What lump amount must she invest today to provide the retirement income? Assume the investment earns 7% compounded monthly for the entire 35 years. A) $49,864.93 B) $54,645.42 C) $54,328.50 D) $187,835.65 E) $155,681.89

33) Puneet intends to retire in 10 years. To supplement his pension he would like to receive $500 every six months for 20 years. If he is to receive the first payment six months after the date of his retirement, what lump amount must he invest today to achieve his goal? Assume that the investment will earn 12% compounded semiannually.

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A) $2486.50 B) $4871.78 C) $5164.09 D) $2345.75 E) $2212.97

34) Julio purchased a farm with a down payment of $8500 and 48 semiannual payments of $3000. The first of these payments is to be made two years after the date of purchase. What was the purchase price of the farm if the interest rate charged on the balance is 14% compounded semiannually? A) $41,191.42 B) $31,424.74 C) $42,124.47 D) $39,924.74 E) $49,691.42

35) Calculate the present value of a deferred annuity of 20 annual payments of $25,000 each. The interest rate is 8.5% compounded annually and the first payment will be made in six years. A) $306,472 B) $211,760 C) $157,339 D) $145,013 E) $104,289

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36) Evergreen Landscaping is applying for a loan. Your help is needed to determine how much they can borrow. They will not be able to make any payments for the first 18 months. After that, they will make payments of $750 per month for five years. There is no interest-free grace period. The first $750 payment will be made 18 months after the loan is received. If the interest rate is 10.5% compounded monthly, how much can they expect to borrow? A) $29,829 B) $34,894 C) $36,515 D) $30,090 E) $24,008

37) Hard Rock Paving Company is applying for a loan. It is your job to determine how much they will be able to borrow. They will not be making any payments for the first 15 months. After that, they will make payments of $1,000 per month for four years. There is no interest-free grace period. The first $1,000 payment will be made 15 months after the loan is received. If the interest rate is 13.2% compounded monthly, how much can they expect to borrow? A) $37,138 B) $31,864 C) $31,517 D) $33,915 E) $40,736

38) Calculate the present value of a deferred annuity of 20 annual payments of $100,000 each. The interest rate is 13.5% compounded annually and the first payment will be made 11 years from now.

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A) $169,340 B) $593,451 C) $218,148 D) $681,890 E) $192,201

39) Samuel has $290,000 in his Retirement Savings Plan right now. He will not be able to make any more contributions to the RSP but he is planning to let the money accumulate until he has enough so that he can take out $3,000 per month for 25 years. How long will he have to wait until he takes out the first $3,000 withdrawal? His investments earn 7.5% compounded monthly. A) 39 months B) 55 months C) 89 months D) 95 months E) 112 months

40) Juliana has $54,500 in her "World Tour Savings Plan" right now. She will not be able to make any more contributions to the Plan but she is planning to let the money accumulate until she has enough so that he can take out $2,500 per month for 3 years while she travels around the world. She will take out the first $2,500 one month after she leaves on her trip. If her investments earn 9.9% compounded monthly, how many months will it be before she leaves on her trip? A) 29 months B) 32 months C) 36 months D) 41 months E) 43 months

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41) A purchase agreement for a $22,000 truck requires 60 equal payments every six months. If the first payment is due one year after the date of purchase and interest is charged at 18% compounded monthly, what is the size of each payment? A) $2065.46 B) $1888.95 C) $1991.31 D) $2469.50 E) $2258.47

42) A $15,000 deposit earns 6% compounded quarterly. Rounded to the nearest month, how long (before the first withdrawal) must the deposit be allowed to grow before it can provide 24 quarterly withdrawals of $1200? A) 7 years B) 7 years and 3 months C) 7 years and 11 months D) 8 years and 3 months E) 8 years and 5 months

43) Heather is planning to invest a constant amount of money at the end of every year for 15 years and then allow her money to accumulate interest for 15 more years without any additional deposits. If her investments earn 11% compounded annually and she must have $650,000 in 30 years, how much will she invest at the end of each of the next 15 years? A) $3,266 B) $2,167 C) $1,889 D) $3,612 E) $3,949

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44) How many monthly withdrawals of $1,400 will an investment of $75,000 sustain if the first withdrawal is made 13 months from now and the money earns 8.4% compounded monthly? A) 96 B) 75 C) 66 D) 53 E) 45

45) A conditional sale contract requires the debtor to make twelve quarterly payments of $267, with the first payment due in nine months. What amount will a finance company pay to purchase the contract on the date of sale if the finance company requires a rate of return of 14% compounded monthly? A) $2,710.18 B) $2,788.18 C) $2,810.18 D) $2,888.18 E) $2,920.18

46) What price will a finance company pay to a merchant for a conditional sale contract that requires twenty-four monthly payments of $734 beginning in three months? The finance company requires a rate of return of 16% compounded monthly. A) $15,498.98 B) $14,598.98 C) $14,164.98 D) $14,934.98 E) $16,598.98

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47) Your parents have $560,000 with which to purchase an ordinary annuity delivering monthly payments for twenty-five years after a twenty-year period of deferral. What monthly payment will they receive, if the undistributed funds earn 2.4% compounded annually? Round your answer to the nearest dollar. A) $3,780 B) $4,180 C) $3,980 D) $3,910 E) $3,990

48) A conditional sale contract requires the debtor to make twelve quarterly payments of $267, with the first payment due in nine months. What amount will a finance company pay to purchase the contract on the date of sale if the finance company requires a rate of return of 14% compounded monthly? A) $2,980.18 B) $2,090.18 C) $2,710.18 D) $1,710.18 E) $1,910.18

49) You are ready to retire and decided to donate $100,000 to Hawthorne College for a perpetual scholarship fund for students in business studies. What amount can be awarded on each anniversary, starting in one year, if the scholarship fund earns 3.5% compounded annually? A) $3,900 B) $7,000 C) $1,750 D) $3,500 E) $4,250

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50) What amount is required to fund a perpetuity that pays $8,040 at the beginning of each six-month period? The funds can be invested to earn 4% compounded quarterly. A) $440,000 B) $450,000 C) $408,000 D) $480,000 E) $400,000

51) A perpetuity is to pay $7,979 per student, for four students, at the end of every year. How much money is required to fund the perpetuity if the money can be invested to earn 5% compounded semiannually? A) $790,000 B) $970,000 C) $820,000 D) $800,000 E) $560,000

52) In 1891, a trading company purchased perpetual bonds from the Bank of England that paid a fixed interest rate. These bonds paid only the interest every six months—the principal amount of the debt would never be repaid. The owner of a $500 face-value receives $3.55 every six months. What is the fixed interest rate (on the face value) paid by the bonds? Calculate your answer to two decimal places. A) 1.83% B) 1.43% C) 1.93% D) 1.23% E) 1.33%

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53) Suppose year-end contributions to an RRSP start at $4,000 and increase by 0.5% per year thereafter. What amount will be in the RRSP after ten years if the plan earns 4% compounded annually? A) $49,040.47 B) $52,040.47 C) $54,040.47 D) $49,876.47 E) $49,982.47

54) You will make year-end contributions for twenty years to a TFSA earning 4% compounded annually. How much will you have after twenty years if the annual maximum contribution is $5,500? The new government has announced they will allow a 2.5% increase per year in the contribution amount, which you will take advantage of. Round your final answer to the whole dollar. A) $298,102 B) $223,102 C) $265,102 D) $243,102 E) $256,102

55) Your client wants to accumulate $1,200,000 in his RRSP by the end of their forty-year working career. What should be the initial year-end contribution if they intend to increase the contribution by 1.5% every year and the RRSP earns 8% compounded annually?

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A) $3,517.53 B) $3,987.53 C) $3,917.53 D) $3,237.53 E) $3,097.53

56) Determine the periodic payment for the following deferred annuity. The annuity is an ordinary annuity following the period of deferral. Deferral Period 4 years

Payment Interval 12 months

Interest Rate 7.75%

Compounding Frequency Annually

Term 10 years

Present Value $20,000,000

57) Determine the periodic payment for the following deferred annuity. The annuity is an ordinary annuity following the period of deferral. Deferral Period 6 years

Payment Interval 6 months

Interest Rate 9.5%

Compounding Frequency

Term

Semiannually 7.5 years

Present Value $25,000,000

58) Determine the periodic payment for the following deferred annuity. The annuity is an ordinary annuity following the period of deferral. Deferral Period 27 months

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Payment Interval 3 months

Interest Rate 6.4%

Compounding Frequency Quarterly

Term 20 years

Present Value $50,000,000

59) Determine the periodic payment for the following deferred annuity. The annuity is an ordinary annuity following the period of deferral. Deferral Period 4 years

Payment Interval

Interest Rate

6 months

7.5%

Compounding Frequency Monthly

Term

Present Value

10 years

$20,000,000

60) Determine the periodic payment for the following deferred annuity. The annuity is an ordinary annuity following the period of deferral. Deferral Period 6 years

Payment Interval

Interest Rate

1 month

9.5%

Compounding Frequency

Term

Present Value

Semiannually 7.5 years

$25,000,000

61) Determine the periodic payment for the following deferred annuity. The annuity is an ordinary annuity following the period of deferral. Deferral Period Payment Interval Interest Rate 27 months

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1 month

6.4%

Compounding Frequency Quarterly

Term 20 years

Present Value $50,000

62) The first of 80 quarterly payments on a $50,000 loan at 6.4% compounded quarterly will be made 30 months after the date the loan was granted. What will be the amount of each payment?

63) A conditional sale contract for a $1450 transaction required a 10% down payment with the balance to be paid by 12 equal monthly payments. The first payment is due six months after the date of the purchase. The retailer charges an interest rate of 13% compounded semiannually on the unpaid balance. What is the monthly payment?

64) After selling their Vancouver home and buying another in Saskatoon, the Martels have $120,000 cash on hand. If the funds are used to purchase a deferred annuity providing a rate of return of 7.25% compounded annually, what payments will they receive at the end of every six months for a 25-year term starting 8 years from now?

65) Determine the unknown value for the following deferred annuity. The annuity is understood to be an ordinary annuity after the period of deferral. Deferral Period 5 years

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Periodic Payment $2000

Interest Rate 7%

Compounding and Payment Frequency Semiannually

Term

Present Value

10 years

66) Determine the unknown value for the following deferred annuity. The annuity is understood to be an ordinary annuity after the period of deferral. Deferral Period 3.5 years

Periodic Payment $750

Interest Rate 8%

Compounding and Payment Frequency Quarterly

Term

Present Value

5 years

67) Determine the unknown value for the following deferred annuity. The annuity is understood to be an ordinary annuity after the period of deferral. Deferral Period 2.75 years

Periodic Payment $500

Interest Rate 9%

Compounding and Payment Frequency Monthly

Term

Present Value

3.5 years

68) Determine the unknown value for the following deferred annuity. The annuity is understood to be an ordinary annuity after the period of deferral. Deferral Period ? years

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Periodic Payment $1500

Interest Rate 7.9%

Compounding and Payment Frequency Annually

Term 8 years

Present Value $6383.65

69) Determine the unknown value for the following deferred annuity. The annuity is understood to be an ordinary annuity after the period of deferral. Deferral Period ? years, ? months

Periodic Payment

Interest Rate

$1076.71

Compounding and Payment Frequency

Quarterly

Term

Present Value

12.5 years

$30,000

70) Determine the unknown value for the following deferred annuity. The annuity is understood to be an ordinary annuity after the period of deferral. Deferral Period

Periodic Payment

? years, ? months

Interest Rate

$400

Compounding and Payment Frequency

9.75%

Monthly

Term

Present Value

15 years

$33,173.03

71) Determine the unknown value for the following deferred annuity. The annuity is understood to be an ordinary annuity after the period of deferral. Deferral Period 5 years

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Periodic Payment $2000

Payment Interval 6 months

Interest Rate 7%

Compounding Frequency Quarterly

Term

Present Value

10 years

72) Determine the unknown value for the following deferred annuity. The annuity is understood to be an ordinary annuity after the period of deferral. Deferral Period 3.5 years

Periodic Payment $750

Payment Interval 3 months

Interest Rate 8.25%

Compounding Frequency Monthly

Term

Present Value

5 years

73) Determine the unknown value for the following deferred annuity. The annuity is understood to be an ordinary annuity after the period of deferral. Deferral Period 2.75 years

Periodic Payment $500

Payment Interval 1 month

Interest Rate 9%

Compounding Frequency Quarterly

Term

Present Value

3.5 years

74) Determine the unknown value for the following deferred annuity. The annuity is understood to be an ordinary annuity after the period of deferral. Deferral Period ? years, ? months

Periodic Payment $1500

Payment Interval 3 months

Interest Rate 7.9%

Compounding Frequency Annually

Term 8 years

Present Value $23,355.14

75) Determine the unknown value for the following deferred annuity. The annuity is understood to be an ordinary annuity after the period of deferral.

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Deferral Period ? years, ? months

Periodic Payment $356.83

Payment Interval 1 month

Interest Rate 7%

Compounding Frequency

Term

Present Value

Quarterly 12.5 years

$30,000

76) Determine the unknown value for the following deferred annuity. The annuity is understood to be an ordinary annuity after the period of deferral. Deferral Period ? years

Periodic Payment $400

Payment Interval 6 months

Interest Rate 9.75%

Compounding Frequency

Term

Monthly 15 years

Present Value $4608.07

77) What amount of money invested now will provide payments of $500 at the end of every month for five years following a four-year period of deferral? The money will earn 7.2% compounded monthly.

78) What price will a finance company pay to a merchant for a conditional sale contract that requires 12 monthly payments of $249, with the first payment due six months from now? The finance company requires a return of 16.5% compounded monthly.

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79) Jinny is buying new windows for her house. The contractor is offering "no money down, and no payments for six months." The total cost of the windows is $12,500 and Jinny will be making monthly payments starting in six months at 9.5% compounded annually for four years. What is Jinny's monthly payment?

80) The Bay is offering "no money down, and no payments for a year." The total cost of a purchase of electronic equipment is $3500 including taxes.

81) Determine the unknown value for the following deferred annuity. The annuity is understood to be an ordinary annuity after the period of deferral. Deferral Period Periodic Payment 5 years

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$2000

Interest Rate 7%

Compounding and Payment Frequency Semiannually

Term

Present Value

10 years

82) Mrs. Singh wants to set up a college fund for her daughter so that she will have a monthly income of $500 each month for three years starting 10 years from now. How much should she deposit today if money earns 4.25% compounded monthly?

83) What amount invested today will provide yearly payments of $50,000 for 20 years starting 10 years from now if invested at 5.5% compounded annually?

84) The first of ten semiannual payments of $2000 will be made 5½ years from today. What is the present value of this deferred annuity using a discount rate of 7% compounded semiannually?

85) A life insurance company can invest funds to earn (after expenses) 8% compounded quarterly. A client wishes to purchase a five-year ordinary annuity that will commence 3½ years from now. What will the insurance company charge for the annuity if the quarterly payments are $750?

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86) What minimum initial amount of money, invested to earn 4% compounded monthly, will support a monthly payout of $500 for 3½ years if the first payment occurs 2 years and 10 months from now?

87) What amount of money invested now will provide monthly payments of $200 for five years, if the ordinary annuity is deferred for 3½ years and the money earns 7.5% compounded monthly?

88) A deferred annuity consists of an ordinary annuity paying $2000 semiannually for a 10year term after a 5-year period of deferral. Calculate the deferred annuity's present value using a discount rate of 4% compounded quarterly.

89) The first quarterly payment of $750 in a five-year annuity will be paid 3¾ years from now. Based on a discount rate of 8.25% compounded monthly, what is present value of the payments today?

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90) A loan granted today will be repaid by payments of $500 per month running for 3½ years. The first payment is due 2 years and 10 months from today. What amount was borrowed if the interest rate on the loan is 9% compounded quarterly?

91) Mr. Haddit plans to retire eight years from today. He projects that he will need $30,000 per year in his retirement which he assumes will be for 15 years. The first payment will be nine years from today. To fund his retirement, Mr. Haddit will invest a lump amount today and later use it to sustain the 15 withdrawals. If his investment earns 6% compounded annually, how much must he invest today?

92) Marion's grandfather's will established a trust that will pay her $1500 every three months for 11 years. The first payment will be made six years from now, when she turns 19. If money is worth 6.5% compounded quarterly, what is today's economic value of the bequest?

93) 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 months after he reaches 60, and the last is to be on his 65th birthday. If Sam's current age is 50 years and 6 months, and the invested funds will earn 6% compounded quarterly, what amount must he invest in the deferred annuity?

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94) A deferred 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?

95) For $30,000, Manny purchased a deferred annuity from an insurance company that will pay him quarterly payments of $1076.71 for 12½ years. The payments are based upon the purchase amount earning 7% compounded quarterly. When will Manny receive the first payment?

96) 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, forhow long a period of deferral must she wait before her RRSP can sustain month-end withdrawals of $400 for 15 years?

97) 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 of return of 16% compounded quarterly?

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98) 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.

99) 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?

100) If money can earn 6.5% compounded annually for the next 20 years, which of the following annuities has the greater economic value today: $1000 paid at the end of each of the next 10 years, or 10 annual payments of $2000 with the first payment occurring 11 years from today?

101) A $35,000 loan bearing interest at 5% compounded quarterly was repaid, after a period of deferral, by quarterly payments of $1573.83 over 12 years. What was the time interval between the date of the loan and the first payment?

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102) A finance company paid a merchant $3975 for a conditional sale contract after discounting it to yield 18% compounded monthly. If the contract is for 20 monthly payments of $256.96 following a payment-free period, what is the time interval between the date of sale and the first payment?

103) A $10,000 investment will be allowed to grow at 4.5% compounded semiannually until it can support semiannual withdrawals of $1000 for 20 years. Rounded to the nearest month, how long before the first withdrawal must the investment be allowed to grow?

104) Mrs. Corriveau has just retired at age 58 with $160,360 in her RRSP. She plans to live off other savings for a few years and allow her RRSP to continue to grow on a tax-deferred basis until there is a sufficient amount to purchase a 25-year annuity paying $2000 at the end of each month. If her RRSP and the annuity each earn 7.5% compounded monthly, how much longer must she let her RRSP grow (before she buys the annuity)?

105) Mr. Donatelli moved from Toronto to Winnipeg to take a job promotion. After selling their Toronto home and buying a home in Winnipeg, the Donatellis have $85,000 in cash on hand. If the funds are used to purchase a deferred annuity from a life insurance company providing a rate of return of 5.5% compounded annually, what payments will they receive at the end of every six months for 20 years after a 9-year deferral period?

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106) What amount must be invested today to allow for quarterly payments of $2500 at the end of every quarter for 15 years after a six-year deferral period? Assume that the funds will earn 5% compounded semiannually.

107) What is the current economic value of an inheritance that will pay $2000 to the beneficiary at the beginning of every three months for 20 years, starting when the beneficiary reaches 20 years of age, 4½ years from now? Assume that money is worth 6% compounded monthly. (Round to the nearest dollar.)

108) To sell a farm that it had acquired in a foreclosure action, the Royal Bank agreed to monthly payments of $2700 for 20 years, with the first payment due 15 months from the date of sale. If the purchaser paid 15% down and the interest rate on the balance is 9% compounded annually, what was the purchase price? (Round to the nearest dollar.)

109) Sabrina borrowed $30,000 at an interest rate of 7% compounded quarterly. Monthly payments of $356.83 will commence after a period of deferral and will pay off the loan over the subsequent 12½ years. What is the length of the period of deferral?

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110) An investor purchased a deferred annuity contract for $4608.07, a price calculated to provide a rate of return on investment of 9.75% compounded monthly. The semiannual payments of $400, once started, continue for a term of 15 years. How long is the period of deferral?

111) How long (before the first withdrawal) must a $19,665 investment earning 3.5% compounded semiannually be allowed to grow before it can provide 60 quarterly withdrawals of $1000?

112) Duncan retired recently and plans to utilize other savings for a few years while his RRSP continues to grow on a tax-deferred basis. The RRSP is currently worth $142,470. How long will it be until the amount in the RRSP is large enough to purchase a 25-year annuity paying $1700 at the end of each month? Assume that the RRSP and the annuity will earn 8.75% compounded semiannually.

113) Mrs. O'Reilly donated $500,000 to Medicine Hat College for a perpetual scholarship fund for women in business studies. What amount can be awarded on each anniversary if the scholarship fund earns 4½% compounded annually?

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114) What amount is required to fund a perpetuity that pays $10,000 at the beginning of each quarter? The funds can be invested to earn 5% compounded quarterly.

115) A perpetuity is to pay $10,000 at the end of every six months. How much less money is required to fund the perpetuity if the money can be invested to earn 5% compounded semiannually instead of 4% compounded semiannually?

116) In 1752, the British government converted all of its outstanding bonds to perpetual bonds that paid a fixed interest rate. These bonds paid only the interest every three months-the principal amount of the debt would never be repaid. The perpetual bonds have come to be known as "Consols," and they trade in the British financial markets. The owner of a £1000 face-value (or denomination) Consol receives £6.25 every three months.

a) What is the fixed interest rate (on the face value) paid by the Consols? b) If the prevailing long-term interest rate in the British financial markets is 4.5% compounded quarterly, what is the fair market value of a £1000 face-value Consol? (Assume that you will receive the first interest payment in three months.)

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117) How much more money is required to fund an ordinary perpetuity than a 30-year ordinary annuity if both pay $5000 quarterly and money can earn 5% compounded quarterly?

118) Ranger Oil recently donated $750,000 to the Northern Alberta Institute of Technology (NAIT) to fund (in perpetuity) five annual bursaries for students in Petroleum Engineering Technology. If the first five bursaries are to be awarded immediately, what is the maximum amount of each bursary? Assume that the bursary fund earns 4.9% compounded semiannually.

119) An old agreement requires a town to pay $500 per year in perpetuity to the owner of a parcel of land for a water well dug on the property in the 1920s. The well is no longer used, and the town wants to buy out the contract, which has become an administrative nuisance. What amount (including the regular scheduled payment) should the landowner be willing to accept on the date of the next scheduled payment if long-term low-risk investments now earn 5.8% compounded annually?

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120) The alumni association of Seneca College is initiating a one-year drive to raise money for a perpetual scholarship endowment fund. The goal is to offer ten scholarships per year, each worth $5000.

a) How large a fund is required to begin awarding the scholarships one year after the funds are in place if the funds can be invested to earn 5% compounded annually in perpetuity? b) Suppose that, during its fundraising year, the alumni association finds an insurance company that will pay 5.5% compounded annually in perpetuity. How much less money does the association need to raise? c) What dollar amount in scholarships can be awarded annually if the alumni association raises only $750,000? Use the interest rate from part (b).

121) A city sells plots in its cemetery for $1000 plus an amount calculated to provide for the cost of maintaining the grounds in perpetuity. This cost is figured at $25 per plot due at the end of each quarter. If the city can invest the funds to earn 4.8% compounded annually in perpetuity, what is the price of a plot?

122) A company's preferred shares pay a $2 dividend every six months in perpetuity. What is the fair market value of the shares just after payment of a dividend if the dividend yield required by the market on shares of similar risk is

a) 4% compounded semiannually? b) 5% compounded semiannually?

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123) A company's perpetual preferred shares pay a semiannual dividend of $1.50. The next dividend will be paid tomorrow.

a) At what price would the shares provide an investor with a 4.5% semiannually compounded rate of return? The investor will receive tomorrow's dividend. b) If the shares are trading at $70, what nominal rate of return will they provide to a purchaser?

124) Mr. O'Connor set up a trust account paying $500 per month in perpetuity to the local SPCA. These payments consume all the interest earned monthly by the trust. Between what amounts does the balance in the trust account fluctuate if it earns 6% compounded monthly?

125) What sum of money, invested today in a perpetual fund earning 5.5% compounded semiannually, will sustain quarterly perpetuity payments of $1000 if the first payment is made:

a) Three months from today? b) One year from today?

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126) The common shares of Unicorp. are forecast to pay annual dividends of $2 at the end of each of the next five years, followed by dividends of $3 per year in perpetuity. What is the fair market value of the shares if the market requires an 8% annually compounded rate of return on shares having a similar degree of risk?

127) Mr. Chan has donated $1 million to a college to set up a perpetuity for the purchase of books and journals for a new library to be built and named in his honour. The donation will be invested and earnings will compound for three years, at which time the first of the quarterly perpetuity payments will be made. If the funds earn 6% compounded quarterly, what will be the size of the payments?

128) A wealthy benefactor has donated $1,000,000 to establish a perpetuity that will be used to support the operating costs of a local heritage museum scheduled to open in 3 years' time. If the funds earn 4.8% compounded monthly, what monthly payments, the first occurring three years from now, can the museum expect?

129) A legal dispute delayed for 18 months the disbursement of a $500,000 bequest designated to provide quarterly payments in perpetuity to a hospice. While under the jurisdiction of the court, the funds earned interest at the rate of 5% compounded semiannually. The hospice has just invested the $500,000 along with its earnings in a perpetual fund earning 5.2% compounded semiannually. What payments will the hospice receive beginning three months from now?

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130) Suppose year-end contributions to an RRSP start at $3000 and increase by 2.5% per year thereafter. What will be the amount in the RRSP after 25 years if the plan earns 9% compounded annually?

131) Chantal will make year-end contributions for 30 years to an RRSP earning 8% compounded annually.

a) How much will she have after 30 years if the annual contribution is $2000? b) How much more will she have after 30 years if she increases the contributions by 2% every year?

132) Randall wants to accumulate $750,000 in his RRSP by the end of his 30-year working career. What should be his initial year-end contribution if he intends to increase the contribution by 3% every year and the RRSP earns 10% compounded annually?

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133) How much will it cost to purchase a 20-year indexed annuity in which the end-of-quarter payments start at $5000 and grow by 0.5% every quarter? Assume that the money used to purchase the annuity earns 6% compounded quarterly.

134) Ken Tuckie is about to buy a 25-year annuity that will deliver end-of-month payments. The first payment will be $1000. How much more will it cost to index the annuity so that payments grow at the rate of 2.4% compounded monthly? Assume the money used to purchase the annuity earns 5.4% compounded monthly.

135) Mrs. Sippy (age 65) is about to begin receiving a CPP retirement pension of $11,000 per year. This pension is indexed to the Consumer Price Index (CPI). Assume that the annual pension will be paid in a single year-end payment, the CPI will rise 3% per year, and money is worth 6% compounded annually. What is the current economic value of:

a) 20 years of pension benefits? b) 25 years of pension benefits?

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136) Ida Ho is about to retire from a government job with a pension that is indexed to the Consumer Price Index (CPI). She is 60 years old and has a life expectancy of 25 years.

a) Estimate the current economic value of her pension which will start at $20,000 per year? For the purpose of this estimation, assume that Ida will draw the pension for 25 years, the annual pension will be paid in a single year-end payment, the CPI will rise 2.5% per year, and money is worth 5% compounded annually. b) How much of the current economic value comes from indexing?

137) Della Ware has accumulated $600,000 in her RRSP and is about to purchase a 25-year annuity from which she will receive month-end payments. The money used to purchase the annuity will earn 4.8% compounded monthly.

a) What will be the monthly payment without indexing? b) What will be initial payment if payments grow by 2.4% compounded monthly? c) How long will it be until the monthly payment from the indexed annuity exceeds the monthly payment from the constant-payment annuity?

138) Dean has already implemented the first stage of his financial plan. Over a 30-year period, he will continue to increase his annual year-end RRSP contributions by 3% per year. His initial contribution was $2000. At the end of the 30 years, he will transfer the funds to an RRIF and begin end-of-month withdrawals that will increase at the rate of 1.8% compounded monthly for 25 years. Assume that his RRSP will earn 9% compounded annually and his RRIF will earn 6% compounded monthly. What will be the size of his initial RRIF withdrawal?

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139) Maritime Bank recently announced that its next semiannual dividend (to be paid six months from now) will be $1.00 per share. A stock analyst's best estimate for the growth in future dividends is 5% compounded semiannually.

a) If you require a rate of return of 10% compounded semiannually on the stock, what maximum price should you be willing to pay per share? Ignore the present value of dividends beyond a 50year time horizon. b) What price do you obtain if you do not ignore dividends beyond 50 years? (Hint: Use a large value, say 99,999, for n in the present value calculation.)

140) The dividends on the common shares of Mosco Inc. are forecast to grow at 10% per year for the next five years. Thereafter, the best guess is that the annual dividend will grow at the same 3% annual rate as the nominal GNP. A $2.00 dividend for the past year was recently paid. Assume that the required rate of return is 9% compounded annually. What is the fair market value of the shares if we ignore all dividends beyond a 30-year time horizon?

141) What amount of money invested now will provide payments of $500 at the end of every month for five years following a four-year period of deferral? The money will earn 7.2% compounded monthly.

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142) What price will a finance company pay to a merchant for a conditional sale contract that requires 12 monthly payments of $249, with the first payment due six months from now? The finance company requires a return of 16.5% compounded monthly.

143) If money can earn 6% compounded annually, what percentage more money is required to fund an ordinary perpetuity paying $1000 at the end of every year than to fund an ordinary annuity paying $1000 per year for 25 years? Round to the nearest 0.01%

144) A company's preferred shares pay a $1.25 dividend every three months in perpetuity. What is the fair market value of the shares just after payment of a dividend if the rate of return required by the market on shares of similar risk is:

a) 5% compounded quarterly? b) 6% compounded quarterly?

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145) Mr. Larsen's will directed that $200,000 be invested to establish a perpetuity making payments at the end of each month to his wife for as long as she lives and subsequently to the Canadian Heart Foundation. What will the payments be if the funds can be invested to earn 5.4% compounded monthly?

146) Mrs. McTavish wants to establish an annual $5000 scholarship in memory of her husband. The first scholarship is to be awarded two years from now. If the funds can earn 6.25% compounded annually, what amount must Mrs. McTavish pay now to sustain the scholarship in perpetuity?

147) C&D Stereo sold a stereo system on a plan that required no down payment and nothing to pay until January 1 (four months away). Then the first of 12 monthly payments of $226.51 must be made. The payments were calculated to provide C&D Stereo with a return on the account receivable of 16.5% compounded monthly. What was the selling price of the stereo system?

148) What is the current economic value of an inheritance that will pay $2500 to the beneficiary at the beginning of every three months for 20 years starting when the beneficiary reaches 21 years of age, 5¼ years from now? Assume that money can earn 6% compounded monthly.

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149) What minimum amount will have to be dedicated today to a fund earning 5.6% compounded quarterly if the first quarterly payment of $2000 in perpetuity is to occur:

a) Three months from now? b) Five years from now?

150) The common shares of Bancorp Ltd. are forecast to pay annual dividends of $3 at the end of each of the next five years, followed by dividends of $2 per year in perpetuity. What is the fair market value of the shares if the market requires a 10% annually compounded rate of return on shares having a similar degree of risk?

151) How much more money is required to fund an ordinary perpetuity than a 25-year ordinary annuity if the funds can earn 7% compounded quarterly and both pay $500 monthly?

152) Dr. Pollard donated $100,000 to the Canadian National Institute for the Blind. The money is to be used to make semiannual payments in perpetuity (after a period of deferral) to finance the recording of books on tape for the blind. The first perpetuity payment is to be made five years from the date of the donation. If the funds are invested at 5% compounded semiannually, what will be the size of the payments?

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153) What percentage more money is required to fund an ordinary perpetuity than to fund a 30-year ordinary annuity if the funds can earn 5.8% compounded semiannually? The perpetuity and the annuity each pay $1000 semiannually. Round to the nearest 0.01%

154) Fred asked two life insurance companies to give quotes on a 20-year deferred annuity (after a 5-year deferral period) that can be purchased for $100,000. Northwest Mutual quoted payments of $875 payable at the end of each month. Liberty Standard stated that all their annuity options provide a rate of return equal to 5.5% compounded annually. Which should Fred choose?

155) A $30,000 loan bearing interest at 9% compounded monthly was repaid, after a period of deferral, by monthly payments of $425.10 for 10 years. What was the time interval between the date of the loan and the first payment?

156) Mrs. Clare left $150,000 to her local college for an annual scholarship for students in need. What is the amount of the scholarship if the fund earns 3.75% compounded annually?

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157) A business group is considering establishing an endowment to allow eligible employees an opportunity to further their education. The amount of the grant available will be $10,000 per month. If the amount the business group is investing is $2 million, what nominal rate of return must the investment earn to fully fund the grant?

158) What is the fair market value of a perpetual preferred share just after the quarterly dividend of $1.40 has been paid if shares of similar risk are earning 5.5% compounded annually?

159) What is the fair market value of a perpetual preferred share just after the semiannual dividend of $.60 has been paid if shares of similar risk are earning 7.25% compounded semiannually?

160) The fair market value of a preferred share is $45. The share pays a quarterly payment of $.65. An investor is able to purchase the share for $42. What will be the investor's annually compounded rate of return? Round to the nearest 0.01%

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161) What amount must be placed in a perpetual fund today if the fund earns 3.75% compounded quarterly, and payments of $1000 are to be made monthly, starting one month from today?

162) What amount must be placed in a perpetual fund today if the fund earns 4.25% compounded semiannually, and payments of $2500 are to be made monthly, starting two years from today?

163) A retiree of the local college has asked that any money collected for a retirement gift be used to set up a perpetuity scholarship fund for a third-year student in the School of Business. A total of $3750 was collected. If interest earns 4% compounded annually, what will be the amount of the yearly scholarship?

164) Mrs. Lyons has deposited $175,000 at 5.25% compounded quarterly. In 10 years, she plans to convert the accumulated amount into a perpetuity, in which she will receive the same amount at the end of each month. What is the maximum payment she can receive if the interest rate stays the same?

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165) Mrs. Hunking wants to set up a fund so that she will receive $2500 at the end of each quarter starting in 20 years, but leave the principal amount untouched. If interest is 4.25% compounded semiannually, how much would she have to deposit today to reach her goal?

166) What amount today will provide payments of $1500 at the end of each month starting in 10 years, if the principal amount is to remain untouched, and money can earn 4.85% compounded quarterly?

167) What semiannually compounded nominal rate of return is required to return $5000 every six months if the perpetuity fund is $265,000? Round to the nearest 0.01%

168) What quarterly compounded nominal rate of return is required to return $2000 per quarter if the perpetuity fund is $98,000? What is the effective rate of interest? Round to the nearest 0.01%

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169) An investment of $100,000 at 4.75% compounded semiannually was made so that in 20 years, it can be converted into a perpetuity, which will pay the same amount at the end of each month. What is the maximum payment the investment can pay?

170) As an employee benefit, a company has offered a fund of $750,000 for eligible children of employees to receive a scholarship of $2500 per year for post-secondary education. If interest earns 4% compounded annually, how many scholarships can be provided per year?

171) Jack is 25 years old. He has deposited $1000 into an RRSP fund, and plans to deposit $1000 plus an additional 5% each year until he retires at age sixty-five. How much will Jack have in his RRSP account when he retires if money earns 4.75% compounded annually?

172) Erica is making contributions to her RRSP by depositing an initial $1500 at the end of December this year, and then increasing the deposit by 8% each year after. To the nearest dollar, what will be the amount of her deposit in the twentieth year?

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173) Year-end contributions to an RRSP start at $1200 and increase each year by 4% thereafter. What amount will be in the RRSP account after 20 years if money earns 5% compounded annually?

174) How much will it cost to buy a 20-year monthly annuity that grows at 2.5% compounded monthly, if the first payment is $1500 and money is worth 4.25% compounded monthly?

175) Mandeep wants to buy an investment that will pay her $2000 for the first month, and include a 3% growth rate compounded monthly for each subsequent monthly payment. The term of the investment is for 25 years, and Mandeep wants to start receiving the payments 10 years from now. What amount should she deposit today to reach her goal if the investment can earn 6% compounded monthly?

176) How much will it cost to buy a 30-year quarterly annuity that grows at 2% compounded quarterly, if the first payment is $3000 and money is worth 4% compounded quarterly?

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177) Monica wants to have $500,000 in her RRSP account in 40 years. Money currently earns 4.25% compounded annually, and Monica plans to make contributions to her RRSP account at the end of each year increased each time by 3% to adjust for inflation. What will be Monica's initial contribution?

178) What is the amount of the initial deposit required to have an RRSP account of $1 million in 30 years, if deposits are made at the end of each month, the plan allows for a 2% adjustment for inflation, and money earns 4% compounded monthly?

179) What is the amount of the initial deposit required to have an RRSP account of $750,000 in 40 years, if deposits are made at the end of each quarter, the plan allows for a 2.5% adjustment for inflation, and money earns 3.8% compounded quarterly?

180) The first of twenty semiannual payments of $5,000 will be made three years from today. What is the present value of this deferred annuity using a discount rate of 4% compounded semiannually?

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181) Western Life Insurance Company can invest funds to earn 7% compounded annually. A client wishes to purchase a twenty-five year ordinary annuity that will commence two years from now. What will the insurance company charge for the annuity, if the monthly payments are $1,750? Round your answer to the nearest whole dollar.

182) What minimum initial amount of money, invested to earn 2.5% compounded quarterly, will support a monthly payout of $3,000 for thirty years if the first payment occurs one year and nine months from now? Round your answer to the nearest whole dollar.

183) What amount of money invested now will provide monthly payments of $2,500 for twenty years, if the ordinary annuity is deferred for 7.5 years and the money earns 7.5% compounded monthly? Round your answer to the nearest whole dollar.

184) A deferred annuity consists of an ordinary annuity paying $44,000 annually for a twentyyear term after a five-year period of deferral. Calculate the deferred annuity's present value using a discount rate of 2.4% compounded quarterly. Round your answer to the nearest whole dollar.

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185) The first monthly payment of $540 in a ten-year annuity will be paid four years and six months from now. Based on a discount rate of 3% compounded monthly, what is present value of the payments today?

186) A car lot offered a loan today that will be repaid by payments of $700 per month running for four years. The first payment is due in twelve months. What amount was borrowed if the interest rate on the loan is 5% compounded quarterly?

187) You plan to retire eighteen years from today. You project that you will need $42,000 per year in your retirement, which you assume will be for twenty-five years. The first payment will be eighteen years from today. To fund your retirement, you will invest a lump amount today and later use it to sustain the twenty-five withdrawals. If your investment earns 2.5% compounded annually, how much must you invest today? Round your answer to the nearest whole dollar.

188) Your grandfather will establish an educational trust that will pay you $2,500 every three months for four years. The first payment will be made when you enter college, exactly three years from now. If money is worth 4.3% compounded semiannually, what is today's economic value of the fund?

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189) You recently received an inheritance and wish to purchase a deferred annuity that will pay $9,000 every three months starting on your sixtieth birthday. If you plan on living for thirty years after your sixtieth birthday, and the invested funds will earn 6% compounded quarterly, what was the amount of the inheritance? You will turn sixty in twenty years.

190) You are to be paid twelve monthly payments from a lawsuit for $4,000 each. The court has allowed the other party to make the first payment in the future, allowing for time to accumulate the money. What is the period of deferral if the present value of the payments, discounted at 1.9% compounded annually, is $46,701?

191) For $500,000, you purchased a deferred ordinary annuity from an insurance company that will pay you quarterly payments of $8,000 for twenty years. The payments are based upon the purchase amount earning 4% compounded annually. How long until you receive the first payment? Round to the closest year.

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192) Your parents have accumulated $656,000 in their RRSP. If they make no further contributions and their RRSP continues to earn 3.75% compounded monthly, for how long a period of deferral must they wait before their RRSP can sustain immediate withdrawals of $5,000 for twenty years? Rounded to the nearest month.

193) A conditional sale contract requires the debtor to make twelve quarterly payments of $267, with the first payment due in nine months. What amount will a finance company pay to purchase the contract on the date of sale if the finance company requires a rate of return of 14% compounded monthly?

194) What price will a finance company pay to a merchant for a conditional sale contract that requires twenty-four monthly payments of $734 beginning in three months? The finance company requires a rate of return of 16% compounded monthly.

195) Your parents have $560,000 with which to purchase an ordinary annuity delivering monthly payments for twenty-five years after a twenty-year period of deferral. What monthly payment will they receive, if the undistributed funds earn 2.4% compounded annually? Round your answer to the nearest dollar.

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196) A mortgage company has lent $300,000 at an interest rate of 4.3% compounded semiannually. Monthly payments of $1,697.95 will commence after a period of deferral and will pay off the loan over the subsequent twenty-five years. What is the length of time until the first payment?

197) An investor purchased a deferred annuity contract for $4,800, a price calculated to provide a rate of return on investment of 12% compounded monthly. The semiannual payments of $400, once started, continue for a term of twelve years. How long is the period of deferral, to the nearest month?

198) You are ready to retire and decided to donate $100,000 to Hawthorne College for a perpetual scholarship fund for students in business studies. What amount can be awarded on each anniversary, starting in one year, if the scholarship fund earns 3.5% compounded annually?

199) What amount is required to fund a perpetuity that pays $8,040 at the beginning of each six-month period? The funds can be invested to earn 4% compounded quarterly.

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200) A perpetuity is to pay $7,979 per student, for four students, at the end of every year. How much money is required to fund the perpetuity if the money can be invested to earn 5% compounded semiannually?

201) In 1891, a trading company purchased perpetual bonds from the Bank of England that paid a fixed interest rate. These bonds paid only the interest every six months—the principal amount of the debt would never be repaid. The owner of a $500 face-value receives $3.55 every six months. What is the fixed interest rate (on the face value) paid by the bonds? Calculate your answer to two decimal places.

202) You wish to leave money to the local pet shelter to be used in perpetuity. Because they need the money immediately, the first payment will be made when you give the donation. If the monthly payment will be $100 and the perpetuity can earn 4.4% compounded annually, how much did you leave the pet shelter?

203) Tungsten Steel recently donated $400,000 to the local college to fund (in perpetuity) three annual bursaries for students in an engineering program. If the first three bursaries are to be awarded immediately, what is the maximum amount of each bursary? Assume that the bursary fund earns 3.6% compounded monthly. To the nearest $100 amount, how much will each student receive?

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204) An agreement between a hydro company and a local farmer agrees to a payment of $1,000 per month, starting one-year from today, in perpetuity for the construction of a wind generating plant. If the farmer agrees to a one-time payment instead of monthly payments in perpetuity, how much money should the farmer accept if money can earn 2.4% compounded annually? Round your answer to the nearest whole dollar.

205) The alumni association of Brown's College is initiating a one-year drive to raise money for a perpetual scholarship endowment fund. The goal is to offer twenty scholarships per year to low-income families, each worth $10,000. How large a fund is required to begin awarding the scholarships one year after the funds are in place if the funds can be invested to earn 6.89% compounded annually in perpetuity? Round your answer to the nearest whole dollar.

206) A city park will sell benches with a memorial plaque in city parks for $400 plus an amount calculated to provide for the cost of maintaining the benches in perpetuity. This cost is figured at $54 per bench due at the end of each year. If the city can invest the funds to earn 4.8% compounded annually in perpetuity, what is the full price of a bench?

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207) A company's preferred shares pay a $1.50 dividend every month in perpetuity. What is the fair market value of the shares just after payment of a dividend if the dividend yield required by the market on shares of similar risk is 8% compounded semiannually?

208) A company's perpetual preferred shares pay a monthly dividend of $0.03. The next dividend will be paid tomorrow. At what price would the shares provide an investor with a 3% annually compounded rate of return? The investor will receive tomorrow's dividend.

209) The owner of a local winery decided to donate his lifelong earnings to the local sports arena. If the owner left $2,000,000 to the arena and wished the money be used to make quarterly payments for maintenance, how much did the arena receive every three months, starting in three months, if money can earn 2.5% compounded monthly? Round your answer to the nearest whole dollar.

210) The common shares of Google are forecast to pay annual dividends of $28 at the end of each of the next three years, followed by dividends of $35 per year in perpetuity. What is the fair market value of the shares if the market requires a 4% annually compounded rate of return?

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211) The local professional sports team has donated $200,000 to a local college to set up a perpetuity for the investment and maintenance of a new gym. The donation will be invested and earnings will compound for five years, at which time the college will use $100,000 to buy new gym equipment. The balance will be reinvested at the same rate of return. What monthly payment, one month after the day of reinvestment, will the college receive once the money has been re-invested? Money can earn 4% compounded semiannually.

212) A wealthy benefactor has donated $4,200,000 to establish a perpetuity that will be used to support the operating costs of a local indoor pool that will open in four years' time. If the funds earn 4.8% compounded monthly, what monthly payments, the first occurring four years from now, can the indoor pool expect?

213) The City of Regina has sued a local environmental group for defacing buildings and damaging city property. The City of Regina has settled for $250,000 in damages and will receive the full amount in nine months. The City of Regina will use this money to sponsor, in perpetuity, a recycling program in the downtown area. If money earns, 4.5% compounded monthly, what monthly payment can the City of Regina budget for starting in exactly twelve months.

214) Suppose year-end contributions to an RRSP start at $4,000 and increase by 0.5% per year thereafter. What amount will be in the RRSP after ten years if the plan earns 4% compounded annually?

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215) You will make year-end contributions for twenty years to a TFSA earning 4% compounded annually. How much will you have after twenty years if the annual maximum contribution is $5,500? The new government has announced they will allow a 2.5% increase per year in the contribution amount, which you will take advantage of. Round your final answer to the whole dollar.

216) Your client wants to accumulate $1,200,000 in his RRSP by the end of their forty-year working career. What should be the initial year-end contribution if they intend to increase the contribution by 1.5% every year and the RRSP earns 8% compounded annually?

217) How much will it cost to purchase a thirty-year indexed annuity in which the end-ofmonth payments start at $750 and grow by 0.5% every year? Assume that the money used to purchase the annuity earns 6% compounded annually.

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Answer Key Test name: Chap 14_10ce 1) D 2) A 3) C 4) B 5) E 6) D 7) C 8) B 9) C 10) E 11) B 12) A 13) D 14) C 15) B 16) C 17) D 18) B 19) B 20) D 21) D 22) B 23) A 24) D 25) A 26) B Version 1

27) C 28) A 29) C 30) A 31) A 32) C 33) D 34) C 35) C 36) D 37) B 38) E 39) B 40) E 41) E 42) D 43) E 44) B 45) A 46) B 47) C 48) C 49) D 50) E 51) A 52) B 53) A 54) D 55) C

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CHAPTER 15 1) A $13,000 loan is to be amortized by equal monthly payments for five years. The interest rate is 12% compounded monthly. How much interest will the debtor pay in total over the fiveyear period? A) $17,178.60 B) $4116.84 C) $4350.80 D) $17,350.80 E) $4178.60

2) A loan of $12,000 with interest at 14% compounded annually is to be amortized by equal payments at the end of each year for six years. How much interest is included in the third payment? A) $1258.80 B) $4421.97 C) $1827.09 D) $7164.30 E) $1680.00

3) A loan of $12,000 with interest at 14% compounded annually is to be amortized by equal payments at the end of each year for six years. What is the outstanding balance just after the fifth payment? A) $9293.08 B) $6136.37 C) $2706.92 D) $2374.49 E) $3001.63

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4) An $80,000 loan is amortized by monthly payments over 25 years. The interest rate charged is 10% compounded semiannually. What will the principal balance be after three years? A) $77,400.72 B) $65,965.72 C) $78,898.93 D) $76,532.48 E) $79,617.86

5) An $80,000 loan is amortized by monthly payments over 25 years. The interest rate charged is 10% compounded semiannually. How much interest will be paid during the first three years? A) $3911.40 B) $25,282.57 C) $20,817.49 D) $23,161.96 E) $22,293.71

6) A $3100 item is paid for by end-of-month payments of $350. The interest rate charged is 15% compounded monthly. What is the size of the final payment? A) $156.45 B) $236.88 C) $154.52 D) $113.12 E) $193.54

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7) A $60,000 loan at 12% compounded semiannually is to be repaid by monthly payments of $1000. How long will it take to pay off this loan? A) 7 years and 5 months B) 7 years and 6 months C) 7 years and 7 months D) 8 years and 3 months E) 8 years and 4 months

8) A $60,000 loan at 12% compounded semiannually is to be repaid by monthly payments of $1000. What is the size of the final payment? A) $685.83 B) $692.53 C) $1000.00 D) $307.47 E) $726.98

9) A $60,000 loan at 12% compounded semiannually is to be repaid by monthly payments of $1000. How much will the principal be reduced by payments 13 to 24 inclusive? A) $5978.87 B) $6021.13 C) $11,147.84 D) $6101.66 E) $5880.69

10) A mortgage loan calls for monthly payments of $750 for 25 years. If $80,000 was borrowed, what semiannually compounded nominal rate of interest is being charged?

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A) 10.635% B) 10.755% C) 10.865% D) 10.522% E) 10.401%

11) The vendor of a property agrees to take back a $60,000 mortgage at a rate of 8% compounded semiannually with monthly payments of $500 for a three-year term. Calculate the market value of the mortgage if financial institutions are charging 10% compounded semiannually on three-year-term mortgages. A) $41,557.55 B) $55,946.44 C) $60,000.00 D) $53,936.60 E) $59,111.11

12) Miss Jones borrowed $10,000 at 12% compounded monthly, and agreed to pay back the loan by equal monthly payments over five years. After making the first 10 payments on time, she missed the next four payments. What total amount paid on the scheduled date for the 15th payment will bring the loan up-to-date? A) $1068.91 B) $1123.45 C) $1134.67 D) $1116.70 E) $1079.60

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13) Miss Jones borrowed $10,000 at 12% compounded monthly, and agreed to pay back the loan by equal monthly payments over five years. After making the first 10 payments on time, she missed the next four payments. How much extra interest did Miss Jones have to pay because of the late payments? A) $22.47 B) $16.85 C) $179.15 D) $11.25 E) $4.50

14) A loan of $45,000 at 8% compounded quarterly is to be amortized over four years with equal payments made at the end of every three months. How much interest will be included in the first payment? A) $2,400 B) $300 C) $450 D) $900 E) $3,600

15) A car loan is to be repaid by equal monthly payments for four years. The interest rate is 7.2% compounded monthly and the amount borrowed is $17,355. How much interest will be included in the first payment? A) $375 B) $1,050 C) $125 D) $104 E) $309

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16) A home improvement loan is to be repaid by equal monthly payments for six years. The interest rate is 5.4% compounded monthly and the amount borrowed is $33,500. How much interest will be included in the first payment? A) $181 B) $151 C) $161 D) $137 E) $97

17) A car loan of $18,290 is to be repaid by equal monthly payments for three years. The interest rate is 1.8% compounded monthly. How much interest will be included in the first payment? A) $329 B) $103 C) $27 D) $76 E) $39

18) A $67,800 loan is to be repaid by equal annual payments for 15 years. The interest rate is 8.3% compounded annually. How much interest will be included in the first payment? A) $2,778 B) $8,490 C) $1,178 D) $3,276 E) $5,627

19) A loan of $32,000 at 6% compounded annually is to be repaid by equal payments at the end of every month for three years. How much interest will be included in the first payment? Version 1

A) $160 B) $192 C) $156 D) $140 E) $123

20) A mortgage loan of $132,000 at 6% compounded semiannually is to be amortized over 25 years by equal monthly payments. How much interest will be included in the first payment? A) $652 B) $660 C) $792 D) $487 E) $515

21) A loan of $49,600 is to be amortized by monthly payments of $1000. How much principal will be repaid by the first payment if the interest rate is 10.8% compounded monthly? A) $446 B) $776 C) $322 D) $496 E) $554

22) A $33,950 loan at 10.6% compounded semiannually is to be paid off by a series of $4,000 payments that will be made at the end of every six months. How much of the first payment will be credited towards reduction of the principal?

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A) $2,660 B) $1,800 C) $1,290 D) $885 E) $2,201

23) How much principal will be repaid by the first monthly payment of $750 on a $22,000 loan at 15% compounded monthly? A) $525 B) $475 C) $650 D) $275 E) $500

24) A mortgage loan of $102,542 at 6% compounded monthly is amortized by equal monthly payments over 25 years. What is the total amount of interest that would be paid over the entire amortization period? A) $44,500 B) $88,297 C) $103,622 D) $198,203 E) $95,662

25) How much interest would you pay in total on a 48-month, $20,000 car loan at 13.2% compounded monthly?

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A) $3,750 B) $4,759 C) $7,128 D) $5,850 E) $11,537

26) A mortgage loan of $132,000 at 6% compounded semiannually is to be amortized over 25 years by equal monthly payments. What will be the balance outstanding after three years? A) $124,797 B) $124,507 C) $124,200 D) $124,430 E) $124,135

27) A home improvement loan is to be repaid by equal monthly payments for six years. The interest rate is 5.4% compounded monthly and the amount borrowed is $33,500. How much will the borrower still owe after four years? A) $12,389 B) $11,167 C) $31,909 D) $23,675 E) $18,660

28) Semiannual payments of $5,000 are to be made on a $70,000 loan at 14% compounded semiannually. A smaller, final payment will be made at the end of the amortization period. What will be the size of the final payment?

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A) $2,977 B) $4,125 C) $3,130 D) $4,990 E) $3,855

29) A loan of $45,000 at 8% compounded quarterly is to be amortized over four years with equal payments made at the end of every three months. How much interest will be paid over the entire amortization period? A) $8,028 B) $6,062 C) $5,013 D) $6,692 E) $10,800

30) A car loan is to be repaid by equal monthly payments for four years. The interest rate is 7.2% compounded monthly and the amount borrowed is $17,355. In total, how much interest will be paid? A) $37,380 B) $2,198 C) $2,671 D) $16,445 E) $2,499

31) A home improvement loan is to be repaid by equal monthly payments for six years. The interest rate is 5.4% compounded monthly and the amount borrowed is $33,500. How much interest will the borrower pay over the six years?

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A) $5,794 B) $3,618 C) $5,427 D) $9,045 E) $7,023

32) A car loan of $18,290 is to be repaid by equal monthly payments for three years. The interest rate is 1.8% compounded monthly. Calculate the total amount of interest the car buyer will pay? A) $494 B) $988 C) $672 D) $512 E) $6720

33) A $67,800 loan is to be repaid by equal annual payments for 15 years. The interest rate is 8.3% compounded annually. Determine the balance outstanding after 10 years. A) $28,137 B) $31,955 C) $40,334 D) $53,404 E) $36,954

34) A loan of $32,000 at 6% compounded annually is to be repaid by equal payments at the end of every month for three years. How much interest will be included in the 19th payment?

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A) $272 B) $83 C) $92 D) $81 E) $111

35) A mortgage loan of $132,000 at 7% compounded semiannually is to be amortized over 25 years by equal monthly payments. How much interest will be included in the 48th payment? A) $814 B) $770 C) $924 D) $719 E) $708

36) A loan of $49,600 is to be amortized by monthly payments of $1000. How much interest will be included in the 31st payment if the interest rate is 10.8% compounded monthly? A) $725 B) $536 C) $276 D) $315 E) $338

37) A $33,950 loan at 10.6% compounded semiannually is to be paid off by a series of $4,000 payments that will be made at the end of every six months. How much of the 10th payment will be credited towards reduction of the principal?

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A) $477 B) $497 C) $713 D) $1,005 E) $1,193

38) How much principal will be repaid by the 17th monthly payment of $750 on a $22,000 loan at 15% compounded monthly? A) $319 B) $271 C) $222 D) $205 E) $171

39) A mortgage loan of $100,000 at 6% compounded monthly is amortized by equal monthly payments over 25 years. What is the total amount of interest that would be paid during the first year? A) $6,168 B) $5,000 C) $5,952 D) $5,902 E) $3,776

40) How much interest would you pay during the last year of a 48-month, $20,000 car loan? The interest rate is 13.2% compounded monthly.

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A) $338 B) $838 C) $264 D) $547 E) $439

41) A mortgage loan of $132,000 at 6% compounded semiannually is to be amortized over 25 years by equal monthly payments. How much interest will be paid during the first three years? A) $19,528 B) $22,834 C) $23,125 D) $26,119 E) $30,404

42) A home improvement loan is to be repaid by equal monthly payments for six years. The interest rate is 5.4% compounded monthly and the amount borrowed is $33,500. How much interest will the borrower pay during the 4th year? A) $1,022 B) $521 C) $837 D) $145 E) $686

43) Annual payments of $12,000 are to be made on a $70,000 loan at 17% compounded annually. A smaller, final payment will be made at the end of the amortization period. What will be the size of the final payment?

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A) $6,150 B) $5,256 C) $4,362 D) $5,914 E) $8,778

44) You purchased a $3,250 HD TV for 10% down, with the balance to be paid with interest at 8% compounded monthly in twelve equal monthly payments. Calculate the total interest paid in the first six months. A) $254.44 B) $254.06 C) $254.27 D) $104.52 E) $103.99

45) Your company borrowed $5,000 at 4% compounded annually to purchase a new Cisco phone system. The agreement requires monthly payments during a five-year amortization period. Calculate the total interest charges. A) $585.29 B) $515.29 C) $524.29 D) $519.29 E) $545.29

46) Your brother borrowed $1,500 from you to purchase a used grand piano. He agreed to repay the loan, with 1.5% interest compounding annually, in four quarterly payments. Calculate the final payment.

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A) $399.51 B) $342.51 C) $378.51 D) $358.51 E) $382.51

47) Falco Restaurant Supplies borrowed $15,000 at 3.25% compounded semiannually to purchase a new delivery truck. The loan agreement stipulates regular monthly payments be made over the next two years. Calculate the total interest charges. A) $527.60 B) $529.60 C) $519.60 D) $509.60 E) $589.60

48) Your parents borrowed $28,800 from a bank to purchase a used recreational vehicle so they can travel across North America for ten years. They agreed to repay the loan, with 3.5% interest compounding monthly, using monthly payments of $1,000 (except for a smaller final payment) until the loan is paid in full. How long until the loan is paid off? A) 12 months B) 19 months C) 34 months D) 24 months E) 17 months

49) Frozen Encounters Ice Cream Palace obtained a $30,000 loan at 6% compounded annually to purchase some preparation tables that operate at -5 Celsius. How much will be paid in interest over the life of the loan if the monthly payments will last for a two-year term.

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A) $1,859.30 B) $1,589.30 C) $1,248.30 D) $1,379.30 E) $1,658.30

50) You obtained a $10,000 loan at 1.5% compounded monthly. What will you pay monthly if the amortization period is five years? How much of the payment made at the end of the third year will go toward principal? A) $173.10 $167.78 B) $167.78 $173.10 C) $178.10 $167.78 D) $173.10 $147.78 E) $163.10 $177.78

51) You obtained a $10,000 loan at 1.5% compounded monthly. How much more interest will you pay in the second year compared to the third year of the loan? A) $27.75 B) $29.75 C) $29.10 D) $30.75 E) $29.20

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52) A loan with payments of $900 due at the end of each month (except for a smaller final payment) was registered with a starting balance of $25,000. The loan has a semiannually compounded rate of return of 3.2%. How much interest will be paid in the 2nd year? A) $370.17 B) $320.89 C) $320.17 D) $340.17 E) $319.98

53) A loan with payments of $900 due at the end of each month (except for a smaller final payment) was registered with a starting balance of $25,000. The loan has a semiannually compounded rate of return of 3.2%. What will be the final payment? A) $852.08 B) $802.91 C) $820.91 D) $802.08 E) $852.80

54) A $200,000 mortgage loan has a twenty-five year amortization. Calculate the dollar difference in the monthly payment at interest rates of 2.5% compounded semiannually and 2.45% compounded monthly. A) $0.75 B) $4.50 C) $3.75 D) $2.50 E) $1.25

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55) A $250,000 mortgage loan has a twenty-five year amortization. Calculate the difference in interest paid over the life of the mortgage, assuming monthly payments at 2.5% compounded semiannually versus 3.0% compounded semiannually. A) $18,960.51 B) $19,960.51 C) $18,684.51 D) $18,254.51 E) $18,128.51

56) You and your partner can afford a maximum mortgage payment of $1,200 per month. The current interest rate is 3.2% compounded semiannually. What is the maximum mortgage loan you can afford if the amortization period is twenty-five years? Round your answer to the nearest $100 dollar value. A) $268,700 B) $295,200 C) $248,200 D) $287,200 E) $244,900

57) You have arranged a mortgage loan with a face value of $210,000 at an interest rate of 3.5% compounded semiannually. The face value is to be fully amortized by equal monthly payments over a twenty-year period. You received only $200,000 of the face value, the difference being spent on legal fees and bonuses to your realtor. What is the actual cost of borrowing for the house, including the bonus, expressed as an effective interest rate? A) 4.11% B) 6.11% C) 5.22% D) 3.77% E) 4.55%

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58) A mortgage loan having a face value of $265,000 is arranged by a mortgage broker. From this face value, the broker deducted a fee of $4,000. The mortgage is written at a contract rate of 3.2% compounded semiannually for a twenty-five year term, with monthly payments. What is the annual cost of borrowing, including the brokerage fee, expressed as an effective interest rate? A) 3.00% B) 4.09% C) 4.15% D) 3.37% E) 3.73%

59) A property is listed for $550,000. A potential purchaser makes an offer of $525,000, consisting of $50,000 cash and a $475,000 mortgage back to the vendor bearing interest at 7.5% compounded semiannually with monthly payments for a thirty-year term and a thirty-year amortization. Calculate the equivalent cash value of the offer if thirty-year mortgage rates in the market are at 8.25% compounded semiannually. A) $492,858.24 B) $498,858.24 C) $499,858.24 D) $478,858.24 E) $458,824.24

60) The vendor of a property agrees to take back a $200,000 mortgage at a rate of 4.5% compounded semiannually with monthly payments of $900 for a twenty-year term. Calculate the market value of the mortgage if financial institutions are charging 6.5% compounded semiannually on twenty-year term mortgages.

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A) $129,239.43 B) $124,604.43 C) $122,539.43 D) $121,979.43 E) $121,539.43

61) Finch wishes to sell a closed mortgage contract just after receiving the 29th payment. The original loan was for $60,000 at 11% compounded semiannually for a five-year term. Monthly payments are being made on a 25-year amortization schedule. What price can she reasonably expect to receive if the current semiannually compounded interest rate on two and three-year term mortgages is:

a) 10%? b) 12%?

62) The owner of a property listed at $195,000 is considering two offers. Mr. and Mrs. Sharpe are offering $191,000 cash. The Conlins' "full-price" offer consists of $65,000 cash and a mortgage back to the vendor for $130,000 at a rate of 7.5% compounded semiannually with payments of $1000 per month for a five-year term. If current five-year rates are 8.5% compounded semiannually, what is the equivalent cash value of the Conlins' offer? Which offer should be accepted?

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63) A $16,000 loan is to be amortized by monthly payments over a five-year period. The interest rate on the loan is 10.8% compounded monthly.

a) What is the interest portion of the 29th payment? b) Determine the principal portion of the 46th payment. c) How much will the principal be reduced in the second year? d) How much interest will be paid in the third year?

64) Monica bought a $1250 stereo system for 20% down, with the balance to be paid with interest at 15% compounded monthly in six equal monthly payments. Complete the amortization schedule below. Calculate the total interest paid. PMT # 0

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

12.50

838.47

10.48

1635.55

674.92

8.44

165.59

509.33

6.37

167.66

341.67

4.27

169.76

171.91

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65) Dr. Alvano borrowed $8000 at 10% compounded quarterly to purchase a new X-ray machine for his clinic. The agreement requires quarterly payments during a two-year amortization period. Complete the amortization schedule below. Calculate the total interest charges. PMT # 0

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

160.00

7067.92

141.36

950.72

6117.20

122.34

969.74

5147.46

102.95

989.13

4158.33

83.17

1008.91

3149.42

62.99

1029.09

2120.33

42.41

1049.67

1070.66

66) Monica bought a $1250 stereo system for 20% down and payments of $200 per month (except for a smaller final payment) including interest at 15% compounded monthly. Complete the amortization schedule below. Calculate the total interest charges. PMT #

Payment ($)

Interest ($)

Principal Reduction ($)

200.00

10.16

189.84

622.66

200.00

7.78

192.22

430.44

200.00

5.38

194.62

235.82

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Balance ($)

812.50

200.00

2.95

197.05

38.77

67) Dr. Alvano borrowed $8000 at 8% compounded quarterly to purchase a new X-ray machine for his clinic. The agreement requires quarterly payments of $1000 (except for a smaller final payment). Complete the amortization schedule below. Calculate the total interest charges. PMT #

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

1000.00

143.20

856.80

6303.20

1000.00

126.06

873.94

5429.26

1000.00

108.59

891.41

4537.85

1000.00

90.76

909.24

3628.61

1000.00

72.57

927.43

2701.18

1000.00

54.02

945.98

1755.20

1000.00

35.10

964.90

790.30

7160.00

68) Golden Dragon Restaurant obtained a $9000 loan at 9% compounded annually to replace some kitchen equipment. Complete the amortization schedule below if the loan is to be repaid by semiannual payments over a three-year term. Calculate the total interest charges. PMT # 0 1

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Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

9000.00 7656.83

337.14

1402.31

6254.52

275.39

1464.06

4790.46

210.93

1528.52

3261.94

143.63

1595.82

69) Valley Produce received $50,000 in vendor financing at 7.8% compounded semiannually for the purchase of harvesting machinery. The contract requires equal annual payments for seven years to repay the debt. Complete the amortization schedule below. How much interest will be paid over the seven-year term? PMT # 0

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

50,000.00

44,388.16

3529.79

6058.10

38,330.06

3048.04

6539.85

31,790.21

2527.99

7059.90

24,730.31

1966.58

7621.31

17,109.00

1360.52

8227.37

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70) Dr. Alvano borrowed $8000 at 8% compounded quarterly to purchase a new X-Ray machine for his clinic. The agreement requires quarterly payments during a two-year amortization period. Suppose that the loan permits an additional prepayment of principal on any scheduled payment date. Complete the amortization schedule so that it reflects a prepayment of $1500 with the third scheduled payment. PMT #

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

8000.00

1092.08

160.00

932.08

7067.92

1092.08

141.36

950.72

6117.20

1092.08

72.95

1019.13

2628.33

1092.08

52.57

1039.51

1588.82

1092.08

31.78

1060.30

528.52

71) Valley Produce received $50,000 in vendor financing at 7.8% compounded semiannually for the purchase of harvesting machinery. The contract requires equal annual payments for seven years to repay the debt. Suppose that the loan permits an additional prepayment of principal on any scheduled payment date. Complete the amortization schedule so that it reflects a prepayment of $10,000 with the second scheduled payment. PMT #

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

50,000.00

9587.89

3976.05

5611.84

44,388.16

9587.89

2252.83

7335.06

20,995.00

9587.89

1669.54

7918.35

13,076.65

9587.89

1039.87

8548.02

4528.63

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72) Cloverdale Nurseries obtained a $60,000 loan at 7.5% compounded monthly to build an additional greenhouse. Monthly payments were calculated to amortize the loan over six years. Complete the partial amortization schedule showing details of the first two payments, Payments 43 and 44, and the last two payments. PMT #

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

60,000.00

375.00

662.41

59,337.59

370.86

666.55

58,671.04

176.86

860.55

27,437.59

171.48

865.93

26,571.66

12.85

1024.56

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1030.68

73) Jean and Walter Pereira financed the addition of a swimming pool using a $24,000 home improvement loan from their bank. Monthly payments were based on an interest rate of 7.2% compounded semiannually and a five-year amortization. Complete the partial amortization schedule showing details of the first two payments, Payments 30 and 31, and the last two payments. What total interest will the Pereira's pay over the life of the loan? PMT #

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

24,000.00

141.89

334.41

23,665.59

139.91

336.39

23,329.20

79.54

396.76

13,058.17

77.20

399.10

12,659.07

5.58

470.72

473.32

74) Golden Dragon Restaurant obtained a $9000 loan at 9% compounded annually to replace some kitchen equipment. Complete the amortization schedule if payments of $1800 (except for a smaller final payment) are made semiannually. PMT #

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

9000.00

1800.00

396.28

1403.72

7596.28

1800.00

334.47

1465.53

6130.75

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1800.00

269.94

1530.06

4600.69

1800.00

202.57

1597.43

3003.26

5 6

75) Valley Produce received $50,000 in vendor financing at 7.8% compounded semiannually for the purchase of harvesting machinery. The contract requires annual payments of $10,000 (except for a smaller final payment). Complete the amortization schedule for the debt. How much interest will be paid over the entire life of the loan? PMT #

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

50,000.00

10,000.00

3976.05

6023.95

43,976.05

10,000.00

3497.02

6502.98

37,473.07

10,000.00

2979.90

7020.10

30,452.97

10,000.00

2421.65

7578.35

22,874.62

10,000.00

1819.01

8180.99

14,693.63

6 7

76) Dr. Alvano borrowed $8000 at 8% compounded quarterly to purchase a new X-Ray machine for his clinic. The agreement requires quarterly payments of $1000. Suppose that the loan permits an additional prepayment of principal on any scheduled payment date. Complete the amortization schedule so that it reflects a prepayment of $1000 with the third scheduled payment.

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PMT #

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

8000.00

1000.00

160.00

840.00

7160.00

1000.00

143.20

856.80

6303.20

1000.00

88.59

911.41

3517.85

1000.00

70.36

929.64

2588.21

1000.00

51.76

948.24

1639.97

1000.00

32.80

967.20

672.77

77) Valley Produce received $50,000 in vendor financing at 7.8% compounded semiannually for the purchase of harvesting machinery. The contract requires annual payments of $10,000. Suppose that the loan permits an additional prepayment of principal on any scheduled payment date. Complete the amortization schedule so that it reflects a prepayment of $10,000 with the second scheduled payment. PMT #

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

50,000.00

10,000.00

3976.05

6023.95

43,976.05

10,000.00

2184.69

7815.31

19,657.76

10,000.00

1563.20

8436.80

11,220.96

10,000.00

892.30

9107.70

2113.26

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78) Cloverdale Nurseries obtained a $60,000 loan at 7.5% compounded monthly to build an additional greenhouse. Complete the partial amortization schedule for payments of $1000 per month (except for a smaller final payment) showing details of the first two payments, Payments 56 and 57, and the last two payments. PMT #

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

60,000.00

1000.00

375.00

625.00

59,375.00

1000.00

119.55

880.45

18,247.73

1000.00

114.05

885.95

17,361.78

1000.00

8.90

991.10

433.39

58,746.09

79) Jean and Walter Pereira financed the addition of a swimming pool using a $24,000 home improvement loan from their bank. Monthly payments of $500 (except for a smaller final payment) include interest at 7.2% compounded semiannually. Complete the partial amortization schedule showing details of the first two payments, Payments 28 and 29, and the last two payments. What total interest will the Pereira's pay over the life of the loan? PMT #

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

24,000.00

500.00

141.89

358.11

23,641.89

500.00

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23,281.66

500.00

80.11

419.89

13,129.98

500.00

77.62

422.38

12,707.60

500.00

4.76

495.24

309.35

80) A $40,000 loan at 6.6% compounded monthly will be repaid by monthly payments over ten years.

a) Calculate the interest component of Payment 35. b) Calculate the principal component of Payment 63. c) Calculate the reduction of principal in Year 1. d) Calculate the reduction of principal in Year 10.

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81) Monthly payments are required on a $45,000 loan at 6.0% compounded monthly. The loan has an amortization period of 15 years.

a) Calculate the interest component of Payment 137. b) Calculate the principal component of Payment 76. c) Calculate the interest paid in Year 1. d) Calculate the interest paid in Year 14.

82) The interest rate on a $14,000 loan is 8.4% compounded semiannually. Semiannual payments will pay off the loan in seven years.

a) Calculate the interest component of Payment 10. b) Calculate the principal component of Payment 3. c) Calculate the interest paid in Year 6. d) How much do Payments 3 to 6 inclusive reduce the principal balance?

83)

A five-year loan of $25,000 at 7.2% compounded quarterly requires quarterly payments.

a) Calculate the interest component of Payment 10. b) Calculate the principal component of Payment 13. c) Calculate the total interest in Payments 5 to 10 inclusive. d) Calculate the principal paid in Year 4.

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84) A $125,000 loan at 6.0% compounded semiannually will be repaid by monthly payments over a 20-year amortization period.

a) Calculate the interest component of Payment 188. b) Calculate the principal component of Payment 101. c) Calculate the reduction of principal in Year 1. d) Calculate the reduction of principal in Year 20.

85) Semiannual payments are required on an $80,000 loan at 8.0% compounded annually. The loan has an amortization period of 15 years.

a) Calculate the interest component of Payment 5. b) Calculate the principal component of Payment 17. c) Calculate the interest paid in Year 1. d) Calculate the interest paid in Year 14.

86) The interest rate on a $50,000 loan is 7.6% compounded semiannually. Quarterly payments will pay off the loan in ten years.

a) Calculate the interest component of Payment 8. b) Calculate the principal component of Payment 33. c) Calculate the total interest in Payments 21 to 30 inclusive. d) Calculate the reduction of principal in Year 3.

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87)

A five-year loan of $20,000 at 6.8% compounded quarterly requires monthly payments.

a) Calculate the interest component of Payment 47. b) Calculate the principal component of Payment 21. c) Calculate the interest paid in Year 2. d) How much do Payments 40 to 45 inclusive reduce the principal balance?

88)

The monthly payments on a $15,000 loan at 6.0% compounded monthly are $275.

a) Calculate the interest component of Payment 13. b) Calculate the principal component of Payment 44. c) Calculate the final payment.

89) Quarterly payments of $3000 are required on an $80,000 loan at 8.0% compounded quarterly.

a) Calculate the interest component of Payment 30. b) Calculate the principal component of Payment 9. c) Calculate the final payment.

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90) The interest rate on a $100,000 loan is 7.2% compounded semiannually. The monthly payments on the loan are $700.

a) Calculate the interest component of Payment 221. b) Calculate the principal component of Payment 156. c) Calculate the final payment.

91)

A $30,000 loan at 6.7% compounded annually requires monthly payments of $450.

a) Calculate the interest component of Payment 29. b) Calculate the principal component of Payment 65. c) Calculate the final payment.

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92) A $37,000 loan at 8.2% compounded semiannually is to be repaid by equal semiannual payments over 10 years.

a) What will be the principal component of the sixth payment? b) What will be the interest component of the sixteenth payment? c) How much will Payments 6 to 15 inclusive reduce the principal? d) How much interest will be paid in the third year? e) What will be the final payment?

93) A 10-year annuity providing a rate of return of 5.6% compounded quarterly was purchased for $25,000. The annuity makes payments at the end of each quarter.

a) How much of the twenty-fifth payment is interest? b) What is the principal portion of the thirteenth payment? c) What is the total interest in Payments 11 to 20 inclusive? d) How much is the principal reduction in the second year? e) What is the final payment?

94) A $37,000 loan at 8.2% compounded semiannually is to be repaid by semiannual payments of $2500 (except for a smaller final payment).

a) What will be the principal component of the sixteenth payment? b) What will be the interest portion of the sixth payment? c) How much will Payments 8 to 14 inclusive reduce the principal balance? d) How much interest will be paid in the fifth year? e) What will be the final payment?

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95) An annuity providing a rate of return of 5.6% compounded quarterly was purchased for $27,000. The annuity pays $800 at the end of each quarter (except for a smaller final payment).

a) How much of the sixteenth payment is interest? b) What is the principal portion of the thirty-third payment? c) What is the total interest in Payments 20 to 25 inclusive? d) How much will the principal be reduced by payments in the sixth year? e) What will be the final payment?

96) Guy borrowed $8000 at 7.8% compounded monthly and agreed to repay the loan in equal quarterly payments over four years.

a) How much of the fifth payment will be interest? b) What will be the principal component of the eleventh payment? c) How much interest will be paid by Payments 5 to 12 inclusive? d) How much will the principal be reduced in the second year? e) What will be the final payment?

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97) A 25-year annuity was purchased with $225,000 that had accumulated in a Registered Retirement Savings Plan (RRSP). The annuity provides a semiannually compounded rate of return of 5.2% and makes equal month-end payments.

a) What amount of principal will be included in Payment 206? b) What will be the interest portion of Payment 187? c) How much will Payments 50 to 100 inclusive reduce the principal balance? d) How much interest will be paid in the fourteenth year? e) What will be the final payment?

98) Guy borrowed $8000 at 7.8% compounded monthly and agreed to make quarterly payments of $500 (except for a smaller final payment).

a) How much of the eleventh payment will be interest? b) What will be the principal component of the sixth payment? c) How much interest will be paid by Payments 3 to 9 inclusive? d) How much will the principal be reduced in the third year? e) What will be the final payment?

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99) An annuity paying $1400 at the end of each month (except for a smaller final payment) was purchased with $225,000 that had accumulated in an RRSP. The annuity provides a semiannually compounded rate of return of 5.2%.

a) What amount of principal will be included in Payment 137? b) What will be the interest portion of Payment 204? c) How much will the principal be reduced by Payments 145 to 156 inclusive? d) How much interest will be paid in the twentieth year? e) What will be the final payment?

100)

Ms. Esperanto obtained a $40,000 home equity loan at 7.5% compounded monthly.

a) What will she pay monthly if the amortization period is 15 years? b) How much of the payment made at the end of the fifth year will go towards principal and how much will go towards interest? c) What will be the balance on the loan after five years? d) How much interest did she pay during the fifth year?

101) Elkford Logging's bank will fix the interest rate on a $60,000 loan at 8.1% compounded monthly for the first four-year term of an eight-year amortization period. Monthly payments are required on the loan.

a) If the prevailing interest rate on four-year loans at the beginning of the second term is 7.5% compounded monthly, what will be the monthly payments for the last four years? b) What will be the interest portion of the twenty-third payment? c) Calculate the principal portion of the fifty-third payment

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102) Christina has just borrowed $12,000 at 9% compounded semiannually. Since she expects to receive a $10,000 inheritance in two years when she turns 25, she has arranged with her credit union to make monthly payments that will reduce the principal balance to exactly $10,000 in two years.

a) What monthly payments will she make? b) What will be the interest portion of the ninth payment? c) Determine the principal portion of the sixteenth payment.

103) Elkford Logging's bank will fix the interest rate on a $60,000 loan at 8.1% compounded monthly for the first four years. After four years, the interest rate will be fixed at the prevailing five-year rate. Monthly payments of $800 (except for a smaller final payment) are required on the loan.

a) If the interest rate after four years is 7.5% compounded monthly, when will the loan be paid off? b) What will be the amount of the final payment? c) What is the interest portion of the thirty-second payment? d) Calculate the principal portion of the fifty-eighth payment.

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104) A $100,000 mortgage loan at 5.2% compounded semiannually requires monthly payments based on a 25-year amortization. Assuming that the interest rate does not change for the entire 25 years, complete the following table: Interval

Balance at the end of the Principal reduction during Interest paid during the interval ($) the interval ($) interval ($)

0 to 5 years 5 to 10 years 10 to 15 years 15 to 20 years 20 to 25 years

105)

The interest rate on a $100,000 mortgage loan is 7% compounded semiannually.

a) Calculate the monthly payment for each of 20-year, 25-year, and 30-year amortizations. b) By what percentage, to the nearest 0.01%, must the monthly payment be increased for a 25year amortization instead of a 30-year amortization? c) By what percentage, to the nearest 0.01%, must the monthly payment be increased for a 20year amortization instead of a 30-year amortization? d) For each of the three amortization periods in part a, calculate the total interest paid over the entire amortization period (assuming that the interest rate and payments do not change).

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106)

A $100,000 mortgage loan has a 25-year amortization.

a) Calculate the monthly payment at interest rates of 4%, 6%, and 8% compounded semiannually. b) By what percentage, to the nearest 0.01%, does the monthly payment on the 8% mortgage exceed the monthly payment on the 4% mortgage? c) Calculate the total interest paid over the entire 25-year amortization period at each of the three interest rates. (Assume the final payment equals the others.)

107) The Graftons can afford a maximum mortgage payment of $1000 per month. The current interest rate is 7.2% compounded semiannually. What is the maximum mortgage loan they can afford if the amortization period is?

a) 15 years? b) 20 years? c) 25 years? d) 30 years?

108) The Tarkanians can afford a maximum mortgage payment of $1000 per month. What is the maximum mortgage loan they can afford if the amortization period is 25 years and the interest rate is:

a) 4.5% compounded semiannually? b) 7.5% compounded semiannually?

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109) A $100,000 mortgage loan at 7.6% compounded semiannually has a 25-year amortization period.

a) Calculate the monthly payment. b) If the interest rate were 1% lower (that is, 6.6% compounded semiannually), what loan amount would result in the same monthly payment?

110) The Switzers are nearing the end of the first five-year term of a $100,000 mortgage loan with a 25-year amortization. The interest rate has been 6.5% compounded semiannually for the initial term. How much will their monthly payments decrease if the interest rate upon renewal is 3.5% compounded semiannually?

111) The Melnyks are nearing the end of the first three-year term of a $100,000 mortgage loan with a 20-year amortization. The interest rate has been 7.7% compounded semiannually for the initial term. How much will their monthly payments decrease if the interest rate upon renewal is 6.7% compounded semiannually?

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112) The interest rate for the first three years of an $80,000 mortgage loan is 7.4% compounded semiannually. Monthly payments are calculated using a 25-year amortization.

a) What will be the principal balance at the end of the three-year term? b) What will the monthly payments be if the loan is renewed at 4.8% compounded semiannually (and the original amortization period is continued)?

113) Five years ago, Ms. Halliday received a mortgage loan from the Bank of Nova Scotia for $60,000 at 7.8% compounded semiannually for a five-year term. Monthly payments were based on a 25-year amortization. The bank is agreeable to renewing the loan for another five-year term at 6.8% compounded semiannually. Calculate the principal reduction that will occur in the second five-year term if:

a) The payments are recalculated based on the new interest rate and a continuation of the original 25-year amortization. b) Ms. Halliday continues to make the same payments as she made for the first five years (resulting in a reduction of the amortization period).

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114) A $40,000 mortgage loan charges interest at 6.6% compounded monthly for a four-year term. Monthly payments were calculated for a 15-year amortization and then rounded up to the next higher $10.

a) What will be the principal balance at the end of the first term? b) What will the monthly payments be on renewal for a three-year term if it is calculated for an interest rate of 4.2% compounded monthly and an 11-year amortization period, but again rounded to the next higher $10?

115) Many mortgage lenders offer the flexibility of dividing a mortgage loan between a fixed interest-rate portion and a variable-interest-rate portion. (A variable-rate mortgage is sometimes referred to as an adjustable-rate mortgage, abbreviated ARM.) The variable interest rate changes from time to time, following the trend of short-term interest rates in the capital markets. On average, quoted variable interest rates on mortgages are lower than quoted fixed rates for most terms. But at times variable rates can rise above (even substantially above) fixed rates, especially fixed rates that may have been "locked in" two or three years earlier. Suppose a $100,000 mortgage loan with a 25-year amortization is divided equally between a fixed-rate portion at 6.6% compounded semiannually and a variable-rate portion at 5.4% compounded monthly. (Quoted rates on variable-rate mortgages are normally monthly compounded rates.) a) What is the initial (combined) monthly payment? b) What will be the combined monthly payment if the variable rate jumps to 6.6% compounded monthly after two years?

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116) The interest rate for the first five years of a $27,000 mortgage loan was 3.25% compounded semiannually. The monthly payments computed for a 10-year amortization were rounded to the next higher $10.

a) Calculate the principal balance at the end of the first term. b) Upon renewal at 5.75% compounded semiannually, monthly payments were calculated for a 5-year amortization and again rounded up to the next higher $10. What will be the amount of the last payment?

117) The Delgados have a gross monthly income of $6000. Monthly payments on personal loans total $500. Their bank limits the gross debt service ratio at 33% and the total debt service ratio at 42%.

a) Rounded to the nearest $100, what is the maximum 25-year mortgage loan for which they can qualify on the basis of their income? Assume monthly heating costs of $200 and property taxes of $220 per month. Current mortgage rates are 6.8% compounded semiannually. b) Rounded to the nearest $100, what minimum down payment must they have to qualify for the maximum conventional mortgage (80% loan-to-value ratio) on a new home?

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118) The Archibalds are eligible for Canada Mortgage and Housing Corporation's Mortgage Loan Insurance. Consequently, their limits are 95% for the loan-to-value ratio, 32% for the GDS ratio, and 40% for the TDS ratio.

a) Rounded to the nearest $100, what is the maximum 25-year mortgage loan for which they can qualify if their gross monthly income is $5000 and their payments on personal debt amount to $600 per month? Assume monthly heating costs of $150 and property taxes of $200 per month. Current mortgage rates are 6.6% compounded semiannually. b) If they make the minimum down payment, what is the maximum price (rounded to the nearest $100) they can pay for a home? (Assume the purchase price equals the appraised value.)

119) Marge and Homer Sampson have saved $95,000 toward the purchase of their first home. Allowing $7000 for legal costs and moving expenses, they have $88,000 available for a down payment.

a) Based only on a loan-to-value ratio of 80%, what is the maximum purchase price they can consider? b) After thorough investigation, the Sampsons made a $360,000 offer on a townhouse subject to arranging financing. Next they met with their banker. With an $88,000 down payment, the Sampsons will need a mortgage loan of $272,000. The current interest rate on a five-year term fixed-rate mortgage with a 25-year amortization is 5.4% compounded semiannually. The banker gathered data for calculating the Sampsons' GDS and TDS ratios. Annual property taxes will be $3000. Annual heating costs will be about $2400. The Sampsons make monthly payments of $800 on a car loan ($14,000 balance). Their gross monthly income is $7000. Calculate the GDS and TDS ratios for the Sampsons. Round to the nearest 0.01%. c) Note that the Sampsons meet the GDS criterion (≤32%) but exceed the TDS limit (40%). The item causing the problem is the $800 per month car payment. Suppose the Sampsons use $14,000 of their down-payment savings to pay off the car loan. They will still have enough to make the minimum down payment (0.2 × $60,000 = $72,000) but will have to increase the mortgage loan by $14,000 to $286,000. Recalculate the GDS and TDS ratios. Round to the nearest 0.01%.

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120) A $200,000 mortgage at 6.6% compounded semiannually with a 25-year amortization requires monthly payments. The mortgage allows the borrower to prepay up to 10% of the original principal once each year. How much will the amortization period be shortened if, on the first anniversary of the mortgage, the borrower makes (in addition to the regular payment) a prepayment of:

a) $10,000? b) $20,000?

121) A $200,000 mortgage at 6.6% compounded semiannually with a 30-year amortization requires monthly payments. The mortgage allows the borrower to prepay up to 10% of the original principal once each year. How much will the amortization period be shortened if, on the first anniversary of the mortgage, the borrower makes (in addition to the regular payment) a prepayment of:

a) $10,000? b) $20,000?

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122) A $100,000 mortgage at 6.9% compounded semiannually with a 25-year amortization requires monthly payments. The mortgage entitles the borrower to increase the regular payment by up to 10% once each year. How much will the amortization period be shortened if, after the 12th payment, the payments are increased by:

a) 7.5%? b) 15%?

123) A $100,000 mortgage at 4.9% compounded semiannually with a 30-year amortization requires monthly payments. The mortgage allows the borrower to increase the regular payment by up to 10% once each year. How much will the amortization period be shortened if payments are increased by 10% after the 12th payment, and by another 10% after Payment 24?

124) A $100,000 mortgage at 6.2% compounded semiannually with a 25-year amortization requires monthly payments. The mortgage allows the borrower to "double up" on a payment once each year. How much will the amortization period be shortened if the borrower doubles the tenth payment?

125) A $100,000 mortgage at 6.8% compounded semiannually with a 30-year amortization requires monthly payments. The mortgage allows the borrower to "double up" on a payment once each year. How much will the amortization period be shortened if the borrower doubles the eighth payment?

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126) A $100,000 mortgage at 6.75% compounded semiannually with a 20-year amortization requires monthly payments. The mortgage allows the borrower to miss a payment once each year. How much will the amortization period be lengthened if the borrower misses the ninth payment? (The interest that accrues during the ninth month is converted to principal at the end of the ninth month.)

127) A $100,000 mortgage at 4.3% compounded semiannually with a 25-year amortization requires monthly payments. The mortgage allows the borrower to miss a payment once each year. How much will the amortization period be lengthened if the borrower misses the 12th payment? (The interest that accrues during the 12th month is converted to principal at the end of the 12th month.)

128) A $100,000 mortgage at 7.1% compounded semiannually with a 30-year amortization requires monthly payments. How much will the amortization period be shortened if a $10,000 lump payment is made along with the 12th payment and payments are increased by 10% starting in the third year?

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129) A $100,000 mortgage at 3.8% compounded semiannually with a 25-year amortization requires monthly payments. How much will the amortization period be shortened if payments are increased by 10% starting in the second year and a $10,000 lump payment is made along with the 24th payment?

130) Monthly payments on a $150,000 mortgage are based on an interest rate of 6.6% compounded semiannually and a 30-year amortization. If a $5000 prepayment is made along with the 32nd payment:

a) How much will the amortization period be shortened? b) What will be the principal balance after four years?

131) The interest rate for the first five years of a $120,000 mortgage is 4.15% compounded semiannually. Monthly payments are based on a 25-year amortization. If a $5000 prepayment is made at the end of the second year:

a) How much will the amortization period be shortened? b) What will be the principal balance at the end of the five-year term?

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132)

A $130,000 mortgage loan at 7.2% compounded monthly has a 25-year amortization.

a) What prepayment at the end of the first year will reduce the time required to pay off the loan by one year? b) Instead of the prepayment in part (a), what prepayment at the end of the 10th year will reduce the time required to pay off the loan by 1 year?

133) After three years of the first five-year term at 6.3% compounded semiannually, Dean and Cindy decide to take advantage of the privilege of increasing the payments on their $200,000 mortgage loan by 10%. The monthly payments were originally calculated for a 30-year amortization.

a) How much will the amortization period be shortened? b) What will be the principal balance at the end of the five-year term?

134) The MacLellans originally chose to make payments of $1600 per month on a $138,000 mortgage written at 7.4% compounded semiannually for the first five years. After three years they exercised the right under the mortgage contract to increase the payments by 10%.

a) If the interest rate does not change, when will they extinguish the mortgage debt? b) What will be the principal balance at the end of the five-year term?

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135) The monthly payments on the Wolskis' $266,000 mortgage were originally based on a 25-year amortization and an interest rate of 4.5% compounded semiannually for a five-year term. After two years, they elected to increase their monthly payments by $150, and at the end of the fourth year they made a $10,000 prepayment.

a) How much have they shortened the amortization period? b) What was the principal balance at the end of the five-year term?

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136) A marketing innovation is the "cash-back mortgage" wherein the lender gives the borrower an up-front bonus cash payment. For example, if you borrow $100,000 on a 3% cashback mortgage loan, the lender will give you $3000 in addition to the $100,000 loan. You pay back only the $100,000 principal over the amortization period. The $3000 can be immediately applied as a prepayment to reduce the principal balance (to $97,000) or it can be used for any other purpose. You must keep your mortgage with the lender for at least five years. The cash-back mortgage seems like a good deal but there is more you need to know about advertised mortgage interest rates. The rates you see posted in your local financial institution are just a starting point for negotiations. You can get ¼% knocked off just by asking for it. With some firm negotiating, you can probably get a ½% reduction. If the institution really wants your business, you can get a ¾%, or even a 1% reduction. However, if you take advantage of some other promotion such as a cash-back offer, you will not get any rate discount. So the cash-back offer is not as good as it initially appears. Which of the following loans should be chosen by the borrower? --A standard $100,000 mortgage loan at 6.5% compounded semiannually? --A 3% cash-back mortgage loan for $100,000 at 7.25% compounded semiannually? In both cases, the interest rate is for a five-year term and the payments are based on a 25-year amortization. For the cash-back mortgage, assume that the $3000 cash bonus is immediately applied to reduce the balance to $97,000. (Since the monthly payments are based on the $100,000 face value, the prepayment will shorten the time required to pay off the loan.) Assume money can earn 4.8% compounded monthly.

137) The Gills have arranged a second mortgage loan with a face value of $21,500 at an interest rate of 6.5% compounded monthly. The face value is to be fully amortized by equal monthly payments over a five-year period. The Gills received only $20,000 of the face value, the difference being a bonus retained by the lender. What is the actual cost of borrowing, including the bonus, expressed as an effective interest rate to the nearest 0.01%?

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138) A mortgage loan having a face value of $63,000 is arranged by a mortgage broker. From this face value, the broker deducted her fee of $3000. The mortgage is written at a contract rate of 8% compounded semiannually for a five-year term. Monthly payments are calculated on a 25year amortization. What is the annual cost of borrowing, including the brokerage fee, expressed as an effective interest rate to the nearest 0.01%?

139) A borrower has arranged a $105,000 face value, bonused mortgage loan with a broker at an interest rate of 10.8% compounded semiannually. Monthly payments are based on a 15-year amortization. A $5000 placement fee will be retained by the broker. What is the effective annual cost, to the nearest 0.01%, of the funds actually advanced to the borrower if the contractual interest rate is for: a) A five-year term? b) A 10-year term? c) The entire 15-year amortization period?

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140) A local mortgage broker has arranged a mortgage loan with a face value of $77,500, which included a finder's fee of $2500. The loan is to be amortized by monthly payments over 20 years at 7% compounded semiannually. What is the actual cost of borrowing, expressed as an effective annual rate, if the contractual interest rate is for:

a) A three-year term? b) A seven-year term? c) The entire 20-year amortization period? Round to the nearest 0.01%.

141) A borrower has the choice between two mortgage loans. Both are to be amortized by monthly payments over 10 years. A mortgage broker will charge a fee of $2200 for an $82,200 face value loan at 10.25% compounded semiannually. A trust company will grant an $80,000 loan (with no other fees) at 10.75% compounded semiannually. Determine which loan has the lower effective annual cost of borrowing if the contractual interest rates are for: a) A 5-year term. b) The entire 10-year amortization period.

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142) Calculate the effective annual cost of borrowing, to the nearest 0.01%, for each of the following three financing alternatives. All interest rates are for a 7-year term and all mortgages use a 20-year amortization to calculate the monthly payments.

Bank B will lend $90,000 at 10.75% compounded semiannually. Credit union C will lend $90,000 at 10.5% compounded monthly. Mortgage broker M will lend $93,000 at 10.25% compounded semiannually but will retain $3000 as a brokerage fee.

143) The vendor of a residential property accepted a $40,000 take-back mortgage to facilitate the sale. The agreement calls for quarterly payments to amortize the loan over 10 years at an interest rate of 7% compounded semiannually. What was the cash value (or fair market value) of the mortgage at the time of the sale if the market interest rate on 10-year term mortgages was:

a) 10.5% compounded semiannually? b) 9% compounded semiannually?

144) The vendor of a property agrees to take back a $55,000 mortgage at a rate of 7.5% compounded semiannually with monthly payments of $500 for a two-year term. Calculate the market value of the mortgage if financial institutions are charging 9.5% compounded semiannually on two-year term mortgages.

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145) A mortgagee wishes to sell his interest in a closed mortgage contract that was written 21 months ago. The original loan was for $60,000 at 6.8% compounded semiannually for a 5-year term. Monthly payments are being made on a 20-year amortization schedule. What price can the mortgagee reasonably expect to receive if the current semiannually compounded interest rate on three-year and four-year term mortgages is:

a) 6%? b) 6.8%? c) 7.5%?

146) An investor is considering the purchase of an existing closed mortgage that was written 20 months ago to secure a $45,000 loan at 10% compounded semiannually paying $500 per month for a 4-year term. What price should the investor pay for the mortgage if she requires a semiannually compounded rate of return on investment of:

a) 11%? b) 10%? c) 9%?

147) A property is listed for $175,000. A potential purchaser makes an offer of $170,000, consisting of $75,000 cash and a $95,000 mortgage back to the vendor bearing interest at 8% compounded semiannually with monthly payments for a 10-year term and a 10-year amortization. Calculate the equivalent cash value of the offer if 10-year mortgage rates in the market are at 10.25% compounded semiannually.

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148) The owner of a property listed at $145,000 is considering two offers. Offer C is for $140,000 cash. Offer M is for $50,000 cash and a mortgage back to the vendor for $100,000 at a rate of 8% compounded semiannually and payments of $750 per month for the five-year term. If current five-year rates are 10.25% compounded semiannually, what is the cash equivalent value of M's offer?

149) You are interested in purchasing a house listed for $180,000. The owner seems quite determined to stay at the asking price, but you think that the true market value is $165,000. It may be that the owner would accept an offer whose nominal value is the psychologically important $180,000 figure but whose cash value is close to your $165,000 figure. What would be the cash value of the following offer if prevailing long-term mortgage rates are 10.5% compounded semiannually? The offer is for the "full" price of $180,000, consisting of $60,000 down and the balance by a $120,000 mortgage in favour of the vendor. Base monthly payments on a 20-year term, a 20-year amortization, and an interest rate of 8.5% compounded semiannually.

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150) The Phams are almost two years into the first 5-year term of a 25-year $80,000 mortgage loan at 7.5% compounded semiannually. Interest rates on three-year term mortgage loans are now 6% compounded semiannually. A job transfer necessitates the sale of the Phams' home. To prepay the closed mortgage, the mortgage contract requires that the Phams pay a penalty equal to the greater of

a) three months' interest on the balance. b) the difference between the fair market value of the mortgage and the balance. What would be the amount of the penalty if they pay out the balance at the time of the twenty fourth payment?

151) A $75,000 mortgage loan at 9% compounded semiannually has a 5-year term and a 25year amortization. Prepayment of the loan at any time within the first five years leads to a penalty equal to the greater of

a) three months' interest on the balance. b) the difference between the fair market value of the mortgage and the balance. What would be the amount of the penalty if the balance was paid out just after the nineteenth monthly payment and the prevailing rate on three-year and four-year-term mortgages was 8% compounded semiannually?

152) Jessica bought a $1150 television set for 25% down and the balance to be paid with interest at 11.25% compounded monthly in six equal monthly payments. Complete the amortization schedule for the debt. Calculate the total interest paid. PMT #

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Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

722.09

6.77

141.73

580.36

5.44

143.06

437.30

4.10

144.40

292.90

2.75

145.75

147.15

153) Givens, Hong, and Partners obtained a $7000 term loan at 8.75% compounded annually for new boardroom furniture. Complete the amortization schedule below in which the loan is repaid by equal semiannual payments over three years. Calculate the total interest paid. PMT # 0

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

5952.16

254.95

1092.72

4859.44

208.14

1139.53

3719.91

159.33

1188.34

2531.57

108.43

1239.24

1292.33

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154) A $28,000 loan at 8% compounded quarterly is to be repaid by equal quarterly payments over a seven-year term.

a) What will be the principal component of the sixth payment? b) What will be the interest portion of the 22nd payment? c) How much will the loan's balance be reduced by Payments 10 to 15 inclusive? d) How much interest will be paid in the second year?

155) A 20-year annuity was purchased with $180,000 that had accumulated in an RRSP. The annuity provides a semiannually compounded rate of return of 5% and makes equal month-end payments.

a) What will be the principal portion of Payment 134? b) What will be the interest portion of Payment 210? c) How much will the loan's balance be reduced by Payments 75 to 100 inclusive? d) How much interest will be paid in the sixth year?

156) Metro Construction received $60,000 in vendor financing at 10.5% compounded semiannually for the purchase of a loader. The contract requires semiannual payments of $10,000 until the debt is paid off. Complete the amortization schedule for the debt. How much total interest will be paid over the life of the loan? PMT # 0

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Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

60,000.00

10,000.00

2790.38

7209.62

45,940.38

10,000.00

2411.87

7588.13

38,352.25

10,000.00

2013.49

7986.51

30,365.74

10,000.00

1594.20

8405.80

21,959.94

10,000.00

1152.90

8847.10

13,112.84

10,000.00

688.42

9311.58

3801.26

157) Metro Construction received $60,000 in vendor financing at 10.5% compounded semiannually for the purchase of a loader. The contract requires semiannual payments of $10,000 until the debt is paid off. Suppose that the loan permits an additional prepayment of principal on any scheduled payment date. Complete the amortization schedule so that it reflects a prepayment of $5000 with the third scheduled payment. PMT #

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

60,000.00

10,000.00

3150.00

6850.00

53,150.00

10,000.00

2790.38

7209.62

45,940.38

10,000.00

1750.99

8249.01

25,103.24

10,000.00

1317.92

8682.08

16,421.16

10,000.00

862.11

9137.89

7283.27

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158) An annuity providing a rate of return of 4.8% compounded monthly was purchased for $45,000. The annuity pays $400 at the end of each month.

a) How much of the 37th payment will be interest? b) What will be the principal portion of the 92nd payment? c) How much interest will be paid by Payments 85 to 96 inclusive? d) How much principal will be repaid in the fifth year? e) What will be the final payment?

159) The interest rate on a $6400 loan is 10% compounded semiannually. If the loan is to be repaid by monthly payments over a four-year term, complete the partial amortization schedule showing details of the first two payments, Payments 34 and 35, and the last two payments. PMT #

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

6400.00

52.26

109.44

6290.56

51.36

110.34

6180.22

18.57

143.13

2131.00

17.40

144.30

1986.70

2.61

159.09

46 47

160.38

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160) A $255,000 amount from an RRSP is used to purchase an annuity paying $6000 at the end of each quarter. The annuity provides an annually compounded rate of return of 2.5%.

a) What will be the amount of the final payment? b) What will be the interest portion of the 27th payment? c) What will be the principal portion of the 33rd payment? d) How much will the principal balance be reduced by Payments 14 to 20 inclusive? e) How much interest will be paid by the payments received in the 6th year?

161) A mortgage contract for $45,000 written 10 years ago is just at the end of its second fiveyear term. The interest rates were 8% compounded semiannually for the first term and 7% compounded semiannually for the second term. If monthly payments throughout have been based on a 25-year amortization, calculate the principal balance at the end of the second term.

162) The interest rate for the first three years of an $87,000 mortgage is 4.4% compounded semiannually. Monthly payments are based on a 20-year amortization. If a $4000 prepayment is made at the end of the 16th month:

a) How much will the amortization period be shortened? b) What will be the principal balance at the end of the three-year term?

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163) Niagara Haulage obtained an $80,000 loan at 7.2% compounded monthly to build a storage shed. Complete the partial amortization schedule for payments of $1000 per month showing details of the first two payments, Payments 41 and 42, and the last two payments. PMT #

Payment ($)

Interest ($)

Principal Reduction ($)

Balance ($)

80,000.00

1000.00

480.00

520.00

79,480.00

1000.00

339.42

660.58

55,910.14

1000.00

335.46

664.54

55,245.60

1000.00

7.83

992.17

313.15

164) The interest rate for the first five years of a $90,000 mortgage loan is 5.25% compounded semiannually. Monthly payments are calculated using a 20-year amortization.

a) What will be the principal balance at the end of the five-year term? b) What will be the new payments if the loan is renewed at 6.5% compounded semiannually (and the original amortization period is continued)? Version 1

165) A mortgage calls for monthly payments of $887.96 for 25 years. If the loan was for $135,000, calculate the semiannually compounded nominal rate of interest on the loan to the nearest 0.01%.

166) A $25,000 home improvement (mortgage) loan charges interest at 6.6% compounded monthly for a three-year term. Monthly payments are based on a 10-year amortization and rounded up to the next $10. What will be the principal balance at the end of the first term?

167) The interest rate for the first five years of a $95,000 mortgage is 9.5% compounded semiannually. Monthly payments are based on a 25-year amortization. If a $3000 prepayment is made at the end of the third year:

a) How much will the amortization period be shortened? b) What will be the principal balance at the end of the five-year term?

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168) After two years of the first five-year term at 6.7% compounded semiannually, Dan and Laurel decide to take advantage of the privilege of increasing the payments on their $110,000 mortgage loan by 10%. The monthly payments were originally calculated for a 25-year amortization.

a) How much will the amortization period be shortened? b) What will be the principal balance at the end of the five-year term?

169) There are two offers on a property listed at $185,000. Mr. Smith is offering $183,000 cash. Ms. Jones's offer consists of $100,000 cash and a mortgage back to the vendor for $90,000 at a rate of 7.5% compounded semiannually and payments of $700 per month for a three-year term. If current three-year rates are 9.5% compounded semiannually, what is the equivalent cash value of Ms. Jones's offer to the nearest dollar?

170) A $200,000 mortgage at 5.5% compounded monthly is amortized over 20 years. What is the amount of the monthly payment?

171) A $350,000 mortgage is amortized over 25 years. What is the monthly payment if interest is 5.8% compounded quarterly?

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172) A mortgage of $300,000 is amortized over 20 years at 5.25% compounded quarterly. What is the outstanding balance after 10 years?

173) Sam and Jane have a $250,000 mortgage amortized over 20 years at 5.75% compounded quarterly. After 10 years, they decided to reduce the principal amount of their mortgage by $40,000. Calculate their new monthly payment.

174) Cliff and Marcie are refinancing their 20-year mortgage of $250,000 after 10 years. They are reducing the principal amount by $50,000, but keeping the same monthly payment. If interest is 5.5% compounded quarterly, by how much will Cliff and Marcie reduce the amortization period of their mortgage?

175) Calculate the final monthly payment of a $175,000 20-year mortgage at 5.9% compounded monthly.

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176) A business borrows $50,000 for expansion, and is repaying the debt by making quarterly payments of $1700 at 8.5% compounded quarterly.

a) Calculate the balance after four years. b) Calculate the final payment.

177) A loan of $10,000 at 9.5% compounded monthly is repaid by monthly payments for four years. How much interest is paid in the third year of the loan?

178) Monthly payments of $484.99 are to be made on a loan of $20,000 at 7.7% compounded quarterly for four years. How much principal is paid off in the 20th payment?

179) The Dawsons are refinancing their 20-year mortgage of $200,000 after five years. They have decided to increase their monthly payment by $300. If interest is 5.25% compounded quarterly, by how much will the Dawson's reduce the amortization period of their mortgage?

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180) Erica has a mortgage for $200,000 with a 20-year amortization period and a five-year term at 5.5% compounded quarterly. She makes payments monthly. If Erica renews the full outstanding balance at the end of the five-year term at 6.75% compounded semiannually, what will be the size of her monthly payment?

181) Susan has a mortgage for $250,000 with a 20-year amortization period and a three-year term at 6.25% compounded quarterly. She makes payments monthly. Susan has decided to pay a lump sum of $25,000 when her mortgage comes up for renewal. What will be the size of her monthly payment if at the time of renewal, interest is 5.8% compounded annually?

182) Jason purchased a car for $32,000 and arranged the monthly financing at 6.85% compounded semiannually over five years. Two years later, he received an inheritance and decided to pay the loan balance in full. How much did Jason owe?

183) The interest rate on a $250,000 mortgage is 6.5% compounded monthly. Calculate the monthly payment for an amortization period of 15 and 20 years.

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184) A $300,000 mortgage is amortized over 20 years. Calculate the monthly payment for 6.5% compounded monthly, and 8.5% compounded monthly.

185) Calculate the monthly payment for a $275,000 mortgage at 5.8% compounded monthly if amortized over 20 and 25 years.

186) The interest rate on a $150,000 mortgage is 6.75% compounded quarterly. Calculate the monthly payment for an amortization period of 20 and 25 years.

187) A $175,000 mortgage is amortized over 20 years. Calculate the monthly payment for 5.5% compounded quarterly and 7.75% compounded quarterly.

188) Calculate the monthly payment for a $325,000 mortgage at 5.5% compounded quarterly if amortized over 15 and 20 years.

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189) Jon has a $290,000 mortgage amortized over 20 years at 6.25% compounded quarterly for the first three years. When the mortgage came up for renewal, Jon paid $10,000 towards the principal, and refinanced at 5.8% compounded quarterly. What is Jon's new monthly payment?

190) You purchased a $3,250 HD TV for 10% down, with the balance to be paid with interest at 8% compounded monthly in twelve equal monthly payments. Calculate the total interest paid.

191) You purchased a $3,250 HD TV for 10% down, with the balance to be paid with interest at 8% compounded monthly in twelve equal monthly payments. Calculate the final payment.

192) You purchased a $3,250 HD TV for 10% down, with the balance to be paid with interest at 8% compounded monthly in twelve equal monthly payments. Calculate the total interest paid in the first six months.

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193) Your company borrowed $5,000 at 4% compounded annually to purchase a new Cisco phone system. The agreement requires monthly payments during a five-year amortization period. Calculate the total interest charges.

194) Your company borrowed $5,000 at 4% compounded annually to purchase a new Cisco phone system. The agreement requires monthly payments during a five-year amortization period. Calculate the total interest charges in the first year.

195) Your company borrowed $5,000 at 4% compounded annually to purchase a new Cisco phone system. The agreement requires monthly payments during a five-year amortization period. Calculate the total principal amount reduced in year three.

196) Your brother borrowed $1,500 from you to purchase a used grand piano. He agreed to repay the loan, with 1.5% interest compounding annually, in four quarterly payments. Calculate the total interest paid on the loan.

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197) Your brother borrowed $1,500 from you to purchase a used grand piano. He agreed to repay the loan, with 1.5% interest compounding annually, in four quarterly payments. Calculate the total interest paid on the first payment.

198) Your brother borrowed $1,500 from you to purchase a used grand piano. He agreed to repay the loan, with 1.5% interest compounding annually, in four quarterly payments. Calculate the final payment.

199) Falco Restaurant Supplies borrowed $15,000 at 3.25% compounded semiannually to purchase a new delivery truck. The loan agreement stipulates regular monthly payments be made over the next two years. Calculate the total interest charges.

200) Falco Restaurant Supplies borrowed $15,000 at 3.25% compounded semiannually to purchase a new delivery truck. The loan agreement stipulates regular monthly payments be made over the next two years. Calculate the principal reduction in the first year.

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201) Falco Restaurant Supplies borrowed $15,000 at 3.25% compounded semiannually to purchase a new delivery truck. The loan agreement stipulates regular monthly payments be made over the next two years. Calculate the final payment.

202) You purchased a new car for 20% down and payments of $900 per month (except for a smaller final payment) including interest at 0.5% compounded monthly. Calculate the total number of payments that need to be paid if the MSRP of the car is $17,990.

203) You purchased a new car for 20% down and payments of $900 per month (except for a smaller final payment) including interest at 0.5% compounded monthly. Calculate the final payment if the MSRP of the car is $17,990.

204) You purchased a new car for 20% down and payments of $900 per month (except for a smaller final payment) including interest at 0.5% compounded monthly. Calculate the total interest paid if the MSRP of the car is $17,990.

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205) Your client borrowed $4,000 at 4% compounded annually to purchase mutual funds for their RRSP account. The agreement requires monthly payments of $250 (except for a smaller final payment). How many payments will fulfill the loan obligation?

206) Your client borrowed $4,000 at 4% compounded annually to purchase mutual funds for their RRSP account. The agreement requires monthly payments of $250 (except for a smaller final payment). How much will the final payment equal?

207) Your client borrowed $4,000 at 4% compounded annually to purchase mutual funds for their RRSP account. The agreement requires monthly payments of $250 (except for a smaller final payment). How much interest was paid in the first six months of the loan?

208) Your parents borrowed $28,800 from a bank to purchase a used recreational vehicle so they can travel across North America for ten years. They agreed to repay the loan, with 3.5% interest compounding monthly, using monthly payments of $1,000 (except for a smaller final payment) until the loan is paid in full. Calculate the total interest paid on the loan.

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209) Your parents borrowed $28,800 from a bank to purchase a used recreational vehicle so they can travel across North America for ten years. They agreed to repay the loan, with 3.5% interest compounding monthly, using monthly payments of $1,000 (except for a smaller final payment) until the loan is paid in full. Calculate the final payment on the loan.

210) Your parents borrowed $28,800 from a bank to purchase a used recreational vehicle so they can travel across North America for ten years. They agreed to repay the loan, with 3.5% interest compounding monthly, using monthly payments of $1,000 (except for a smaller final payment) until the loan is paid in full. How long until the loan is paid off?

211) Frozen Encounters Ice Cream Palace obtained a $30,000 loan at 6% compounded annually to purchase some preparation tables that operate at -5 Celsius. How much will be paid in interest over the life of the loan if the monthly payments will last for a two-year term.

212) Frozen Encounters Ice Cream Palace obtained a $30,000 loan at 6% compounded annually to purchase some preparation tables that operate at -5 Celsius. How much will the principal be reduced in the first quarter of the loan if the monthly payments will last for a twoyear term.

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213) Frozen Encounters Ice Cream Palace obtained a $30,000 loan at 6% compounded annually to purchase some preparation tables that operate at -5 Celsius. If Frozen Encounters Ice Cream Palace wishes to pay off the loan at the end of the first year, immediately after the twelfth payment, how much will they have to pay the bank to clear the loan?

214) A $350,000 loan at 3.3% compounded annually will be repaid by monthly payments over twenty-five years. Calculate the interest component of Payment 35.

215) A $350,000 loan at 3.3% compounded annually will be repaid by monthly payments over twenty-five years. Calculate the principal component of Payment 163.

216) A $350,000 loan at 3.3% compounded annually will be repaid by monthly payments over twenty-five years. Calculate the reduction of principal in Year 10.

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217) A $350,000 loan at 3.3% compounded annually will be repaid by monthly payments over twenty-five years. Calculate the reduction of principal in Year 24.

218) Monthly payments are required on a $23,000 loan at 4% compounded monthly. The loan has an amortization period of ten years. Calculate the interest component of Payment 117.

219) Monthly payments are required on a $23,000 loan at 4% compounded monthly. The loan has an amortization period of ten years. Calculate the principal component of Payment 46.

220) Monthly payments are required on a $23,000 loan at 4% compounded monthly. The loan has an amortization period of ten years. Calculate the interest paid in Year 1.

221) Monthly payments are required on a $23,000 loan at 4% compounded monthly. The loan has an amortization period of ten years. Calculate the interest paid in Year 14.

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222) The interest rate on a $114,000 loan is 4.4% compounded annually. Quarterly payments will pay off the loan in seven years. Calculate the interest component of Payment 8.

223) The interest rate on a $114,000 loan is 4.4% compounded annually. Quarterly payments will pay off the loan in seven years. Calculate the principal component of Payment 3.

224) The interest rate on a $114,000 loan is 4.4% compounded annually. Quarterly payments will pay off the loan in seven years. Calculate the interest paid in Year 6.

225) The interest rate on a $114,000 loan is 4.4% compounded annually. Quarterly payments will pay off the loan in seven years. How much do Payments 2 to 7 inclusive reduce the principal balance?

226) A five-year loan of $13,000 at 3.2% compounded annually requires monthly payments. Calculate the interest component of Payment 12. Version 1

227) A five-year loan of $13,000 at 3.2% compounded annually requires monthly payments. Calculate the principal component of Payment 13.

228) A five-year loan of $13,000 at 3.2% compounded annually requires monthly payments. Calculate the total interest in the second year.

229) A five-year loan of $13,000 at 3.2% compounded annually requires monthly payments. Calculate the principal paid in Year 4.

230) An annuity providing a rate of return of 3.6% compounded semiannually was purchased for $23,000. The annuity pays $500 at the end of each month (except for a smaller final payment). How much of the 16th payment is interest?

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231) An annuity providing a rate of return of 3.6% compounded semiannually was purchased for $23,000. The annuity pays $500 at the end of each month (except for a smaller final payment). What is the principal portion of the 33rd payment?

232) An annuity providing a rate of return of 3.6% compounded semiannually was purchased for $23,000. The annuity pays $500 at the end of each month (except for a smaller final payment). What is the total interest in Payments 12 to 24 inclusive?

233) An annuity providing a rate of return of 3.6% compounded semiannually was purchased for $23,000. The annuity pays $500 at the end of each month (except for a smaller final payment). How much will the principal be reduced by payments in the sixth year?

234) An annuity providing a rate of return of 3.6% compounded semiannually was purchased for $23,000. The annuity pays $500 at the end of each month (except for a smaller final payment). What will be the final payment?

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235) A loan with payments of $900 due at the end of each month (except for a smaller final payment) was registered with a starting balance of $25,000. The loan has a semiannually compounded rate of return of 3.2%. What amount of principal will be included in Payment 13?

236) A loan with payments of $900 due at the end of each month (except for a smaller final payment) was registered with a starting balance of $25,000. The loan has a semiannually compounded rate of return of 3.2%. What will be the interest portion of Payment 20?

237) A loan with payments of $900 due at the end of each month (except for a smaller final payment) was registered with a starting balance of $25,000. The loan has a semiannually compounded rate of return of 3.2%. How much will the principal be reduced by Payments 13 to 18 inclusive?

238) A loan with payments of $900 due at the end of each month (except for a smaller final payment) was registered with a starting balance of $25,000. The loan has a semiannually compounded rate of return of 3.2%. How much interest will be paid in the 2nd year?

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239) A loan with payments of $900 due at the end of each month (except for a smaller final payment) was registered with a starting balance of $25,000. The loan has a semiannually compounded rate of return of 3.2%. What will be the final payment?

240) You obtained a $10,000 loan at 1.5% compounded monthly. What will you pay monthly if the amortization period is five years? How much of the payment made at the end of the third year will go toward principal?

241) You obtained a $10,000 loan at 1.5% compounded monthly. How much more interest will you pay in the second year compared to the third year of the loan?

242) You obtained a $10,000 loan at 1.5% compounded monthly. How much more is the principal of the loan reduced in year 4 compared to year 1?

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243) The interest rate on a $350,000 mortgage loan is 2.95% compounded semiannually. What is the difference in the monthly payment if the mortgage is amortized over fifteen years instead of twenty years?

244) The interest rate on a $350,000 mortgage loan is 2.95% compounded semiannually. By what percentage must the monthly payment be increased for a 20-year amortization instead of a 25-year amortization?

245) The interest rate on a 25-year, $350,000 mortgage loan is 2.95% compounded semiannually. What must the semiannually compounded interest rate be, assuming the same payment, if you wish to amortize over twenty years instead of twenty-five years?

246) A $200,000 mortgage loan has a twenty-five year amortization. Calculate the dollar difference in the monthly payment at interest rates of 2.5% compounded semiannually and 2.45% compounded monthly.

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247) A $250,000 mortgage loan has a twenty-five year amortization. Calculate the difference in interest paid over the life of the mortgage, assuming monthly payments at 2.5% compounded semiannually versus 3.0% compounded semiannually.

248) You and your partner can afford a maximum mortgage payment of $1,200 per month. The current interest rate is 3.2% compounded semiannually. What is the maximum mortgage loan you can afford if the amortization period is twenty-five years? Round your answer to the nearest $100 dollar value.

249) You and your partner can afford a maximum mortgage payment of $1,300 per month. The current interest rate is 2.2% compounded semiannually. What is the maximum mortgage loan you can afford if the amortization period is twenty years? Round your answer to the nearest dollar. If you can find a discount broker who will offer you a rate of 1.95% compounded semiannually, how much more can you spend on a house?

250) Your younger sister is looking at purchasing a new house and isn't sure how long of an amortization period to use. A mortgage broker says they can offer a rate of 2.1% compounded semiannually for different time periods. How much more per month will your sister have to spend if she amortizes over twenty years instead of twenty-five years? Assume your sister has been approved for a $190,000 mortgage.

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251) A $300,000 mortgage at 2.9% compounded semiannually with a twenty-year amortization requires monthly payments. The mortgage allows the borrower to increase the amount of the regular payment by up to 10% once each year. How much will the amortization period be shortened if payments are increased by 10% after the 12th payment, and by another 10% after Payment 24?

252) A $250,000 mortgage at 2.2% compounded semiannually with a twenty-year amortization requires monthly payments. The mortgage allows the borrower to "double up" on a payment once each year. How much will the amortization period be shortened if the borrower doubles the 12th payment?

253) A $300,000 mortgage at 4.1% compounded semiannually with a twenty-year amortization requires monthly payments. How much will the amortization period be shortened if a $10,000 lump payment is made along with the 12th payment?

254) You have arranged a mortgage loan with a face value of $210,000 at an interest rate of 3.5% compounded semiannually. The face value is to be fully amortized by equal monthly payments over a twenty-year period. You received only $200,000 of the face value, the difference being spent on legal fees and bonuses to your realtor. What is the actual cost of borrowing for the house, including the bonus, expressed as an effective interest rate?

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255) A mortgage loan having a face value of $265,000 is arranged by a mortgage broker. From this face value, the broker deducted a fee of $4,000. The mortgage is written at a contract rate of 3.2% compounded semiannually for a twenty-five year term, with monthly payments. What is the annual cost of borrowing, including the brokerage fee, expressed as an effective interest rate?

256) A property is listed for $550,000. A potential purchaser makes an offer of $525,000, consisting of $50,000 cash and a $475,000 mortgage back to the vendor bearing interest at 7.5% compounded semiannually with monthly payments for a thirty-year term and a thirty-year amortization. Calculate the equivalent cash value of the offer if thirty-year mortgage rates in the market are at 8.25% compounded semiannually.

257) The vendor of a property agrees to take back a $200,000 mortgage at a rate of 4.5% compounded semiannually with monthly payments of $900 for a twenty-year term. Calculate the market value of the mortgage if financial institutions are charging 6.5% compounded semiannually on twenty-year term mortgages.

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Answer Key Test name: Chap 15_10ce 1) C 2) A 3) C 4) A 5) D 6) A 7) C 8) B 9) E 10) A 11) B 12) C 13) A 14) D 15) D 16) B 17) C 18) E 19) C 20) A 21) E 22) E 23) B 24) E 25) D 26) D Version 1

27) A 28) B 29) A 30) C 31) A 32) D 33) B 34) D 35) E 36) C 37) B 38) E 39) C 40) E 41) B 42) C 43) A 44) A 45) B 46) C 47) D 48) E 49) A 50) A 51) B 52) C 53) D 54) E 55) A 56) C Version 1

57) A 58) D 59) A 60) E

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CHAPTER 16 1) A $1000 face value, 10% bond (interest payable semiannually) has 20 years remaining until maturity (at which time it will be redeemed at face value). The rate of return required by the market on this type of bond is 8% compounded semiannually.

What is the market value of this bond today? A) $1000.00 B) $1260.00 C) $1197.93 D) $1135.90 E) $828.41

2) A $1000 face value, 10% bond (interest payable semiannually) has 20 years remaining until maturity (at which time it will be redeemed at face value). The rate of return required by the market on this type of bond is 8% compounded semiannually.

If the market value of the bond today is $1197.93, what is the bond's premium or discount? A) $0.00 B) $197.93 discount C) $197.93 premium D) $171.59 discount E) $171.59 premium

3) A $1000 face value, 10% bond (interest payable semiannually) has 20 years remaining until maturity (at which time it will be redeemed at face value). The rate of return required by the market on this type of bond is 8% compounded semiannually.

What would be the new price of the bond if the required return abruptly rises to 10%? Version 1

A) $1000.00 B) $1197.93 C) $828.41 D) $923.60 E) $1135.90

4) A bond with a face value of $1000 and 20 years remaining until maturity, pays a coupon rate of 12% compounded semiannually. What yield (compounded semiannually) to maturity is earned by an investor who purchases this bond for $850? A) 14.29% B) 11.80% C) 14.94% D) 16.32% E) 13.65%

5) A $1000 face value, 10% coupon bond (interest payable semiannually) is purchased three years before maturity to yield 6% compounded semiannually to maturity.

What amount would accountants treat as interest income for the first year? A) $100.00 B) $600.00 C) $33.25 D) $60.00 E) $66.00

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6) A $1000 face value, 10% coupon bond (interest payable semiannually) is purchased three years before maturity to yield 6% compounded semiannually to maturity.

What amount would accountants treat as interest income for the second year? A) $100.00 B) $32.23 C) $63.93 D) $64.46 E) $35.54

7) Equal deposits will be made to a sinking fund at the end of each year for eight years. The sinking fund will earn 10% compounded annually, and the maturity value of the fund after eight years must be $50,000.00.

What must be the annual deposit to the sinking fund? A) $5723.37 B) $4392.47 C) $4372.20 D) $4094.67 E) $3974.73

8) Equal deposits will be made to a sinking fund at the end of each year for eight years. The sinking fund will earn 10% compounded annually, and the maturity value of the fund after eight years must be $50,000.00.

If the annual deposit to the sinking fund is $4372.20, what will be the sinking fund's balance just after the fifth deposit?

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A) $26,692.72 B) $30,083.90 C) $19,916.10 D) $24,266.11 E) $30,169.06

9) A 15-year, $500,000 loan will be repaid by the sinking fund method. Interest only must be paid at the end of each year. At the same time, 15 equal annual deposits will be made to a sinking fund that is to accumulate the $500,000 needed to repay the principal after 15 years. Interest on the loan is 14% compounded annually, and the sinking fund will earn 10% compounded annually.

What will be the increase in the sinking fund during the 10th year? A) $21,369.87 B) $37,106.76 C) $25,080.55 D) $37,086.79 E) $15,736.89

10) A 15-year, $500,000 loan will be repaid by the sinking fund method. Interest only must be paid at the end of each year. At the same time, 15 equal annual deposits will be made to a sinking fund that is to accumulate the $500,000 needed to repay the principal after 15 years. Interest on the loan is 14% compounded annually, and the sinking fund will earn 10% compounded annually.

What will be the book value of the debt just after the fifth deposit to the sinking fund?

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A) $403,924.72 B) $23,040.38 C) $96,075.28 D) $75,384.81 E) $424,615.19

11) A Government of Ontario bond has seven years remaining to maturity. The face value is $1,000, the annual coupon rate is 8% (payable in semiannual instalments) and the current market rate of return is 6% compounded semiannually. What is the market value of the bond? A) $1,000 B) $1,113 C) $1,186 D) $829 E) $977

12) Calculate the market value of the following Petro-Canada $10,000 bond. The annual coupon rate (payable in semiannual instalments) is 6%, the current market rate is 7.8% compounded semiannually and the bond will mature in 13 years. A) $13,932 B) $11,260 C) $9,036 D) $8,874 E) $8,546

13) Nine years ago ITT Corporation issued a 30-year, 11% bond with a $10,000 face value. It was sold at a price that would provide the purchaser with a yield to maturity of 8.63% (compounded semiannually). Calculate the price.

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A) $9,476 B) $11,462 C) $12,280 D) $10,653 E) $9,218

14) Calculate the market value of a $10,000 bond that carries a coupon rate of 7% and has 11 years remaining to maturity. The current market rate on this bond is 9% compounded semiannually. A) $8,622 B) $9,579 C) $10,562 D) $11,488 E) $12,993

15) Calculate the market value of a $1,000 bond that carries a coupon rate of 5% and has 21 years remaining to maturity. The current market rate on this bond is 7.4% compounded semiannually. A) $1,310 B) $1,023 C) $904.74 D) $746.19 E) $617.88

16) Calculate the market value of a $100,000 bond that carries a coupon rate of 8% and has 7½ years remaining to maturity. The current market rate on this bond is 6.68% compounded semiannually.

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A) $92,661 B) $96,513 C) $107,689 D) $109,223 E) $104,274

17) Calculate the premium or discount on the sale of a 25-year, $1,000 Bell Canada bond that was issued six years ago with a coupon rate of 6% and is trading today at a yield rate of 5.5% (compounded semiannually). A) $25.26 premium B) $58.48 premium C) $107.16 premium D) $56.23 discount E) $24.89 discount

18) Calculate the premium or discount on the sale of a 20-year, $10,000 Rogers Communications Corp. bond that was issued nine years ago with a coupon rate of 9% and is trading today at a yield rate of 8.0% (compounded semiannually). A) $722.56 premium B) $632.96 premium C) $220.73 premium D) $159.23 discount E) $689.22 discount

19) Calculate the premium or discount on the sale of a 25-year, $1,000 Province of Quebec bond that was issued 16 years ago with a coupon rate of 6% and is trading today at a yield rate of 8.5% (compounded semiannually).

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A) $317.99 premium B) $254.86 premium C) $171.92 premium D) $155.07 discount E) $216.48 discount

20) Calculate the premium or discount on the sale of a 30-year, $1,000 General Motors bond that was issued 21 years ago with a coupon rate of 16% and is trading today at a yield rate of 6.5% (compounded semiannually). A) $429.68 discount B) $254.86 discount C) $570.32 discount D) $639.69 premium E) $1,080.10 premium

21) Calculate the market value of a 25-year, $1,000 Alberta Government bond that has nine years remaining to maturity, a coupon rate of 9% and is trading today at a yield rate of 7.2% (compounded semiannually). A) $1,169 B) $1,118 C) $1,087 D) $891 E) $848

22) Calculate the market value of a 20-year, $100,000 City of New York bond that has six years remaining to maturity, a coupon rate of 11% and is trading today at a yield rate of 8.2% (compounded semiannually).

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A) $95,214 B) $123,062 C) $113,063 D) $87,934 E) $80,230

23) Calculate the premium or discount on the sale of a 25-year, $1,000 CeeLo Corporation bond that was issued 6 years ago with a coupon rate of 8.2% and is trading today at a yield rate of 15.8% (compounded semiannually). A) $429.68 premium B) $712.14 discount C) $454.26 discount D) $287.86 discount E) $545.74 premium

24) Calculate the premium or discount on the sale of a 25-year, $1,000 Bell Canada bond that was issued six years ago with a coupon rate of 6% and is trading today at a yield rate of 5.5% (compounded semiannually). A) $58.48 premium B) $295.18 premium C) $70.88 discount D) $117.44 discount E) $17.39 premium

25) Calculate the premium or discount on the sale of a 20-year, $10,000 Molson's Corporation bond that was issued 17 years ago with a coupon rate of 13% and is trading today at a yield rate of 7.6% (compounded semiannually).

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A) $6,334.32 discount B) $3,665.68 discount C) $2,537.32 premium D) $1,424.64 premium E) $5,105.99 premium

26) A $1,000 bond with a coupon rate of 7% and 11 years remaining to maturity has a current market value of $944. Determine the yield to maturity. A) 7.529% compounded semiannually B) 7.766% compounded semiannually C) 15.057% compounded semiannually D) 3.883% compounded semiannually E) 6.749% compounded semiannually

27) A $1,000 bond with a coupon rate of 8.2% and 23 years remaining to maturity has a current market value of $1,196. Determine the yield to maturity. A) 9.337% compounded semiannually B) 7.551% compounded semiannually C) 4.863% compounded semiannually D) 6.540% compounded semiannually E) 10.187% compounded semiannually

28) The current market value of a $1,000 bond is $977. The coupon rate is 6.4% and it will reach maturity in four years. Determine the yield to maturity.

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A) 7.070% compounded semiannually B) 5.826% compounded semiannually C) 8.491% compounded semiannually D) 3.535% compounded semiannually E) 11.887% compounded semiannually

29) A 30-year, $1,000 Sunoco bond is trading at a $397 premium. The bond carries a coupon rate of 11% and it was issued 12 years ago. Determine the yield to maturity. A) 6.255% compounded semiannually B) 7.414% compounded semiannually C) 12.510% compounded semiannually D) 6.250% compounded semiannually E) 7.068% compounded semiannually

30) A 25-year, $1,000 CeeLo bond is trading at a $620 discount. The bond carries a coupon rate of 9% and it was issued 10 years ago. Determine the yield to maturity. A) 7.81% compounded semiannually B) 8.522% compounded semiannually C) 12.460% compounded semiannually D) 13.699% compounded semiannually E) 24.921% compounded semiannually

31) A $1000, 25-year bond carrying a coupon rate of 8.00% was issued at a $32 premium. What was the market rate of return at the time the bond was issued?

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A) 8.306% compounded semiannually B) 7.709% compounded semiannually C) 8.000% compounded semiannually D) 6.400% compounded semiannually E) 7.815% compounded semiannually

32) The John Deere Corporation has issued $10,000,000 in bonds and they are required to set up a sinking fund that will provide enough money to retire 80% of the bond issue when it matures in 25 years. They will make equal semiannual deposits that will earn 9% compounded semiannually. How much money will be in the sinking fund after 20 years? A) $8,000,000 B) $6,699,381 C) $4,796,796 D) $5,995,995 E) $7,281,316

33) The Home Depot Corporation has issued $80,000,000 in bonds and they are required to set up a sinking fund that will provide enough money to retire 75% of the bond issue when it matures in 30 years. They will make equal semiannual deposits that will earn 8% compounded semiannually. After 25 years, what will be the book value of the debt? A) $38,489,006 B) $71,486,397 C) $80,000,000 D) $28,681,325 E) $41,510,993

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34) Air Canada is setting up a sinking fund to replace aircraft in 20 years. The fund is expected to accumulate $500,000,000 by making equal deposits at the end of every three months earning 7% compounded quarterly. By how much will the sinking fund grow during the 14th year? A) $11,641,862 B) $29,457,474 C) $45,722,052 D) $142,939,067 E) $273,079,346

35) Murphy Company pays $15,000 into a sinking fund at the end of every month. The fund earns 9% compounded monthly. By how much will the sinking fund grow during the 5th year? A) $1,131,362 B) $15,455 C) $196,200 D) $268,551 E) $411,594

36) A government hydro bond was issued on April 23, 2005 with a maturity date of April 23, 2025. If the bond was purchased on April 23, 2015 and has a coupon rate of 2.4% compounded semiannually with a market rate of 1.8% compounded semiannually, what was the value of the bond on the date purchased? Assume a par value of $1,000. A) $1,064.59 B) $1,084.59 C) $876.59 D) $1,224.59 E) $1,624.59

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37) A junk bond was issued on May 1, 2008 with a maturity date of May 1, 2018. If the bond was purchased on May 1, 2013 and has a coupon rate of 13% compounded semiannually with a market rate of 1.9% compounded semiannually, what was the value of the bond on the date purchased? Assume a par value of $1,000. A) $1,117.07 B) $1,527.07 C) $1,247.07 D) $1,677.07 E) $1,599.98

38) You purchased a $1,000 face value Saskatchewan Hydro Energy bond maturing in seven years. The coupon rate was 4.5% payable semiannually. If the prevailing market rate at the time of purchase was 5.6% compounded semiannually, what price did you pay for the bond? A) $973.02 B) $859.02 C) $937.02 D) $1,002.02 E) $987.02

39) Your client purchased a $10,000 bond carrying a 2.5% coupon rate when it had twelve years remaining until maturity. What price did they pay if the prevailing rate of return on the purchase date was 4.2% compounded semiannually? A) $9,846.71 B) $9,930.71 C) $9,398.71 D) $9,278.71 E) $9,458.71

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40) A hydro bond with a face value of $5,000 and twenty years remaining until maturity pays a coupon rate of 3.2% compounded semiannually. Calculate its effective yield to maturity if it is priced at $4,800. A) 3.51% B) 2.51% C) 7.02% D) 1.26% E) 4.51%

41) You bought a 2.4% compounded semiannually coupon, $8,000 face value corporate bond for $6,700 when it had nineteen years remaining until maturity. What is your nominal and effective yields to maturity on the bond? A) 3.59% Effective 3.62% compounded semiannually B) 3.62% Effective 3.59% compounded semiannually C) 7.24% Effective 7.18% compounded semiannually D) 1.81% Effective 1.79% compounded semiannually E) 3.12% Effective 3.19% compounded semiannually

42) A corporate bond and a government bond both have a face value of $5,000 and pay a coupon rate of 3.5% compounded semiannually. They have two and fifteen years, respectively, remaining until maturity. Calculate the effective yield to maturity of each bond if it is purchased for $4,859.

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A) Corporate 3.06% Government 5.78% B) Corporate 2.07% Government 1.90% C) Corporate 5.06% Government 3.78% D) Corporate 4.45% Government 4.52% E) Corporate 10.12% Government 7.56%

43) A corporate bond with a face value of $10,000 and six years remaining untilmaturity pays a coupon rate of 12% compounded semiannually. Calculate its effective yield to maturity if it is priced at $12,550. A) 4.87% B) 9.87% C) 8.87% D) 6.87% E) 3.94%

44) Delta Airlines bonds and Air Canada bonds both have a face value of $100,000 and pay a coupon rate of 6.45% compounded semiannually. They have nine and twenty-two years, respectively, remaining until maturity. Calculate the effective yield to maturity of each bond if it is purchased for $104,000.

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A) Air Canada 12.42% Delta 11.97% B) Air Canada 3.10% Delta 3.59% C) Air Canada 6.21% Delta 3.49% D) Air Canada 3.15% Delta 5.96% E) Air Canada 6.21% Delta 5.96%

45) A $50,000 Petronas Corp. bond carrying a 12% coupon is currently priced to yield 4% compounded semiannually until maturity. If the bond price abruptly falls by $1,250, what is the change in the nominal yield to maturity if the bond has four years remaining to maturity? A) 2.59% B) 1.08% C) 0.30% D) 0.59% E) 0.99%

46) A $5,000, 12% coupon bond issued by Caesar's Entertainment on August 15, 2011 matures on August 15, 2036. What was its flat price on June 1, 2020 when the required yield to maturity was 5.5% compounded semiannually? A) $8,671.08 B) $8,871.08 C) $8,431.08 D) $6,671.08 E) $9,271.08

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47) A $1,000, 3.75% coupon, thirty year bond was issued by Potash Saskatchewan on March 15, 1998. At what flat price did it trade on July 4, 2019, when the market's required return was 9% compounded semiannually? A) $684.43 B) $692.20 C) $675.23 D) $599.92 E) $701.56

48) A $5,000, 3.2% coupon, twenty-year Ontario Hydro bond was issued on March 15, 2009. Calculate its flat price on and September 15, 2020, if the yield to maturity on the date was 6% compounded semiannually. A) $4,984.43 B) $4,271.97 C) $4,454.97 D) $4,290.62 E) $4,900.11

49) A $1,000, 13% coupon, twenty-year Marriott Hotels bond was issued on September 20, 2017. Calculate its (flat) price on March 22, 2019 if the yield to maturity was 5.9% compounded semiannually. A) $1,983.68 B) $1543.68 C) $1,353.68 D) $1,793.68 E) $1,993.68

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50) Your company requires $113 million to purchase new planes in seven years. If your company wishes to put aside funds every three months for twelve years and can 3.2% compounded quarterly, how much money, to the nearest dollar, will be required for payments to build the fund? Assume the first payment will begin in three months. A) $3,756,629 B) $4,616,629 C) $5,616,629 D) $3,916,629 E) $3,616,629

51) Your company requires $100,000 to purchase a new warehouse in three years. If your company wishes to put aside funds every year, starting today, and can 2.2% compounded annually, how much money, to the nearest dollar, will be required for payments to build the fund? A) $31,909 B) $32,450 C) $32,245 D) $32,098 E) $30,925

52) Your company wishes to build a new spa and hotel and needs $27 million to begin construction in six years. If your company can put aside funds every month for six years and can 2.2% compounded monthly, how much money, to the nearest dollar, will be required for payments to build the fund? Assume the first payment will one month from now.

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A) $352,084 B) $351,137 C) $354,873 D) $350,581 E) $354,945

53) Your company requires $1.75 million to purchase land for a new development. If your company wishes to put aside funds every month for six years and can 3.2% compounded quarterly, how much money, to the nearest dollar, will be required for payments to build the fund? A) $22,850 B) $23,490 C) $22,085 D) $21,950 E) $23,272

54) Calculate the purchase price of the $1000 face value of the bond. (Assume that bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed at its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date June 1, 2000

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Maturity Date June 1, 2020

Purchase Date June 1, 2006

Coupon Rate 5.75%

Market Rate 4.5%

55) Calculate the purchase price of the $1000 face value of the bond. (Assume that bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed at its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date June 15, 2005

Maturity Date June 15, 2030

Purchase Date December 15, 2011

Coupon Rate 5.0%

Market Rate 6.0%

56) Calculate the purchase price of the $1000 face value of the bond. (Assume that bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed at its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date December 15, 1998

Maturity Date December 15, 2023

Purchase Date June 1, 2001

Coupon Rate 4.75%

Market Rate 5.9%

57) Calculate the purchase price of the $1000 face value of the bond. (Assume that bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed at its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date January 1, 1997

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Maturity Date January 1, 2017

Purchase Date July 1, 2005

Coupon Rate 7.3%

Market Rate 3.8%

58) Calculate the purchase price of the $1000 face value of the bond. (Assume that bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed at its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date May 15, 2000

Maturity Date May 15, 2020

Purchase Date November 15, 2006

Coupon Rate 6.0%

Market Rate 4.0%

59) Calculate the purchase price of the $1000 face value of the bond. (Assume that bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed at its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date January 31, 2009

Maturity Date January 31, 2039

Purchase Date July 31, 2011

Coupon Rate 5.1%

Market Rate 6.0%

60) Calculate the purchase price of the $1000 face value of the bond. (Assume that bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed at its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date March 15, 1997

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Maturity Date March 15, 2022

Purchase Date September 15, 2001

Coupon Rate 8.8%

Market Rate 17.0%

61) Calculate the purchase price of the $1000 face value of the bond. (Assume that bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed at its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date October 31, 1991

Maturity Date October 31, 2016

Purchase Date April 30, 2008

Coupon Rate 16.0%

Market Rate 5.7%

62) Denis purchased a $10,000 face value Ontario Hydro Energy bond maturing in five years. The coupon rate was 6.5% payable semiannually. If the prevailing market rate at the time of purchase was 5.8% compounded semiannually, what price did Denis pay for the bond?

63) Bernard purchased a $50,000 bond carrying a 4.5% coupon rate when it had 8 years remaining until maturity. What price did he pay if the prevailing rate of return on the purchase date was 5.2% compounded semiannually?

64) A $1000, 6.5% coupon bond has 13½ years remaining until maturity. Calculate the bond premium if the required return in the bond market is 5.5% compounded semiannually.

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65) A $1000, 5.5% coupon bond has 8½ years remaining until maturity. Calculate the bond premium if the required return in the bond market is 6.3% compounded semiannually.

66) A $5000, 5.75% coupon bond has 16 years remaining until maturity. Calculate the bond discount if the required return in the bond market is 6.5% compounded semiannually.

67) A $25,000, 6.25% coupon bond has 21½ years remaining until maturity. Calculate the bond discount if the required return in the bond market is 5.2% compounded semiannually.

68) Eight years ago, Yan purchased a $20,000 face value, 6% coupon bond with 15 years remaining to maturity. The prevailing market rate of return at the time was 7.2% compounded semiannually; now it is 4.9% compounded semiannually. How much more or less is the bond worth today?

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69) Bond A and Bond B both have a face value of $1000, each carries a 5% coupon, and both are currently priced at par in the bond market. Bond A matures in 2 years and Bond B matures in 10 years. If the prevailing required rate of return in the bond market suddenly drops to 4.7% compounded semiannually, how much will the market price of each bond change?

70) Bond C and Bond D both have a face value of $1000, and each carries a 4.2% coupon. Bond C matures in 3 years and Bond B matures in 23 years. If the prevailing required rate of return in the bond market suddenly rises from the current 4.5% to 4.8% compounded semiannually, how much will the market price of each bond change?

71) Bonds A, B, C, and D all have a face value of $1000 and carry a 7% coupon. The time remaining until maturity is 5, 10, 15, and 25 years for A, B, C, and D, respectively. Calculate their market prices if the rate of return required by the market on these bonds is 6% compounded semiannually.

72) Bonds E, F, G, and H all have a face value of $1000 and carry a 7% coupon. The time remaining until maturity is 5, 10, 15, and 25 years for E, F, G, and H, respectively. Calculate their market prices if the rate of return required by the market on these bonds is 8% compounded semiannually.

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73) Bonds J, K, and L all have a face value of $1000 and all have 20 years remaining until maturity. Their respective coupon rates are 6%, 7%, and 8% compounded semiannually. Calculate their market prices if the rate of return required by the market on these bonds is 5% compounded semiannually.

74) Bonds M, N, and Q all have a face value of $1000 and all have 20 years remaining until maturity. Their respective coupon rates are 7%, 6%, and 5%. Calculate their market prices if the rate of return required by the market on these bonds is 8% compounded semiannually.

75) A $1000, 7% coupon bond has 15 years remaining until maturity. The rate of return required by the market on these bonds has recently been 7% (compounded semiannually). Calculate the price change if the required return abruptly:

a) Rises to 8%. b) Rises to 9%. c) Falls to 6%. d) Falls to 5%.

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76) Bonds K and L both have a face value of $1000 and 15 years remaining until maturity. Their coupon rates are 6% and 8%, respectively. If the prevailing market rate decreases from 7.5% to 6.5% compounded semiannually, calculate the price change of each bond:

a) In dollars. b) As a percentage of the initial price, to the nearest 0.01%.

77) Three years after the issue of a $10,000, 6.5% coupon, 25-year bond, the rate of return required in the bond market on long-term bonds is 5.6% compounded semiannually.

a) At what price would the bond sell? b) What capital gain or loss (expressed as a percentage of the original investment to the nearest 0.01%) would the owner realize by selling the bond at that price?

78) Four and one-half years ago Gavin purchased a $25,000 bond in a new Province of Ontario issue with a 20-year maturity and a 6.1% coupon. If the prevailing market rate is now 7.1% compounded semiannually:

a) What would be the proceeds from the sale of Gavin's bonds? b) What would be the capital gain or loss (expressed as a percentage of the original investment to the nearest 0.01%)?

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79) Three years ago Quebec Hydro sold an issue of 20-year, 6.5% coupon bonds. Calculate an investor's percent capital gain or loss for the entire three-year holding period if the current semiannually compounded return required in the bond market is:

a) 5.5%. b) 6.5%. c) 7.5%. Round to the nearest 0.01%

80) Two and one-half years ago the Province of Saskatchewan sold an issue of 25-year, 6% coupon bonds. Calculate an investor's percent capital gain or loss for the entire 2½-year holding period if the current rate of return required in the bond market is:

a) 6.5%. b) 6%. c) 5.5%. Round to the nearest 0.01%

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81) During periods of declining interest rates, long-term bonds can provide investors with impressive capital gains. The best example in recent times occurred in the early 1980s. In September 1981 the bond market was pricing long-term bonds to provide a rate of return of over 18.5% compounded semiannually. Suppose you had purchased 10% coupon bonds in September 1981 with 20 years remaining until maturity. Four and one-half years later (in March 1986) the bonds could have been sold at a prevailing market rate of 9.7% compounded semiannually. What would have been your semiannually compounded rate of total return on the bonds during the 4½year period? Round to the nearest 0.01%

82) The downside of the long-term bond investment story occurs during periods of rising long-term interest rates, when bond prices fall. During the two years preceding September 1981, the market rate of return on long-term bonds rose from 11% to 18.5%, compounded semiannually. Suppose you had purchased 10% coupon bonds with 22 years remaining until maturity in September 1979 and sold them in September 1981. What would have been your semiannually compounded rate of total return on the bonds during the two-year period? Round to the nearest 0.01%

83) A bond with a face value of $1000 and 15 years remaining until maturity pays a coupon rate of 5%. Calculate its nominal yield to maturity, to the nearest 0.01%, if it is priced at $900.

84) A bond with a face value of $1000 and 15 years remaining until maturity pays a coupon rate of 10%. Calculate its nominal yield to maturity, to the nearest 0.01%, if it is priced at $1250.

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85) Manuel bought a $100,000 bond with a 4% coupon for $92,300 when it had five years remaining to maturity. What was the prevailing nominal market rate, to the nearest 0.01%, at the time Manuel purchased the bond?

86) Pina bought a 6% coupon, $20,000 face value corporate bond for $21,000 when it had 10 years remaining until maturity. What are her nominal and effective yields to maturity, to the nearest 0.01%, on the bond?

87) Bonds A and C both have a face value of $1000 and pay a coupon rate of 6.5%. They have 5 and 20 years, respectively, remaining until maturity. Calculate the nominal yield to maturity, to the nearest 0.01%, of each bond if it is purchased for $950.

88) Bonds D and E both have a face value of $1000 and pay a coupon rate of 7%. They have 5 and 20 years, respectively, remaining until maturity. Calculate the nominal yield to maturity, to the nearest 0.01%, of each bond if it is purchased for $1050.

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89) A $5000 Government of Canada bond carrying a 6% coupon is currently priced to yield 6% compounded semiannually until maturity. If the bond price abruptly rises by $100, what is the change in the yield to maturity if the bond has:

a) Three years remaining to maturity? b) 15 years remaining to maturity? Round to the nearest 0.01%

90) A $10,000 Nova Chemicals Corp bond carrying an 8% coupon is currently priced to yield 7% compounded semiannually until maturity. If the bond price abruptly falls by $250, what is the change in the yield to maturity if the bond has:

a) Two years remaining to maturity? b)12 years remaining to maturity? Round to the nearest 0.01%

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91) In the spring of 1992 it became apparent that Olympia & York (O&Y) would have serious difficulty in servicing its debt. Because of this risk, investors were heavily discounting O&Y's bond issues. On April 30, 1992 an Olympia & York bond issue, paying an 11.25% coupon rate and maturing on October 31, 1998, traded at $761.50 (per $1000 of face value). (This was at a time when Government of Canada bonds with a similar coupon and maturity date were trading at a premium of about 10% above par.) If O&Y had managed to make the contractual payments on these bonds, what nominal yield to maturity, to the nearest 0.01%, would investors who purchased those bonds on April 30, 1992, have realized? (P.S. They didn't!)

92) Calculate the purchase price of the $1000 face value of the bond. (Assume that bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed for its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date October 31, 1991

Maturity Date October 31, 2016

Purchase Date April 30, 2008

Coupon Rate 16.0%

Market Rate 5.7%

93) Calculate the purchase price of the $1000 face value of the bond. (Assume that bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed for its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date March 15, 2002

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Maturity Date March 15, 2027

Purchase Date October 5, 2008

Coupon Rate 5.5%

Market Rate 6.0%

94) Calculate the purchase price of the $1000 face value of the bond. (Assume that bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed for its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date January 1, 2006

Maturity Date January 1, 2021

Purchase Date April 15, 2006

Coupon Rate 4.0%

Market Rate 4.5%

95) Calculate the purchase price of the $1000 face value of the bond. (Assume that bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed for its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date September 20, 2008

Maturity Date September 20, 2028

Purchase Date June 1, 2011

Coupon Rate 5.0%

Market Rate 5.8%

96) Calculate the purchase price of the $1000 face value of the bond. (Assume that bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed for its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date August 1, 2005

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Maturity Date August 1, 2025

Purchase Date December 15, 2009

Coupon Rate 6.1%

Market Rate 4.9%

97) Calculate the purchase price of the $1000 face value of the bond. (Assume that bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed for its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date July 1, 2012

Maturity Date July 1, 2023

Purchase Date April 9, 2013

Coupon Rate 4.3%

Market Rate 5.5%

98) Calculate the purchase price of the $1000 face value of the bond. (Assume that bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed for its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date

Maturity Date

December 1, 2012

December 1, 2032

Purchase Date March 25, 2014

Coupon Rate 5.2%

Market Rate 5.7%

99) Calculate the purchase price of the $1000 face value of the bond. (Assume that bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed for its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date April 1, 2003

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Maturity Date April 1, 2027

Purchase Date June 20, 2005

Coupon Rate 5.4%

Market Rate 6.1%

100) A $1000, 6.5% coupon bond issued by Bell Canada matures on October 15, 2029. What was its flat price on June 11, 2010 if its yield to maturity was 4.75% compounded semiannually?

101) A $1000, 6% coupon, 25year Government of Canada bond was issued on June 1, 2005. At what flat price did it sell on April 27, 2009 if the market's required return was 4.6% compounded semiannually?

102) A $1000, 10% coupon bond issued by Ontario Hydro on July 15, 1994 matures on July 15, 2019. What was its flat price on June 1, 2003 when the required yield to maturity was 5.5% compounded semiannually?

103) A $1000, 6.75% coupon, 25-year Government of Canada bond was issued on March 15, 1971. At what flat price did it trade on July 4, 1981, when the market's required return was 17% compounded semiannually?

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104) A $1000, 5.2% coupon, 20-year Province of Ontario bond was issued on March 15, 2013. Calculate its flat price on March 15, April 15, May 15, June 15, July 15, August 15, and September 15, 2014, if the yield to maturity on every date was 6% compounded semiannually.

105) A $1000, 7% coupon, 15-year Province of Saskatchewan bond was issued on May 20, 2001. Calculate its flat price on May 20, June 20, July 20, August 20, September 20, October 20, and November 20, 2003, if the yield to maturity on every date was 5.9% compounded semiannually.

106) A $1000 face value, 7.6% coupon bond pays interest on May 15 and November 15. If its flat price on August 1 was $1065.50, at what price (expressed as a percentage of face value to the nearest 0.01%) would the issue have been reported in the financial pages?

107) A $5000 bond was sold for $4860 (flat) on September 17. If the bond pays $200 interest on June 1 and December 1 of each year until maturity, what price (expressed as a percentage of face value to the nearest 0.01%) would have been quoted for bonds of this issue on September 17?

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108) If a broker quotes a price of 108.50 for a bond on October 23, what amount will a client pay per $1000 face value? The 7.2% coupon rate is payable on March 1 and September 1 of each year. The relevant February has 28 days.

109) Calculate the quoted price on April 15, 2006 of the bond outlined below. (Assume that the face value is $1000, that the purchase price is $958.06, that the bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed for its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date January 1, 2006

Maturity Date January 1, 2021

Purchase Date April 15, 2006

Coupon Rate 4.0%

Market Rate 4.5%

110) Calculate the quoted price on June 1, 2011 of the bond outlined below. (Assume that the face value is $1000, that the purchase price is $923.19, that the bond interest is paid semiannually, that the bond was originally issued at its face value, that the bond is redeemed for its face value at maturity and that the market rate of return is compounded semiannually.) Issue Date September 20, 2008

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Maturity Date September 20, 2028

Purchase Date June 1, 2011

Coupon Rate 5.0%

Market Rate 5.8%

111) A $5000, 7% coupon, 20-year bond issued on January 21, 2006, was purchased on January 25, 2007, to yield 6.5% to maturity, and then sold on January 13, 2008, to yield 5.2% to maturity. What was the investor's capital gain or loss:

a) In dollars? b) As a percentage of her original investment, to the nearest 0.01%?

112) A $10,000, 14% coupon, 25-year bond issued on June 15, 1984, was purchased on March 20, 1987, to yield 9% to maturity, and then sold on April 20, 1990, to yield 11.5% to maturity. What was the investor's capital gain or loss:

a) In dollars? b) As a percentage of his original investment, to the nearest 0.01%?

113)

For the sinking fund calculate (rounded to the nearest dollar):

a) The size of the periodic sinking fund payment b) The balance in the sinking fund at the time indicated in the last column. (Round the sinking fund payment to the nearest dollar before calculating the balance.) End-of-Term Amount in Sinking Fund $12 million

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Term

10 years

Sinking Fund Rate of Return 7%

Payment and Compounding Interval 6 months

Payment at Balance at the Beginning or End of End of Interval? Interval End

114)

For the sinking fund calculate (rounded to the nearest dollar):

115)

Term

10 years

Sinking Fund Rate of Return 3%

Payment and Compounding Interval 6 months

Payment at Balance at the Beginning or End of End of Interval? Interval End

For the sinking fund calculate (rounded to the nearest dollar):

116)

Term

15 years

Sinking Fund Rate of Return 6.5%

Payment and Compounding Interval 1 year

Payment at Balance at the Beginning or End of End of Interval? Interval End

For the sinking fund calculate (rounded to the nearest dollar):

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End-of-Term Amount in Sinking Fund $8 million

117)

Term

10 years

Sinking Fund Rate of Return 7.5%

Payment and Compounding Interval 1 month

Payment at Balance at the Beginning or End of End of Interval? Interval End

For the sinking fund calculate (rounded to the nearest dollar):

118)

Term

5 years

Sinking Fund Rate of Return 5.25%

Payment and Compounding Interval 1 month

Payment at Balance at the Beginning or End of End of Interval? Interval Beginning

For the sinking fund calculate (rounded to the nearest dollar):

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Term

10 years

Sinking Fund Rate of Return 6.5%

Payment and Compounding Interval 3 months

Payment at Balance at the Beginning or End of End of Interval? Interval Beginning

119)

For the sinking fund calculate (rounded to the nearest dollar):

120)

Term

15 years

Sinking Fund Rate of Return 2.75%

Payment and Compounding Interval 6 months

Payment at Balance at the Beginning or End of End of Interval? Interval Beginning

For the sinking fund calculate (rounded to the nearest dollar):

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Term

10 years

Sinking Fund Rate of Return 5.75%

Payment and Compounding Interval 1 year

Payment at Balance at the Beginning or End of End of Interval? Interval Beginning

121) The following bond has a sinking fund requirement for retiring the entire principal amount of the issue on its maturity date. Calculate (to the nearest dollar):

a) The size of the sinking fund payment at the end of every six months b) The annual cost of the debt c) The book value of the debt at the end of the indicated interval (rounding the sinking fund payment to the nearest dollar before calculating the book value). Principal Amount of Bond Issue $10 million

Term 10 years

Sinking Fund Rate of Return 7%

Coupon Rate 10%

Book Value at the End of Interval 12

122) The following bond has a sinking fund requirement for retiring the entire principal amount of the issue on its maturity date. Calculate (to the nearest dollar):

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Term 5 years

Sinking Fund Rate of Return 6%

Coupon Rate 8.5%

Book Value at the End of Interval 6

123) The following bond has a sinking fund requirement for retiring the entire principal amount of the issue on its maturity date. Calculate (to the nearest dollar):

Term 15 years

Sinking Fund Rate of Return 6.5%

Coupon Rate 9%

Book Value at the End of Interval 21

124) The following bond has a sinking fund requirement for retiring the entire principal amount of the issue on its maturity date. Calculate (to the nearest dollar):

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Term 10 years

Sinking Fund Rate of Return 7.5%

Coupon Rate 10.5%

Book Value at the End of Interval 15

125) The following bond has a sinking fund requirement for retiring the entire principal amount of the issue on its maturity date. Calculate (to the nearest dollar):

Term 5 years

Sinking Fund Rate of Return 5.75%

Coupon Rate 8%

Book Value at the End of Interval 7

126) The following bond has a sinking fund requirement for retiring the entire principal amount of the issue on its maturity date. Calculate (to the nearest dollar):

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Term 10 years

Sinking Fund Rate of Return 6.5%

Coupon Rate 9.25%

Book Value at the End of Interval 18

127) The following bond has a sinking fund requirement for retiring the entire principal amount of the issue on its maturity date. Calculate (to the nearest dollar):

Term

Sinking Fund Rate of Return

15 years

7.5%

Coupon Rate 10.25%

Book Value at the End of Interval 19

128) The following bond has a sinking fund requirement for retiring the entire principal amount of the issue on its maturity date. Calculate (to the nearest dollar):

Term

Sinking Fund Rate of Return

10 years

Coupon Rate 9.75%

Book Value at the End of Interval 11

129) Complete the sinking fund schedule below. The rate of return is 7% compounded semiannually. Round the periodic interest earnings to the nearest dollar. PMT # 0

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PMT ($) (at end) -

Interest ($) -

Increase in Fund ($) -

Balance in Fund ($) 0

122,135

4275

126,410

248,545

122,135

8699

130,834

379,379

122,135

13,278

135,413

514,792

122,135

22,923

145,058

800,003

130) Complete the sinking fund schedule below. The rate of return is 6% compounded annually. Round the periodic interest earnings to the nearest dollar. PMT #

PMT ($) (at end)

96,770

Interest ($)

Increase in Fund ($)

Balance in Fund ($)

96,770

5806

102,576

199,346

96,770

11,961

108,731

308,077

96,770

18,485

115,255

423,332

96,770

32,730

129,500

675,002

131) Complete the sinking fund schedule below. The rate of return is 6.75% compounded annually. Round the periodic interest earnings to the nearest dollar. PMT #

PMT ($) (at beg)

163,710

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Interest ($) -

Increase in Fund ($) -

Balance in Fund ($) 0

163,710

22,847

186,557

361,317

163,710

35,439

199,149

560,466

163,710

63,232

226,942

1,000,000

132) Complete the sinking fund schedule below. The rate of return is 5.75% compounded semiannually. Round the periodic interest earnings to the nearest dollar. PMT #

PMT ($) (at beg)

60,390

Interest ($)

Increase in Fund ($)

Balance in Fund ($)

60,390

3522

63,912

126,038

60,390

5360

65,750

191,788

60,390

7250

67,640

259,428

60,390

11,195

71,585

400,598

60,390

13,253

73,643

474,241

60,390

15,371

75,761

550,002

133) Complete the partial sinking fund schedule showing the details of Payments 1, 2, 11, 12, 19, and 20. The rate of return is 3% compounded semiannually. Round the periodic interest earnings to the nearest dollar. PMT #

PMT ($) (at end)

302,720

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Interest ($) -

Increase in Fund ($) -

Balance in Fund ($) 0

302,720

4541

307,261

302,720

48,599

351,319

302,720

93,038

395,758

302,720

98,975

609,981

3,591,247 3,947,836

6,598,302

134) Complete the partial sinking fund schedule showing the details of Payments 1, 2, 39, 40, 59, and 60. The rate of return is 5.25% compounded monthly. Round the periodic interest earnings to the nearest dollar. PMT #

PMT ($) (at beg)

87,284

Interest ($)

Increase in Fund ($)

Balance in Fund ($)

87,284

765

88,049

175,715

87,284

16,200

103,484

87,284

25,642

112,926

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3,719,128 3,823,065

5,886,578

87,284

26,136

135) Complete the partial sinking fund schedule (including the book value of the debt) showing the details of the first two and the last two payments. The rate of return is 7% compounded semiannually and the term is 10 years. Round the sinking fund payments and periodic interest earnings to the nearest dollar. PMT # PMT ($) (at end) 0

Interest ($)

Increase in Fund ($) Balance in Fund ($)

Book Value ($)

10,000,000

12,376

365,987

719,598

9,280,402

326,207

679,818

1 2

1,336,640

19 20

10,000,007

(7)

136) Complete the partial sinking fund schedule (including the book value of the debt) showing the details of the first two and the last two payments. The rate of return is 6% compounded semiannually and the term is 5 years. Round the sinking fund payments and periodic interest earnings to the nearest dollar. PMT # 0

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PMT ($) (at end) -

Interest ($) -

Increase in Fund ($) Balance in Fund ($) -

Book Value ($) 8,000,000 49

1 2

20,935

718,779

212,684

910,528

1416623

6583377

1794537

9 10

7999999

137) To provide for the automation of a production process in five years, Dominion Chemicals is starting a sinking fund to accumulate $600,000 by the end of the five years. Sinking fund payments are to be made at the beginning of every month. Round the sinking fund payments and the periodic interest earnings to the nearest dollar.

a) If the sinking fund earns 7.5% compounded monthly, what monthly payments starting today should be made to the fund? b) How much interest will be earned in the fourth year? c) In what month will the fund pass the halfway point? d) How much interest will be earned in the 35th month?

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138) To provide for the automation of a production process in five years, Dominion Chemicals is starting a sinking fund to accumulate $600,000 by the end of the five years. Sinking fund payments are to be made at the end of every month. Round the sinking fund payments and the periodic interest earnings to the nearest dollar.

a) If the sinking fund earns 7.5% compounded monthly, what monthly payments starting at the end of the month should be made to the fund? b) How much interest will be earned in the fourth year? c) In what month will the fund pass the halfway point? d) How much interest will be earned in the 35th month?

139) ThermoTech Systems recently sold a $20-million bond issue with a 20-year maturity and a coupon rate of 7% compounded semiannually. The bond indenture contract requires ThermoTech to make equal payments at the end of every six months into a sinking fund administered by National Trust. The sinking fund should accumulate the full $20 million required to redeem the bonds at their maturity. Round the sinking fund payments and periodic interest earnings to the nearest dollar.

a) What must the size of the sinking fund payments be if the fund earns 4.5% compounded semiannually? b) How much interest will the fund earn in the sixth year? c) How much will the fund increase in the 27th payment interval?

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140) The town of Mount Hope is financing a $4.5-million upgrade to its water system through the province's Municipal Finance Authority. The MFA obtained financing via a bond issue with interest at 7.5% per annum payable semiannually. Also, at the end of every six months, the town is to make equal payments into a sinking fund administered by the MFA so that the necessary funds are available to repay the $4.5-million debt when it matures in 17 years. The sinking fund earns 4% compounded semiannually. Round the sinking fund payments and periodic interest earnings to the nearest dollar.

a) Calculate the size of the sinking fund payments. b) How much will the fund increase in the 18th payment interval? c) How much interest will the fund earn in the 10th year?

141) A sinking fund is to be set up to provide for the repayment of 80% of the principal amount of a $1-million debt in 10 years. Equal payments are to be made at the beginning of each quarter. The sinking fund will earn 7% compounded quarterly. Calculate the size of the sinking fund payments to the nearest dollar.

142) A sinking fund is to be set up to provide for the repayment of 80% of the principal amount of a $1 million debt in 10 years. Equal payments are to be made at the end of every quarter. The sinking fund will earn 7% compounded quarterly. Calculate the size of the sinking fund payments to the nearest dollar.

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143) A $1000, 7.5% coupon bond has 19½ years remaining until maturity. Calculate the bond discount if the required return in the bond market is 8.6% compounded semiannually.

144) Four years after the issue of a $10,000, 9.5% coupon, 20-year bond, the rate of return required in the bond market on long-term bonds was 7.8% compounded semiannually.

a) At what price did the bond then sell? b) What capital gain or loss (expressed in dollars) would the original owner have realized by selling the bond at that price?

145) Four and one-half years ago Glenda purchased fifteen $1000 bonds in a Province of New Brunswick issue carrying an 8.5% coupon and priced to yield 9.8% (compounded semiannually). The bonds then had 18 years remaining until maturity. The bond market now requires a yield to maturity on the bonds of 8.0% compounded semiannually. If Glenda sells the bonds today, what will be the dollar amount of her capital gain or loss?

146) A $1000 face value, 6.8% coupon, Province of Ontario bond with 18 years to run until maturity is currently priced to yield investors 6.5% compounded semiannually until maturity. How much lower would the bond's price have to be to make the yield to maturity 7% compounded semiannually?

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147) Two and one-half years ago, Nova Scotia Power sold an issue of 25-year, 8% coupon bonds. If the current semiannually compounded return required in the bond market is 6.9%, calculate the percent capital gain or loss on the bonds over the entire 2½-year holding period. Round to the nearest 0.01%

148) Calculate the nominal yield to maturity, to the nearest 0.01%, on a bond purchased for $1034.50 if it carries a 7.9% coupon and has 8½ years remaining until maturity.

149) A New Brunswick Power bond issue carrying a 7.6% coupon matures on November 1, 2025. At what price did $1000 face value bonds trade on June 10, 2013, if the yield to maturity required by the bond market on that date was 5.9% compounded semiannually?

150) A New Brunswick Electric bond issue carrying a 7.6% coupon matures on November 1, 2020. Face value bonds of $1000 traded on June 10, 2013 (yield to maturity required by the bond market on that date was 5.9% compounded semiannually). Calculate the quoted price on June 10, 2000.

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151) The Cowichan Regional District borrowed $500,000 through the Provincial Finance Authority to purchase firefighting equipment. At the end of every 6 months, the regional district must make a sinking fund payment of a size calculated to accumulate $500,000 after 7 years to repay the principal amount of the debt. The sinking fund earns 7% compounded semiannually. Complete the partial sinking fund schedule showing details of the first two and the last two payments. Round the sinking fund payments and periodic interest earnings to the nearest dollar. PMT # 0

PMT ($) (at end) -

Interest ($)

Increase in Fund ($) Balance in Fund ($)

Book Value ($)

500000

990

29,275

57,560

442440

15,951

44,236

1 2

86984

13 14

499,993

152) A $1000, 9.5% coupon Government of Canada bond has 10 years remaining until its maturity. It is currently priced at 108.25 (percent of face value).

a) To the nearest 0.01%, what is the bond's semiannually compounded yield to maturity? b) If the bond price abruptly rises by $25, what is the change in its yield to maturity?

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153) A $1000, 6.5% coupon, 20-year Government of Canada bond was issued on June 15, 2009. At what price did it trade on December 10, 2013, when the market's required return was 5.2% compounded semiannually?

154) If a broker quotes a price of 111.25 for a bond on September 10, what amount will a client pay per $1000 face value? The 7% coupon rate is payable on May 15 and November 15 of each year.

155) Laurentian Airways is preparing for the replacement of one of its passenger jets in three years by making payments to a sinking fund at the beginning of every six months for the next three years. The fund can earn 6% compounded semiannually, and the capital required in three years is $750,000. Complete the sinking fund schedule. Round the sinking fund payments and periodic interest earnings to the nearest dollar. PMT # 0

PMT ($) (at beg) -

Interest ($)

Increase in Fund ($)

Balance in Fund ($)

6856

119,427

235,375

10,438

123,009

358,384

14,129

126,700

485,084

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5 6

21,845

134,416

750,001

156) The municipality of Duncan has financed a sewage treatment plant by issuing $18 million worth of sinking fund debentures. The debentures have a 15-year term and pay a coupon rate of 9% compounded semiannually. Rounding to the nearest dollar:

a) What equal payments at the end of every six months will be necessary to accumulate $18 million after 15 years if the sinking fund can earn 6.25% compounded semiannually? b) What is the annual cost of the debt to Duncan taxpayers?

157) A $1000 par value, 10% coupon bond was issued five years ago with 10 years remaining until maturity. Calculate the value of the bond today if the investor's required rate of return is 5.5% compounded semiannually.

158) A $1000 par value, 8.75% coupon bond has five years remaining until maturity. Calculate the value of the bond today if the required rate of return in the bond market is 6.5% compounded semiannually.

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159) A $1000 par value, 15 year, 9.75% coupon bond was purchased five years ago. Calculate the bond premium if the required rate of return in the bond market is 3.75% compounded annually.

160) A $1000 par value, 9.25% coupon bond was issued three years ago with seven years remaining until maturity. Calculate the bond premium if the investor's required rate of return is 4.5% compounded semiannually

161) Monica is looking to buy a five-year, $20,000 bond with a coupon rate of 9%. She can invest elsewhere at 5.5% compounded semiannually. What price should Monica expect to pay for the bond?

162) Sameer has an opportunity to buy a $25,000, seven-year bond with a coupon rate of 4.75% compounded semiannually. Other investments of the same risk return 6.5% compounded semiannually. How much should Sameer pay for the bond?

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163) A $1000 par value, 7.5% coupon bond was issued two years ago with eight years remaining until maturity. An investor paid $1173.99 for the bond today. What was the investor's required rate of return compounded semiannually? Round to the nearest 0.01%

164) A $1000, 10-year bond paying a semiannual payment of $40, sold today for $1089.84. What was the purchaser's required rate of return compounded semiannually? Round to the nearest 0.01%

165) Nick bought a 10-year, $15,000 bond with a coupon rate of 5.85% compounded semiannually. The bond was originally issued two years ago. Sam paid $13,956.88 for the bond so that it would return 7% compounded semiannually. How many years remain to the bond's maturity?

166) A $1000 bond with a coupon rate of 4.25% compounded semiannually, sells for $928.18. If the purchaser's required rate of return is 5.5% compounded semiannually, how many years remain to the bond's maturity?

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167) A $1000 par value bond paying interest at 7.5% compounded semiannually, matures in seven years. What is the bond's yield to maturity if today's market price is $1150? Round to the nearest 0.01%

168) A $1000 par value bond paying interest at 4.75% compounded semiannually, matures in five years. What is the bond's yield to maturity if today's market price is of $950? Round to the nearest 0.01%

169) A $1000, three-year, 7% coupon bond is currently selling at a market price to yield 8% compounded semiannually. What change occurs in the yield if the market price is increased by $20? Round to the nearest 0.01%

170) A $1000, six-year, 6.85% coupon bond is currently selling at a market price to yield 5.8% compounded semiannually. What change occurs in the yield if the market price is increased by $25?

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171) A $1000, eight-year, 5.8% coupon bond is currently selling at a market price to yield 7.5% compounded semiannually. What change occurs in the yield if the market price is decreased by $20?

172) A $1000, five-year, 4.5% coupon bond was sold after 15 months. If the purchaser's required rate of return was 6% compounded semiannually, what was the selling price of the bond?

173) Sameer bought a $25,000, seven-year, 6.5% coupon bond exactly two years ago. He is going to sell it next month to an investor who requires 5.75% compounded semiannually. What price should Sameer receive for the bond?

174) A company wants to accumulate $1,000,000 in the next four years for plant expansion. They have set up a sinking fund account to which semiannual deposits will be made at 4.75% compounded semiannually. To the nearest dollar, what should be the size of the semiannual payments?

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175) A distribution centre is planning for expansion in five years. They have set up a sinking fund account in order to accumulate $750,000 with deposits made at the beginning of each quarter at 5.5% compounded annually. To the nearest dollar, what should be the size of the quarterly payments?

176) Mandeep is making monthly deposits into a savings account that pays 4.75% compounded quarterly. She plans to have $25,000 in six years to use as a down payment on a house.

a) What should be the size of her monthly payments? b) How much of the $25,000 is interest earned?

177) A company established a sinking fund account to accumulate $600,000 in five years. Payments are made at the beginning of each month and the account pays 5.25% compounded quarterly. How much interest does the account earn over the five years?

178) A Government of Manitoba bond was issued on May 1, 2009 with a maturity date of May 1, 2020. If the bond was purchased on May 1, 2013 and has a coupon rate of 1.2% compounded semiannually with a market rate of 1.5% compounded semiannually, what was the value of the bond on the date purchased? Assume a par value of $1,000. Version 1

179) A Government of Alberta bond was issued on June 15, 2007 with a maturity date of June 15, 2017. If the bond was purchased on June 1, 2013 and has a coupon rate of 2.4% compounded semiannually with a market rate of 2.6% compounded semiannually, what was the value of the bond on the date purchased? Assume a par value of $1,000.

180) A Government of Nova Scotia bond was issued on July 14, 2002 with a maturity date of July 14, 2032. If the bond was purchased on July 14, 2022 and has a coupon rate of 2.2% compounded semiannually with a market rate of 3.5% compounded semiannually, what was the value of the bond on the date purchased? Assume a par value of $1,000.

181) A government hydro bond was issued on April 23, 2005 with a maturity date of April 23, 2025. If the bond was purchased on April 23, 2015 and has a coupon rate of 2.4% compounded semiannually with a market rate of 1.8% compounded semiannually, what was the value of the bond on the date purchased? Assume a par value of $1,000.

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182) A junk bond was issued on May 1, 2008 with a maturity date of May 1, 2018. If the bond was purchased on May 1, 2013 and has a coupon rate of 13% compounded semiannually with a market rate of 1.9% compounded semiannually, what was the value of the bond on the date purchased? Assume a par value of $1,000.

183) You purchased a $1,000 face value Saskatchewan Hydro Energy bond maturing in seven years. The coupon rate was 4.5% payable semiannually. If the prevailing market rate at the time of purchase was 5.6% compounded semiannually, what price did you pay for the bond?

184) Your client purchased a $10,000 bond carrying a 2.5% coupon rate when it had twelve years remaining until maturity. What price did they pay if the prevailing rate of return on the purchase date was 4.2% compounded semiannually?

185) A $5,000, 5.5% coupon bond has twenty-one years remaining until maturity. Calculate the bond premium if the required return in the bond market is 3.5% compounded semiannually.

186) A $10,000, 3.5% coupon bond has six years remaining until maturity. Calculate the bond discount if the required return in the bond market is 5.3% compounded semiannually. Version 1

187) A $2,000, 4% coupon bond has eight years remaining until maturity. Calculate the bond discount if the required return in the bond market is 6% compounded semiannually.

188) A $5,000, 2.05% coupon bond has four years remaining until maturity. Calculate the bond premium if the required return in the bond market is 1.2% compounded semiannually.

189) Eight years ago, you purchased a $10,000 face value, 3% coupon bond with twelve years remaining to maturity. The prevailing market rate of return at the time was 4.2% compounded semiannually; now it is 4.5% compounded semiannually. How much more or less is the bond worth today?

190) Bond alpha and Bond beta both have a face value of $5,000, each carries a 2.5% coupon, and both are currently priced at par in the bond market. Bond alpha matures in four years and Bond beta matures in seven years. If the prevailing required rate of return in the bond market suddenly drops to 1.7% compounded semiannually, how much will the market price of each bond change?

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191) A hydro bond and government bond both have a face value of $10,000, and each carries a 2.2% coupon. The hydro bond matures in two years and the government bond matures in twelve years. If the prevailing required rate of return in the bond market suddenly drops from the current 3.5% to 2.8% compounded semiannually, how much will the market price of each bond change?

192) Three years ago Quebec Hydro sold an issue of twenty year, 6.5% coupon bonds. Calculate an investor's capital gain/loss for the entire three-year holding period if the current semiannually compounded return required in the bond market is 5.5%? Assume a purchase value at par of $10,000.

193) Four years ago the Province of Saskatchewan sold an issue of ten-year, 6% coupon bonds. Calculate an investor's capital gain for the entire four -year holding period if the current rate of return required in the bond market is 8.5%? Assume a par value purchase of $5,000.

194) Three years after the issue of a $5,000, 2.5% coupon, thirty-year bond, the rate of return required in the bond market on long-term bonds is 3.6% compounded semiannually. What capital gain or loss (expressed as a percentage of the original investment) would the owner realize by selling the bond at the new price? Version 1

195) A hydro bond with a face value of $5,000 and twenty years remaining until maturity pays a coupon rate of 3.2% compounded semiannually. Calculate its effective yield to maturity if it is priced at $4,800.

196) You bought a 2.4% compounded semiannually coupon, $8,000 face value corporate bond for $6,700 when it had nineteen years remaining until maturity. What is your nominal and effective yields to maturity on the bond?

197) A corporate bond and a government bond both have a face value of $5,000 and pay a coupon rate of 3.5% compounded semiannually. They have two and fifteen years, respectively, remaining until maturity. Calculate the effective yield to maturity of each bond if it is purchased for $4,859.

198) A corporate bond with a face value of $10,000 and six years remaining until maturity pays a coupon rate of 12% compounded semiannually. Calculate its effective yield to maturity if it is priced at $12,550.

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199) Your client bought a $100,000 bond with a 7% compounded semiannually coupon for $72,300 when it had thirty-two years remaining to maturity. What was the prevailing effective market rate at the time your client purchased the bond?

200) Your parents bought a 2% compounded semiannually coupon, $100,000 face value corporate bond for $91,000 when it had five years remaining until maturity. What is their nominal yield to maturity on the bond?

201) Your client has a choice between two bonds, a corporate bond and a government bond. Both have a face value of $12,000 and pay a coupon rate of 3.5% compounded semiannually. They have seven and four years, respectively, remaining until maturity. Which bond should they choose for the higher yield and provide the effective yield to maturity of that bond? Assume both bonds can be purchased for $11,000.

202) Delta Airlines bonds and Air Canada bonds both have a face value of $100,000 and pay a coupon rate of 6.45% compounded semiannually. They have nine and twenty-two years, respectively, remaining until maturity. Calculate the effective yield to maturity of each bond if it is purchased for $104,000. Version 1

203) A $50,000 Petronas Corp. bond carrying a 12% coupon is currently priced to yield 4% compounded semiannually until maturity. If the bond price abruptly falls by $1,250, what is the change in the nominal yield to maturity if the bond has four years remaining to maturity?

204) A $100,000 German currency bond carrying a 1.2% compounded semiannually coupon is currently priced to yield 1.3% compounded semiannually until maturity. If the bond price abruptly rises by $1,500, what is the change in the yield to maturity if the bond has fifteen years remaining to maturity?

205) A corporate bond was issued on June 1, 2010 for $1,000 with a maturity date of June 1, 2030. If the bond was purchased on June 15, 2016 and had a coupon rate of 8.0% compounded semiannually, what was the purchase price if the yield in the market was 5.25% compounded semiannually?

206) A corporate bond was issued on January 11, 2009 for $10,000 with a maturity date of January 11, 2029. If the bond was purchased on June 15, 2015 and had a coupon rate of 6.0% compounded semiannually, what was the purchase price if the yield in the market was 7.25% compounded semiannually? Version 1

207) A $1,000, 3.5% semiannual coupon bond issued by Advance Canada matures on March 15, 2029. What was its flat price on June 11, 2020 if its yield to maturity was 4.75% compounded semiannually?

208) A $10,000, 3% coupon, twenty-five year Manitoba Hydro bond was issued on April 1, 2015. At what flat price did it sell on April 27, 2019 if the market's required return was 2.6% compounded semiannually?

209) A $5,000, 12% coupon bond issued by Caesar's Entertainment on August 15, 2011 matures on August 15, 2036. What was its flat price on June 1, 2020 when the required yield to maturity was 5.5% compounded semiannually?

210) A $1,000, 3.75% coupon, thirty year bond was issued by Potash Saskatchewan on March 15, 1998. At what flat price did it trade on July 4, 2019, when the market's required return was 9% compounded semiannually?

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211) A $5,000, 3.2% coupon, twenty-year Ontario Hydro bond was issued on March 15, 2009. Calculate its flat price on and September 15, 2020, if the yield to maturity on the date was 6% compounded semiannually.

212) A $1,000, 13% coupon, twenty-year Marriott Hotels bond was issued on September 20, 2017. Calculate its (flat) price on March 22, 2019 if the yield to maturity was 5.9% compounded semiannually.

213) Your company requires $113 million to purchase new planes in seven years. If your company wishes to put aside funds every three months for twelve years and can 3.2% compounded quarterly, how much money, to the nearest dollar, will be required for payments to build the fund? Assume the first payment will begin in three months.

214) Your company requires $100,000 to purchase a new warehouse in three years. If your company wishes to put aside funds every year, starting today, and can 2.2% compounded annually, how much money, to the nearest dollar, will be required for payments to build the fund?

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215) Your company wishes to build a new spa and hotel and needs $27 million to begin construction in six years. If your company can put aside funds every month for six years and can 2.2% compounded monthly, how much money, to the nearest dollar, will be required for payments to build the fund? Assume the first payment will one month from now.

216) Your company requires $1.75 million to purchase land for a new development. If your company wishes to put aside funds every month for six years and can 3.2% compounded quarterly, how much money, to the nearest dollar, will be required for payments to build the fund?

217) To provide for the automation of a production process in four years, Great Brewing is starting a sinking fund to accumulate $400,000 by the end of the five years. Round the sinking fund payments to the nearest dollar. If the sinking fund earns 7.5% compounded monthly, what monthly payments starting today should be made to the fund? If Great Brewing raise $90,000 by issuing new shares immediately, by how much can they lower their sinking fund payments, assuming all else remains constant.

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Answer Key Test name: Chap 16_10ce 1) C 2) C 3) A 4) A 5) E 6) D 7) C 8) A 9) B 10) A 11) B 12) E 13) C 14) A 15) D 16) C 17) B 18) A 19) D 20) D 21) B 22) C 23) C 24) A 25) D 26) B Version 1

27) D 28) A 29) E 30) E 31) B 32) C 33) E 34) B 35) D 36) A 37) B 38) C 39) D 40) A 41) B 42) C 43) D 44) E 45) D 46) A 47) B 48) C 49) D 50) E 51) A 52) B 53) C

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CHAPTER 17 1) Two alternative investments require the same cash outlay. Their net cash returns are as follows:

ALTERNATIVE A: $20,000 each year for five years beginning one year from now. ALTERNATIVE B: $10,000 each year for 11 years beginning one year from now. If money is worth 20% compounded annually, which investment alternative should be chosen? What is the size of the current economic advantage of the preferred alternative? A) Alternative A by $7887.52 B) Alternative A by $16,541.64 C) Alternative B by $7887.52 D) Alternative B by $16,541.64 E) Alternative B by $10,000.00

2) A contract is estimated to yield 48 quarterly net returns of $3000 beginning three months from now. To secure the contract, outlays of $40,000 now and $35,000 two years from now are required. What is the contract's net present value to a business whose cost of capital is 12% compounded quarterly? A) $800.12 B) $35,800.12 C) $10,444.80 D) $8170.80 E) $23,200.17

3) The development of a product requires an immediate investment of $100,000, and further investments of $40,000 at the end of each of the next four years. Net returns are expected to be $25,000 per year for 10 years, starting at the end of the fourth year. If the company requires a rate of return of 10% compounded annually, what is the net present value of the development project? Should the project be undertaken? Version 1

A) -$152,407.24; NO B) $152,407.24; YES C) -$36,994.64; NO D) -$111,382.01; NO E) $111,382.01; YES

4) A contract is estimated to yield net returns of $10,000 at the end of each quarter for the next five years. To secure the contract, it would require an immediate outlay of $50,000 and a further outlay of $150,000 four years from now. If the cost of capital is 12% compounded quarterly, what is the contract's net present value? A) $55,299.70 B) -$44,700.30 C) $5299.71 D) -$5299.71 E) $44,700.30

5) A machine can be leased for five years at $3000 per month, payable in advance. Alternatively, it can be purchased for $150,000, and sold for $20,000 in five years. Should the machine be purchased or leased if the firm's cost of borrowing is 10%? Why? A) Purchase because the net present value of purchasing is less than that of leasing B) Lease because the net present value of leasing is less than that of purchasing C) Purchase because the net present value of purchasing is greater than that of leasing D) Lease because the net present value of leasing is greater than that of purchasing E) Doesn't matter because the net present value of both are the same

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6) An investment opportunity requires an immediate cash outlay of $45,000, and then an $80,000 cash outlay two years from now. Net returns of $10,000, $30,000, and $125,000 are expected at the end of each of the next three years, respectively.

What is the investment's net present value if the cost of capital is 12%? A) $13,041.41 B) $16,093.33 C) -$10,045.63 D) $40,000.00 E) $92,760.80

7) An investment opportunity requires an immediate cash outlay of $45,000, and then an $80,000 cash outlay two years from now. Net returns of $10,000, $30,000, and $125,000 are expected at the end of each of the next three years, respectively.

What is this investment's internal rate of return? A) 12.00% B) 13.93% C) 14.67% D) 20.74% E) 75.59%

8) Three projects each require an initial investment of $150,000. Each has no residual value at the end of three years. The following table presents the forecast annual profits for each project. Year

Project 1

Project 2

Project 3

$60,000

$10,000

$150,000

$60,000

$20,000

$15,000

$60,000

$170,000

$10,000

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Rank these projects (best to worst) based on their NPVs if the cost of capital is 20%. A) 2; 1; 3 B) 3; 1; 2 C) 3; 2; 1 D) 2; 3; 1 E) 1; 3; 2

9) Three projects each require an initial investment of $150,000. Each has no residual value at the end of three years. The following table presents the forecast annual profits for each project. Year

Project 1

Project 2

Project 3

$60,000

$10,000

$150,000

$60,000

$20,000

$15,000

$60,000

$170,000

$10,000

Rank these projects (best to worst) based on their NPVs if the cost of capital is 8%. A) 2; 1; 3 B) 3; 1; 2 C) 3; 2; 1 D) 2; 3; 1 E) 1; 2; 3

10)

Rank these projects (best to worst) based on their IRRs.

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A) 2; 3; 1 B) 3; 1; 2 C) 2; 1; 3 D) 1; 2; 3 E) 3; 2; 1

11) Maxwell Bus Lines is considering the purchase of a new bus. It will cost $120,000 now and will require major maintenance expenditures of $30,000 after 5 years and 10 years. The bus will increase profit of $35,000 at the end of every year for 14 years at which time it will also have a salvage value of $10,000. Maxwell's cost of capital is 17% (compounded annually). What is the net present value of this expenditure? A) $66,289 B) $44,211 C) $17,453 D) $9,739 E) -$1,378

12) An investment of $24,000 on a new computer system should increase annual profit by $8,000 for the first three years and $12,000 for the following two years. We expect it to be obsolete after five years. If a return of 25% compounded annually is required, what is the net present value of this computer system? A) -$463 B) $463 C) $2,794 D) -$2,794 E) $9,278

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13) Acme Ltd. requires a return of 22% compounded annually on capital projects. They are considering a facility that will require an immediate expense of $200,000. Positive cash flows are projected, at the end of each of the next five years, as follows: $50,000, $60,000, $90,000, $70,000 and $50,00 0 respectively. Calculate the net present value of the project. A) -$24,615 B) $24,615 C) $11,318 D) -$11,318 E) -$19,043

14) Determine the net present value of the following capital project. Cash outflows will be as follows: $500,000 immediately, $200,000 at the ends of years 3 and 6. Cash inflows at the ends of years 1, 2, 4, 5, 7 and 8 will be $250,000, $250,000, $350,000, $350,000, $450,000 and $450,000 respectively. The required rate of return is 30% compounded annually. A) -$51,458 B) $51,458 C) $93,976 D) -$316,782 E) $316,782

15) Calculate the net present value of the following project if the required cost of capital is 17.5% compounded semiannually. There will be an immediate cash outflow of $243,000 and, at the end of each year for 10 years, there will be cash inflows of $52,000 per year. A) $11,497 B) -$11,497 C) $43,895 D) -$117,074 E) $117,074

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16) Calculate the net present value of the following project if the required cost of capital is 24% compounded semiannually. There will be an immediate cash outflow of $93,500 and, at the end of each year for 10 years, there will be cash inflows of $22,000 per year. A) -$35,238 B) $35,238 C) $3,188 D) -$15,987 E) $12,499

17) Calculate the internal rate of return on a capital project that will require an immediate cash outflow of $55,000 and will provide positive cash flows of $9,000 at the end of each year for 11 years. A) 16.33% B) 4.29% C) 27.44% D) 17.64% E) 11.35%

18) Calculate the internal rate of return on a capital project that will require an immediate cash outflow of $145,000, will provide positive cash flows of $25,000 at the end of each year for seven years and will cost $15,000 at the end of the eighth year. A) 2.78% B) 4.83% C) 9.41% D) 13.55% E) 21.85%

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19) Calculate the internal rate of return on a capital project that will require an immediate cash outflow of $100,000 and will provide positive cash flows of $35,000 at the end of each year for five years. A) 5.22% B) 11.38% C) 17.44% D) 22.11% E) 31.48%

20)

Determine the internal rate of return for a capital project that calls for:

An immediate cash outflow of $250,000. Cash inflows of $100,000 at the end of years 1, 2, 4, 5, 7, 8 and 9. Cash inflows of $25,000 at the end of 3, 6 years. A final cash inflow of $150,000 at the end of year 10. A) 17.31% B) 25.07% C) 31.90% D) 37.19% E) 44.39%

21) A new wine company can lease a storefront or purchase a small building. The lease will cost $1,700 per month and run for ten years. The alternative is to purchase a building by taking out a loan for the full amount and making payments of $2,200 per month. The future value of the storefront is estimated to $575,000, when they relocate after ten years. Should the company purchase of lease and what will be the savings if money costs 2.5% compounded annually?

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A) Leasing can save $34,548 B) Purchasing can save $34,548 C) Leasing can save $32,981 D) Purchasing can save $32,981 E) Leasing can save $36,548

22) A local school can purchase gym equipment for $17,000 or lease some equipment for five years. The lease has a front-end delivery and setup charge of $2,000 and regular payments of $1500 at the beginning of every quarter (including the first quarter). The equipment is expected to have $500 scrap value. Should the school lease or buy the equipment if it can borrow funds at 3.2% compounded annually and what is the current economic value of the savings with the lower-cost option? A) Leasing can save $13,293 B) Purchasing can save $13,293 C) Leasing can save $14,851 D) Purchasing can save $15,231 E) Leasing can save $15,293

23) Beaver Mountain Buses needs an additional bus for three years to replace the Greyhound bus service that was discontinued. It can lease a bus for $3,000 payable at the beginning of each month, or it can buy a similar bus for $140,000, using financing at the rate of 9.5% compounded monthly. The bus's resale value after three years is expected to be $40,000. On strictly financial considerations, should the company lease or buy the bus and what is the financial advantage in current dollars of the preferred choice? A) Purchasing can save $15,491 B) Leasing can save $17,491 C) Leasing can save $15,491 D) Purchasing can save $17,491 E) Leasing can save $18,762

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24) You have accepted your first job in Calgary. You are told it is a three-year contract and you have to decide to purchase a condominium or lease an apartment. You can buy a onebedroom condominium for $170,000 and believe the resale value will be $185,000. Monthly condo fees will cost $750, payable at the start of every month. The other option is to lease an apartment for $1,500 per month, all utilities included. Should you rent or buy the condo if mortgage rates are 4.5% compounded semiannually? A) Leasing can save $17,578 B) Leasing can save $19,401 C) Buying can save $14,201 D) Buying can save $17,201 E) Buying can save $14,598

25) You wish to start a new high-end bus line that will transport people between Toronto and Vancouver. You believe you can profit $200,000 per year for the first five years. You will have to buy one bus for $720,000 and it will have a resale value of $120,000 at the end of year five. Should you create the bus line if the cost of capital is 4% and what is the NPV of the project? A) No, ($268,996) B) Yes, $348,998 C) Yes, $248,409 D) No, ($248,409) E) Yes, $268,996

26) A proposed gold mine would require the investment of $2.65 million at the beginning of the first year and a further investment of $4.6 million at the end of the first year. Mining operations are expected to yield annual year-end profits of $2 million starting in year three. The mine will sustain eight years of mining operations, once it reaches profit. At the end of the last year of operations, the mining company would also have to spend $2 million on environmental restoration. Would the project provide the mining company with a rate of return exceeding its 12% cost of capital? If the rate of return was 8%, how much more/less would the NPV be?

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A) Yes, $519,255 More $1,498,732 B) No, $519,255 Less $1,498,732 C) Yes, $519,255 Less $1,498,732 D) Yes, $769,255 More $1,498,732 E) Yes, $519,255 More $1,923,732

27) The development of a new marijuana edible will require the expenditure of $3,000,000 at the beginning of each of the next two years. Once legal, the product will reach the market at the beginning of year three and is expected to increase the firm's annual year-end profit by $800,000 for eight years. Then the product line will be sold for a projected price of $3,000,000. If the firm's cost of capital is 10.5%, should it proceed with the project? If the company can earn $5,000,000 for selling the product line, should they proceed with the project and what is the NPV? A) Yes, $1,176,936 Yes $440,039 B) No, ($1,176,936) No ($440,039) C) No, ($1,986,936) No ($620,039) D) No, ($1,986,936) No ($620,039) E) Yes, $1,176,936 No ($440,039)

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28) To manufacture a new line of cleaning supplies, a company must immediately invest $775,000 in new equipment. At the end of Years two and six, there will have to be a major overhaul of the equipment at a cost of $150,000 on each occasion. The new product is expected to increase annual operating profits by $150,000 in each of the first four years, and by $125,000 in each of the subsequent three years. The equipment will then be salvaged at the end of year seven to recover about $200,000. Should the product be manufactured if the company's cost of capital is 13% compounded annually? A) No, ($572,320) B) Yes, $252,320 C) No, ($252,320) D) Yes, ($432,320) E) Yes, ($192,320)

29) Project

Investment

NPV

$120,000

$40,000

$200,000

$20,000

$80,000

$90,000

A firm has identified the following three investment opportunities and calculated their net present values. If the firm's capital budget for this period is limited to $300,000, which projects should be selected? A) A and B B) A C) C D) A and C E) B and C

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Project

Investment

NPV

$580,000

$700,000

$400,000

$200,000

$680,000

$900,000

$450,000

$50,000

$300,000

$75,000

A firm has identified the following five investment opportunities and calculated their net present values. If the firm's capital budget for this period is limited to $1,500,000, which projects should be selected? A) C and E B) B and C C) A and E D) A and C E) A and B

31) A national trucking firm has narrowed down the possible choices for its next warehouse purchase to two alternatives. The Winnipeg warehouse costs $600,000, and would have an estimated resale value of $800,000 after seven years. The Regina warehouse has a $750,000 price, and would have an estimated resale value of $900,000 after seven years. The annual operating profit from the Winnipeg warehouse would be $50,000. Because of its lower provincial costs, the warehouse in Regina's annual profit would be $90,000. Which warehouse should the trucking firm purchase if its cost of capital is 6.5% and in current dollars, what is the economic advantage of selecting the preferred alternative? A) Regina would provide a greater value of $133,731 B) Winnipeg would provide a greater value of $133,731 C) Winnipeg would provide a greater value of $241,731 D) Regina would provide a greater value of $213,731 E) Regina would provide a greater value of $166,731

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32) A printing company requires a new CRM software system for attracting new customers. Model CRM-239 software will last for five years and costs $79,000. This software is believed to generate an annual profit of $22,000. Model CRM-ARC, also with a five year life, costs $97,000 and will return an annual profit of $27,000. Neither piece of software will have resale value. If the company's cost of capital is 5.5%, which model should be purchased and what is the current economic advantage in dollars? A) Model CRM-239 will provide extra value of $3,352 B) Model CRM-ARC will provide extra value of $3,352 C) Model CRM-ARC will provide extra value of $5,372 D) Model CRM-ARC will provide extra value of $2,852 E) Model CRM-239 will provide extra value of $3,352

33) The expected profits from a $480,000 investment are $100,000 in year one, $120,000 in years two to five and $140,000 in each of years six to eight. What is the investment's payback period in years and months? A) 4 years and 1 months B) 4 years and 3 months C) 4 years and 2 months D) 3 years and 11 months E) 4 years and 6 months

34) The expected profits from a $1,100,000 investment are $200,000 in year one, $250,000 in year two, $300,000 in years three and four and $200,000 for the subsequent five years. What is the investment's payback period in years and months?

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A) 4 years and 4 months B) 4 years and 1 month C) 4 years and 6 months D) 4 years and 3 months E) 4 years and 9 months

35) Vencap Enterprises is evaluating an investment opportunity that can be purchased for $55,000. Further product development will require contributions of $30,000 in Year 1 and $10,000 in Year 2. Then returns of $20,000, $60,000, and $40,000 are expected in the three following years.

a) Use the Valuation Principle to determine whether Vencap should make the investment if its cost of capital is 6%. b) By what amount will the current economic value of Vencap be increased or decreased if it proceeds with purchasing the investment for $55,000?

36) Vencap Enterprises is evaluating an investment opportunity that can be purchased for $55,000. Further product development will require contributions of $30,000 in Year 1 and $10,000 in Year 2. Then returns of $20,000, $60,000, and $40,000 are expected in the three following years.

a) Use the Valuation Principle to determine whether Vencap should make the investment if its cost of capital is 8%. b) By what amount will the current economic value of Vencap be increased or decreased if it proceeds with purchasing the investment for $55,000?

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37) Vencap Enterprises is evaluating an investment opportunity that can be purchased for $55,000. Further product development will require contributions of $30,000 in Year 1 and $10,000 in Year 2. Then returns of $20,000, $60,000, and $40,000 are expected in the three following years. Cost of capital is 6%. What price should Vencap offer for the investment opportunity if it requires a 9% return on investment?

38) The timber rights to a tract of forest can be purchased for $250,000. The harvesting agreement would allow 25% of the timber to be cut in each of the first, second, fourth, and fifth years. The purchaser of the timber rights would be required to replant, at its expense, the logged areas in Years 3 and 6. Arrowsmith Lumber calculates that its profit in each of the four cutting years would be $90,000 and that the cost of replanting the harvested areas in each of Years 3 and 6 would be $30,000.

a) Should Arrowsmith Lumber buy the timber rights if its cost of capital is 5.5%? b) By what amount would the economic value of Arrowsmith Lumber be increased or decreased if it proceeded with purchasing the timber rights for $250,000?

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39) The timber rights to a tract of forest can be purchased for $250,000. The harvesting agreement would allow 25% of the timber to be cut in each of the first, second, fourth, and fifth years. The purchaser of the timber rights would be required to replant, at its expense, the logged areas in Years 3 and 6. Arrowsmith Lumber calculates that its profit in each of the four cutting years would be $90,000 and that the cost of replanting the harvested areas in each of Years 3 and 6 would be $30,000.

a) Should Arrowsmith Lumber buy the timber rights if its cost of capital is 7%? b) By what amount would the economic value of Arrowsmith Lumber be increased or decreased if it proceeded with purchasing the timber rights for $250,000?

40) The timber rights to a tract of forest can be purchased for $250,000. The harvesting agreement would allow 25% of the timber to be cut in each of the first, second, fourth, and fifth years. The purchaser of the timber rights would be required to replant, at its expense, the logged areas in Years 3 and 6. Arrowsmith Lumber calculates that its profit in each of the four cutting years would be $90,000 and that the cost of replanting the harvested areas in each of Years 3 and 6 would be $30,000. Its cost of capital is 5.5%. At what price would Arrowsmith Lumber be willing to purchase the timber rights if it requires a return on investment of 9%?

41) A machine can be leased for four years at $1000 per month payable at the beginning of each month. Alternatively, it can be purchased for $45,000 and sold for $5000 after four years. Should the machine be purchased or leased if the firm's cost of borrowing is:

a) 6.6% compounded monthly? b) 9% compounded monthly?

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42) A real estate salesperson can lease an automobile for five years at $500 per month payable at the beginning of each month, or purchase it for $32,000. She can obtain a loan at 3.75% compounded monthly to purchase the car. Should she lease or buy the car if:

a) The trade-in value after five years is $5000? b) The trade-in value after five years is $8000?

43) 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 of the lease period for $3000.

a) Should the college lease or buy the system if it can borrow funds at 5% compounded quarterly? b) What is the current economic value of the savings with the lower-cost option?

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44) Rocky Mountain Bus Tours needs an additional bus for three years. It can lease a bus for $2100 payable at the beginning of each month, or it can buy a similar bus for $120,000 using financing at the rate of 7.5% compounded monthly. The bus's resale value after three years is expected to be $60,000.

a) On strictly financial considerations, should the company lease or buy the bus? b) What is the financial advantage in current dollars of the preferred choice?

45) Ralph Harder has been transferred to Regina for five years. He has found an attractive house that he can buy for $180,000 or rent for $1000 per month, payable at the beginning of each month. He estimates that the resale value of the house in five years will be $200,000 net of the selling commission. If he buys the house, the average (month-end) costs for repairs, maintenance, and property taxes will be $300. Should Mr. Harder rent or buy the house if mortgage rates are:

a) 7% compounded monthly? b) 6% compounded monthly?

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46) St. Lawrence Bus Lines is offered a contract for busing schoolchildren that will produce an annual profit of $70,000 for seven years. To fulfill the contract, St. Lawrence would have to buy three buses at a total cost of $433,000. At the end of the contract the resale value of the buses is estimated to be $80,000. Should St. Lawrence Bus Lines sign the contract if its cost of capital is:

a) 6%? b) 7%? c) 8%?

47) An automotive parts plant is scheduled to be closed in 10 years. Nevertheless, its engineering department thinks that some investments in computer controlled equipment can be justified by savings in labour and energy costs within that time frame. The engineering department is proposing a four phase capital investment program: Phase

Initial investment

Annual savings

$80,000 now

$20,000 (end of Years 1-10)

$80,000 at start of Year 2

$17,000 (end of Years 2-10)

$80,000 at start of Year 3

$13,000 (end of Years 3-10)

$80,000 at start of Year 4

$15,000 (end of Years 4-10)

The four phases are independent of one another. In other words, a decision not to proceed with an earlier phase does not affect the forecast savings from a later phase. The savings from any later phase are in addition to savings from earlier phases. There will be no significant residual value from any of the proposed investments. The firm's cost of capital is 8%. As the plant's financial analyst, what phases, if any, of the proposal would you accept?

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48) The pro forma projections for growing a 20-hectare ginseng crop require the expenditure of $250,000 in the summer that the crop is planted and an additional $50,000 in each of the next two summers to cultivate and fertilize the growing crop. After payment of the costs of harvesting the crop, the profit should be $200,000 in the third summer after planting, and $300,000 in the fourth summer. Allowing for a cost of capital of 9% compounded annually, what is the economic value of the project at the time of planting?

49) A proposed strip mine would require the investment of $3 million at the beginning of the first year and a further investment of $3 million at the end of the first year. Mining operations are expected to yield annual year-end profits of $1 million starting in Year 2. The ore body will sustain 10 years of mining operations. At the end of the last year of operations, the mining company would also have to spend $1 million on environmental restoration. Would the project provide the mining company with a rate of return exceeding its 10% cost of capital?

50) The development of a new product will require the expenditure of $150,000 at the beginning of each of the next three years. When the product reaches the market at the beginning of Year 4, it is expected to increase the firm's annual year-end profit by $90,000 for seven years. Then the product line will be terminated, and $100,000 of the original expenditures should be recoverable promptly. If the firm's cost of capital is 8.5%, should it proceed with the project?

51) The introduction of a new product will require an initial investment of $550,000. The annual profit expected from the new product is forecast to be $100,000 for Years 1 to 3, $70,000 for Years 4 to 6, and $50,000 for Years 7 to 12. Should the firm proceed with the investment if its required compound annual return is 6%? Version 1

52) Jasper Ski Corp. is studying the feasibility of installing a new chair lift to expand the capacity of its downhill-skiing operation. Site preparation would require the expenditure of $1,900,000 at the beginning of the first year. Construction would take place early in the second year at a cost of $5.8 million. The lift would have a useful life of 12 years and a residual value of $800,000. The increased capacity should generate increased annual profits of $600,000 at the end of Years 2 to 5 inclusive and $1 million in Years 6 to 13 inclusive. Should Jasper proceed with the project if it requires a return on investment of 7%?

53) A capital project would require an immediate investment of $150,000 and a further investment of $40,000 on a date four years from now. On the operating side, the project is expected to lose $30,000 in the first year and $10,000 in the second, to break even in the third year, and to turn annual profits of $70,000 in Years 4 to 7 and $40,000 in Years 8 to 10. The estimated residual value at the end of the 10th year is $50,000. Is the project acceptable if a return on investment of 10% is required?

54) To manufacture a new product, a company must immediately invest $375,000 in new equipment. At the end of Years 3 and 5, there will have to be a major overhaul of the equipment at a cost of $50,000 on each occasion. The new product is expected to increase annual operating profits by $75,000 in each of the first four years and by $55,000 in each of the subsequent three years. The equipment will then be salvaged to recover about $20,000. Should the product be manufactured if the company's cost of capital is 8% compounded annually?

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55) A new machine that will lead to savings in labour costs of $16,000 per year can be purchased for $72,000. However, it will cost $1500 per year for the first four years and $2500 per year for the next four years to service and maintain it. In addition, its annual electrical power consumption will cost $1000. After a service life of eight years, the salvage value of the machine is expected to be $5000. Should the machine be acquired if the company requires a minimum return on investment of 7%?

56) Wildcat Drilling Contractors Inc. is considering the acquisition of a new deep-drilling rig at a cost of $14 million. With this added drilling capability, the company's net operating profits would increase by $2 million in the first year and grow by 10% per year over the seven-year service life of the rig. The salvage value of the rig after seven years would be about $2 million. Should Wildcat Drilling acquire the new drilling rig if its cost of capital is 8% compounded annually?

57) A firm has identified the following four investment opportunities and calculated their net present values. If the firm's capital budget for this period is limited to $300,000, which projects should be selected? Project

Initial investment ($)

NPV ($)

100,000

25,000

60,000

40,000

130,000

60,000

200,000

110,000

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58) The investment committee of a company has identified the following seven projects with positive NPVs. If the board of directors has approved a $3-million capital budget for the current period, which projects should be selected? Project

Initial investment ($)

NPV ($)

1,000,000

600,000

1,800,000

324,000

750,000

285,000

600,000

270,000

450,000

113,000

150,000

21,000

250,000

20,000

59)

Mohawk Enterprises is considering the following investment opportunities. Profit for year ($) Project

Initial investment ($)

Year 1

Year 2

Year 3

Year 4

30,000

12,000

9000

8000

20,000

36,000

6000

23,000

10,000

14,000

18,000

10,000

20,000

22,000

18,000

2500

11,000

28,000

26,000

17,000

20,000

6000

7000

10,000

11,000

If Mohawk's cost of capital is 8% per annum and its capital budget is limited to $90,000, what projects should it choose? Version 1

60) A small regional airline has narrowed down the possible choices for its next passenger plane purchase to two alternatives. The Eagle model costs $600,000 and would have an estimated resale value of $100,000 after seven years. The Albatross model has a $750,000 price and would have an estimated resale value of $300,000 after seven years. The annual operating profit from the Eagle would be $150,000. Because of its greater fuel efficiency and slightly larger seating capacity, the Albatross's annual profit would be $190,000. Which plane should the airline purchase if its cost of capital is 6.5%? In current dollars, what is the economic advantage of selecting the preferred alternative over the other?

61) Carl Williams does custom wheat combining in southern Alberta. He will purchase either a new Massey or a new Deere combine to replace his old machine. The Massey combine costs $190,000, and the Deere combine costs $156,000. Their trade-in values after six years would be about $50,000 and $40,000, respectively. Because the Massey cuts an 18-foot swath versus the Deere's 15-foot swath, Carl estimates that his annual profit with the Massey will be 10% higher than the $70,000 he could make with the Deere. The Massey equipment dealer will provide 100% financing at 7% per annum, and the Deere dealer will approve 100% financing at 6% per annum. Which combine should Carl purchase? How much more, in current dollars, is the better alternative worth?

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62) Machine A costs $40,000 and is forecast to generate an annual profit of $15,000 for four years. Machine B, priced at $60,000, will produce the same annual profits for eight years. The trade-in value of A after four years is expected to be $10,000, and the resale value of B after eight years is also estimated to be $10,000. If either machine satisfies the firm's requirements, which one should be selected? Use a required return of 8%.

63) A sawmill requires a new saw for cutting small-dimension logs. Model H, with a threeyear service life, costs $119,000 and will generate an annual profit of $55,000. Model J, with a four-year service life, costs $160,000 and will return an annual profit of $58,000. Neither saw will have significant salvage value. If the mill's cost of capital is 5.5%, which model should be purchased?

64) A business is evaluating two mutually exclusive projects. Project A requires an immediate investment of $6000 plus another $8000 in three years. It would produce a profit of $6000 in the second year, $18,000 in the fourth year, and $12,000 in the seventh year. Project B requires an immediate investment of $5000, another $8000 in two years, and a further $5000 in four years. It would produce an annual profit of $5400 for seven years. Neither project would have any residual value after seven years. Which project should be selected if the required rate of return is 7%? What is the economic advantage, in current dollars, of the preferred project over the other?

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65) A company must choose between two investments. Investment C requires an immediate outlay of $50,000 and then, in two years, another investment of $30,000. Investment D requires annual investments of $25,000 at the beginning of each of the first four years. C would return annual profits of $16,000 for 10 years beginning with the first year. D's profits would not start until Year 4 but would be $35,000 in Years 4 to 10 inclusive. The residual values after 10 years are estimated to be $30,000 for C and $20,000 for D. Which investment should the company choose if its cost of capital is 9%? How much more is the preferred project worth today?

66) A landscaping business will buy one of three rototillers. The initial cost, expected service life, and trade-in value (at the end of the service life) of each model are presented in the following table. The annual profit from rototilling services is $1400. Model

Cost ($)

Service life (years)

Trade-in value ($)

2000

400

2800

900

AAA

4200

1400

Which model should be purchased if the required return on investment is 8.5%?

67) An independent trucker is trying to decide whether to buy a 15-tonne or 25-tonne truck. A 15-tonne truck would cost $150,000; it would have a service life of seven years and a trade-in value of about $30,000 at seven years of age. A 25-tonne truck would cost $200,000, and would have a service life of six years and be worth about $40,000 at six years of age. The estimated annual profit (after provision for a normal salary for the driver-owner) would be $35,000 for the smaller truck and $48,000 for the larger truck. Which truck should be purchased if the cost of financing a truck is 9% compounded annually? What is the average annual economic benefit of making the right decision?

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68) Consumer Digest recently reported that car batteries X, Y, and Z have average service lives of three, four, and six years, respectively. Grace found that the best retail prices for these batteries in her town are $95, $120, and $165. If money is worth 7% compounded annually, which battery has the lowest equivalent annual cost?

69) The provincial government's Ministry of Forest Resources requires a spotter plane for its fire service. The price of a Hawk is $240,000, and its annual operating costs will be $60,000. Given the heavy use it will receive, it will be sold for about $60,000 after five years and replaced. A more durable but less efficient Falcon, priced at $190,000, will cost $80,000 per year to operate, will last seven years, and will have a resale value of $80,000. If the provincial government pays an interest rate of 6.5% compounded annually on its midterm debt, which plane has the lower equivalent annual cost?

70) Neil always trades in his car when it reaches five years of age because of the large amount of driving he does in his job. He is investigating whether there would be a financial advantage in buying a two-year-old car every three years instead of buying a new car every five years. His research indicates that, for the make of car he prefers, he could buy a two-year-old car for $18,000, whereas a new car of the same model sells for $30,000. In either case, the resale value of the five-year-old car would be $6000. Repairs and maintenance average $450 per year for the first two years of the car's life and $1500 per year for the next three. Which alternative has the lower equivalent annual cost if money is worth 7% compounded annually?

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71) A construction company has identified two machines that will accomplish the same job. The Caterpillar model costs $160,000 and has a service life of eight years if it receives a $30,000 overhaul every two years. The International model costs $210,000 and should last 12 years with a $20,000 overhaul every three years. In either case, the overhaul scheduled for the year of disposition would not be performed, and the machine would be sold for about $20,000. If the company's cost of capital is 12%, which machine should be purchased?

72) A 10-year licence to distribute a product should increase the distributor's profit by $10,000 per year. If the licence can be acquired for $66,000, what is the investment's IRR to the nearest 0.1%?

73) Burger Master bought the food concession for a baseball stadium for five years at a price of $1.2 million. If the operating profit is $400,000 per year, what IRR will Burger Master realize on its investment, to the nearest 0.1%?

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74) An automotive parts plant is scheduled to be closed in 10 years. Nevertheless, its engineering department thinks that some investments in computer-controlled equipment can be justified by savings in labour and energy costs within that time frame. The engineering department is proposing the following four-phase capital investment program. Phase

Initial investment

Annual savings

$80,000 now

$20,000 (end of Years 1-10)

$80,000 at start of Year 2

$17,000 (end of Years 2-10)

$80,000 at start of Year 3

$13,000 (end of Years 3-10)

$80,000 at start of Year 4

$15,000 (end of Years 4-10)

The four phases are independent of one another. In other words, the savings from any phase are in addition to annual savings already realized from previous phases. There will be no significant residual value from any of the proposed investments. The firm's cost of capital is 8%. Calculate the IRR of each of the four phases of the cost reduction proposal, to the nearest 0.1%. Based on the IRR investment criterion, which phases should be approved at an 8% cost of capital?

75) A project requires an initial investment of $60,000. It will generate an annual profit of $12,000 for eight years and have a terminal value of $10,000. Calculate the project's IRR to the nearest 0.1%. Should it be accepted if the cost of capital is 15%?

76) An investment of $100,000 will yield annual profits of $12,000 for 10 years. The proceeds on disposition at the end of the 10 years are estimated at $15,000. On the basis of its IRR and a 6% cost of capital, should the investment be made?

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77) St. Lawrence Bus Lines is offered a contract for busing schoolchildren that will produce an annual profit of $70,000 for seven years. To fulfill the contract, St. Lawrence would have to buy three buses at a total cost of $433,000. At the end of the contract the resale value of the buses is estimated to be $80,000. Determine the IRR on the school bus contract, to the nearest 0.1%.

78) An $80,000 capital investment will produce annual profits of $15,000 for the first five years and $10,000 for the next five years. It will have no residual value. What is its IRR to the nearest 0.1%? Should it be undertaken if the cost of capital is 8.5%?

79) A natural resource development and extraction project would require an investment of $1 million now and $1 million at the end of each of the next four years. Then it would generate annual profits of $2 million in each of the following four years. There would be no residual value. What would be the IRR of the project, to the nearest 0.1%? Would it be acceptable to a company requiring a 12% return on investment?

80) The introduction of a new product would require an initial investment of $120,000. The forecast profits in successive years of the anticipated four-year product life are $15,000, $60,000, $40,000, and $35,000. Determine the IRR of the investment, to the nearest 0.1%. Should the product be introduced if the firm's cost of capital is 9%?

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81) A venture requiring an immediate investment of $500,000 and an additional investment of $200,000 in three years' time will generate annual profits of $150,000 for seven years starting next year. There will be no significant terminal value. Calculate the IRR of the investment, to the nearest 0.1%. Should the investment be undertaken at a 13% cost of capital?

82) A proposed strip-mine would require the investment of $3 million at the beginning of the first year and a further investment of $3 million at the end of the first year. Mining operations are expected to yield annual profits of $1 million starting in Year 2. The ore body will sustain 10 years of mining operations. At the end of the last year of operations, the mining company would also have to spend $1 million on environmental restoration. Determine the IRR on the strip-mine proposal, to the nearest 0.1%. Should the mine be developed given the mining company's 10% cost of capital?

83) The pro forma projections for growing a 20-hectare ginseng crop require the expenditure of $250,000 in the summer that the crop is planted and an additional $50,000 in each of the next two summers to cultivate and fertilize the growing crop. After payment of the costs of harvesting the crop, the profit should be $200,000 in the third summer after planting, and $300,000 in the fourth summer. Determine the IRR of the ginseng crop, to the nearest 0.1%.

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84) Jasper Ski Corp. is studying the feasibility of installing a new chair lift to expand the capacity of its downhill-skiing operation. Site preparation would require the expenditure of $1,900,000 at the beginning of the first year. Construction would take place early in the second year at a cost of $5.8 million. The lift would have a useful life of 12 years and a residual value of $800,000. The increased capacity should generate increased annual profits of $600,000 at the end of Years 2 to 5 inclusive and $1 million in Years 6 to 13 inclusive. Determine the IRR of the project, to the nearest 0.1%. Should the expansion be undertaken, given Jasper Ski Corp's required return of 7%?

85) Two mutually exclusive investments are available to a firm. Project C, requiring a capital investment of $200,000, will generate an annual profit of $43,000 for six years. Project D is expected to yield an annual profit of $30,000 for six years on an initial investment of $135,000.

a) Calculate the internal rate of return on each project, to the nearest 0.1%. Based upon their IRRs, which project should be selected? b) Which project should be selected if the firm's cost of capital is 7%? c) Which project should be selected if the firm's cost of capital is 5%?

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86) Academic Publishing is trying to decide which of two books to publish. The larger book will cost $125,000 to publish and print. Sales are expected to produce an annual profit of $32,000 for five years. The smaller book will cost $76,000 to publish and print, and should generate an annual profit of $20,000 for five years.

a) Calculate the internal rate of return on each book, to the nearest 0.1%. On the basis of their IRRs, which book should be published? b) Which book should be published if the firm's cost of capital is 8%? c) Which book should be published if the firm's cost of capital is 6%?

87) Due to a restricted capital budget, a company can undertake only one of the following three-year projects. Both require an initial investment of $800,000 and will have no significant terminal value. Project X is anticipated to have annual profits of $400,000, $300,000, and $250,000 in successive years, whereas Project Y's only profit, $1.05 million, comes at the end of Year 3.

a) Calculate the IRR of each project, to the nearest 0.1%. On the basis of their IRRs, which project should be selected? b) Which project should be selected if the firm's cost of capital is 9%? c) Which project should be selected if the firm's cost of capital is 7%?

88) Two mutually exclusive projects each require an initial investment of $50,000 and should have a residual value of $10,000 after three years. The following table presents their forecast annual profits. Year 1

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Project 1 ($) 10,000

Project 2 ($) 30,000

20,000

30,000

8,000

a) Calculate the IRR of each project, to the nearest 0.1%. On the basis of their IRRs, which project should be selected? b) Which project should be selected if the firm's cost of capital is 8%? c) Which project should be selected if the firm's cost of capital is 6%?

89) A company is examining two mutually exclusive projects. Project X requires an immediate investment of $100,000 and produces no profit until Year 3. Then the annual profit is $40,000 for Years 3 to 5 inclusive. Project Y requires an investment of $50,000 now and another $50,000 in 1 year. It is expected to generate an annual profit of $30,000 in Years 2 to 5.

a) Calculate the IRR of each project, to the nearest 0.1%. On the basis of their IRRs, which project is preferred? b) Which project should be selected if the firm's cost of capital is 4%? c) Which project should be selected if the firm's cost of capital is 3%?

90) A company is evaluating two mutually exclusive projects. Both require an initial investment of $250,000 and have no appreciable disposal value. Their expected profits over their five-year lifetimes are as follows: Project

Project Alpha ($)

Project Beta ($)

120,000

20,000

80,000

40,000

60,000

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20,000

100,000

20,000

120,000

The company's cost of capital is 7%. Calculate the NPV and IRR (to the nearest 0.1%) for each project. Which project should be chosen?

91) The expected profits from a $52,000 investment are $8000 in Year 1, $12,000 in each of Years 2 to 5, and $6000 in each of Years 6 and 7.

a) What is the investment's payback period, to the nearest 0.01 year? b) If the firm's required payback period is four years, will it make the investment?

92) A firm is considering the purchase of a $30,000 machine that would save labour costs of $5000 per year in the first three years and $6000 per year for the next four years. Will the firm purchase the machine if the payback requirement is:

a) Five years? b) Six years?

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93) A capital investment requiring a single initial cash outflow is forecast to have an operating profit of $50,000 per year for five years. There is no salvage value at the end of the five years. If the investment has an IRR of 8%, calculate its payback period to the nearest year.

94) Investment proposals A and B require initial investments of $45,000 and $35,000, respectively. Both have an economic life of four years with no residual value. Their expected profits are as follows: Year

Proposal A ($)

Proposal B ($)

16,250

12,500

17,500

12,500

17,500

15,000

17,500

15,000

If the firm's cost of capital is 14%, rank the proposals based on their: a) NPVs. b) IRRs. c) Payback periods.

95) The expected profits from an $80,000 investment are $15,000 in Year 1 and $20,000 in each of Years 2 to 7.

a) What is the investment's payback period, to the nearest 0.01 year? b) If the firm's required payback period is four years, will it make the investment? c) If the firm's cost of capital is 8%, will it make the investment?

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96) A seven-year licence to distribute a product should increase the distributor's profit by $16,000 per year. If the licence can be acquired for $85,000, what is the investment's IRR to the nearest 0.1%?

97) A proposed open-pit mine would require the investment of $2 million at the beginning of the first year and a further investment of $1 million at the end of the first year. Mining operations are expected to yield annual profits of $750,000, beginning in Year 2. The ore body will sustain eight years of ore extraction. At the beginning of the tenth year, the mining company must spend $1 million on cleanup and environmental restoration. Will the project provide the mining company with a rate of return exceeding its 14% cost of capital?

98) The development of a new product will require the expenditure of $125,000 at the beginning of each of the next two years. When the product reaches the market in Year 3, it is expected to increase the firm's annual profit by $50,000 for eight years. (Assume that the profit is received at the end of each year.) Then $75,000 of the original expenditures should be recoverable. If the firm's cost of capital is 12%, should it proceed with the project?

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99) Rainbow Aviation needs an additional plane for five years. It could buy the plane for $360,000, using funds borrowed at 7.5% compounded monthly, and then sell the plane for an estimated $140,000 after five years. Alternatively, it could lease the plane for $5600, payable at the beginning of each month. Which alternative should Rainbow Aviation choose? What is the economic value of the financial advantage on the initial date of the preferred alternative?

100) Huron Charters can purchase a sailboat for $100,000 down and a $60,000 payment due in one year. The boat would generate additional annual operating profits of $24,000 for the first five years and $15,000 for the next five years. New sails costing $16,000 would be required after five years. After ten years the boat would be replaced; its resale value would be about $60,000. Should Huron purchase the sailboat if its cost of capital is 6% compounded annually?

101) A company's board of directors has imposed an $800,000 limit on capital spending for the current year. Management has identified the following five projects as all providing a return on investment greater than the cost of capital. Which projects should be chosen? Project

Initial investment ($)

NPV ($)

200,000

63,000

400,000

100,000

350,000

90,000

250,000

75,000

100,000

20,000

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102) A company is considering two mutually exclusive investment projects. Each requires an initial investment of $25,000. Project A will generate an annual profit of $6000 for eight years and have a residual value of $5000. Project B's profits are more irregular: $15,000 in the first year, $19,000 in the fifth year, and $24,000 (including the residual value) in the eighth year. Which project should be chosen if the required return on investment is 15% compounded annually?

103) A manufacturer's sales rep can lease an automobile for five years at $385 per month payable at the beginning of each month, or purchase it for $22,500. He can obtain a loan at 9% compounded monthly to purchase the car. Should he lease or buy the car if:

a) The trade-in value after five years is $5000? b) The trade-in value after five years is $7000?

104) The investment committee of a company has identified the following seven projects with positive NPVs. If the board of directors has approved a $4.5-million capital budget for the current period, which projects should be selected? Project

Initial investment ($)

NPV ($)

1,125,000

428,000

2,700,000

486,000

675,000

170,000

375,000

30,000

1,500,000

900,000

225,000

32,000

900,000

405,000

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105) Machine X costs $50,000 and is forecast to generate an annual profit of $16,000 for five years. Machine Y, priced at $72,000, will produce the same annual profits for 10 years. The trade-in value of X after five years is expected to be $10,000, and the resale value of Y after 10 years is also thought to be $10,000. If either machine satisfies the firm's requirements, which one should be selected? Use a required return of 8%.

106) A U-Print store requires a new photocopier. A Sonapanic copier with a four-year service life costs $35,000 and will generate an annual profit of $14,000. A higher-speed Xorex copier with a five-year service life costs $52,000 and will return an annual profit of $17,000. Neither copier will have significant salvage value. If U-Print's cost of capital is 6%, which model should be purchased?

107) The provincial government's Ministry of Fisheries requires a new patrol boat. The price of a Songster is $90,000, and its annual operating costs will be $10,000. It will be sold for about $20,000 after five years, and replaced. A more durable and more efficient Boston Wailer, priced at $110,000, would cost $8000 per year to operate, last seven years, and have a resale value of $40,000. If the provincial government pays an interest rate of 6.5% compounded annually on its midterm debt, which boat has the lower equivalent annual cost?

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108) A potato farmer needs to buy a new harvester. Two types have performed satisfactorily in field trials. The SpudFinder costs $100,000 and should last for five years. The simpler TaterTaker also costs $100,000 but requires an extra operator at $20,000 per season. This machine has a service life of seven years. The disposal value of either machine is insignificant. If the farmer requires a 7% return on investment, which harvester should she buy?

109) A capital investment requiring one initial cash outflow is forecast to have the operating profits listed below. The investment has an NPV of $20,850, based on a required rate of return of 12%. Calculate the payback period of the investment to the nearest 0.1 year. Year

Operating profit ($)

74,000

84,000

96,000

70,000

110) The introduction of a new product will require a $400,000 investment in demonstration models, promotion, and staff training. The new product will increase annual profits by $100,000 for the first four years and $50,000 for the next four years. There will be no significant recoverable amounts at the end of the eight years. The firm's cost of capital is 13%. Calculate the expected IRR (to the nearest 0.1%) on the proposed investment in the new product. Should the new product be introduced? Why?

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111) A $600,000 capital investment will produce annual profits of $90,000 for the first four years and $120,000 for the next four years. It will have no residual value. What is its IRR (to the nearest 0.1%)? Should it be undertaken if the cost of capital is 7%?

112) An investment of $400,000 will yield annual profits of $55,000 for eight years. The proceeds on disposition of the investment at the end of the eight years are estimated at $125,000. On the basis of its IRR and a 9% cost of capital, should the investment be made?

113) A new machine that will lead to savings in labour costs of $20,000 per year can be purchased for $60,000. However, it will cost $2000 per year for the first four years and $3000 per year for the next four years to service and maintain the machine. In addition, its annual fuel consumption will cost $1500. After a service life of eight years, the salvage value of the machine is expected to be $10,000. Should the machine be acquired if the company requires a minimum annual rate of return on investment of 15%?

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114) A company is examining two mutually exclusive projects. Project P requires an immediate investment of $300,000 and produces no profit until the fourth year. Then the expected annual profit is $120,000 for Years 4 to 7 inclusive. Project Q requires an investment of $260,000 now and is expected to generate an annual profit of $55,000 in Years 1 to 7. Neither project has any residual value after seven years.

a) Calculate the IRR of each project to the nearest 0.1%. On the basis of their IRRs, which project is preferred? b) Which project should be selected if the firm's cost of capital is 10%? c) Which project should be selected if the firm's cost of capital is 6%?

115) The initial investment and expected profits from two mutually exclusive capital investments being considered by a firm are as follows: Investment A ($)

Investment B ($)

Initial investment

92,000

85,000

Year 1 profit

30,000

50,000

Year 2 profit

80,000

50,000

a) Calculate the IRR for each investment to the nearest 0.1%. On the basis of their IRRs, which investment is preferred? b) Which investment should be chosen if the firm's cost of capital is 10%? c) Which investment should be chosen if the firm's cost of capital is 7%?

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116) Jurgen Wiebe has been transferred to Winnipeg for five years. He has found an attractive house that he can buy for $360,000 or rent for $1850 per month, payable at the beginning of each month. He estimates that the resale value of the house in five years will be $390,000 net of the selling commission. If he buys the house, the average (end-of-month) costs for repairs, maintenance, and property taxes will be $1500. Should Mr. Wiebe rent or buy the house if the interest rate on five-year mortgage loans is 3.0% compounded monthly?

117) A firm can manufacture the same product with either of two machines. Machine C requires an initial investment of $55,000 and would earn a profit of $30,000 per year for three years. It would then be replaced, because repairs would be required too frequently after three years. Its trade-in value would be $10,000. Machine D costs $90,000 and would have a service life of five years. The annual profit would be $5000 higher than Machine C's profit because of its lower repair and maintenance costs. Its recoverable value after five years would be about $20,000. Which machine should be purchased if the firm's cost of capital is 9%? What is the equivalent annual economic advantage of the preferred choice?

118) A sales representative is considering two options for a car. The first is a lease requiring a down payment of $5000 and monthly payments at the end of each month of $475.00 for four years. She can buy the car at the end of the four years for $8000. The second option is to finance the car through the bank with $5000 down, and $650 per month for four years. If interest is 5.8% compounded monthly, should she lease or buy? What is the economic advantage of her choice?

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119) Sameer's Construction is considering purchasing a new machine that will cost $500,000. Using the new machine will save Sameer's business $60,000 per year over the life of the machine, which is 10 years. There is no salvage value at the end of 10 years. If the loan to purchase the machine is at 6% compounded annually, should Sameer's Construction go ahead with the purchase?

120) Luca is expanding her dress shop to include a new line of shoes. The expansion will cost $275,000 initially, with a further investment of $200,000 in three years. She expects to earn $80,000 additionally per year from the expansion over the next ten years. If interest is 7.5% compounded annually, by what amount will the current economic value of Larissa's dress shop be increased or decreased if she proceeds with the expansion?

121) A new product will cost $800,000 to launch and the returns are expected to be $175,000 per year for seven years. Use the Valuation Principle to determine whether the company should make the investment if its cost of capital is 10% compounded quarterly. What is the economic value of the investment to the firm?

122) A company is considering installing a new machine that costs $100,000. Expected savings are $15,000 per year for 10 years. The machine has no salvage value at the end of the 10 years. Should the company purchase the machine if interest is 7.5% compounded annually?

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123) A company is considering installing a new machine that initially costs $800,000, with a further outlay of $100,000 at the beginning of years four and seven for maintenance. The salvage value is $75,000 at the end of 10 years. Expected returns are $125,000 for the first three years, and $175,000 for the remaining seven years. Should the company install the new machine if money is worth 9% compounded annually?

124) A new machine can be purchased for $400,000. It needs to be serviced on a regular basis at a cost of $25,000 per year. The cost to remove the machine after ten years is $50,000. The machine is expected to save the company $75,000 per year over its life. Should the new machine be purchased if money earns 8.5% compounded annually?

125) Renovations estimated to cost $500,000 will increase sales for the first three years by $80,000 per year, by $90,000 for the next three years, and by $100,000 for four more years. If money earns 10% compounded annually, should the renovations be made?

126) A firm must choose between two investments. Investment A requires an initial outlay of $225,000 and returns $70,000 per year for six years. Investment B requires an initial outlay of $350,000 and returns $90,000 per year for six years. If money earns 9% compounded annually, which investment should the firm select?

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127) A firm is evaluating two machines. The first costs $250,000 and will require annual maintenance of $30,000 per year for 10 years. At the end of 10 years, the salvage value will be $75,000. The second machine costs $400,000, and will require maintenance of $225,000 at the end of the fifth year. The salvage value after 10 years will be $175,000. Which machine should the firm select if interest is 8.5% compounded annually?

128) A firm is evaluating two machines. Machine A costs $200,000 and requires annual maintenance of $50,000 for seven years. Machine B costs $200,000, and requires maintenance of $200,000 at the end of three years, and $150,000 at the end of five years. There is no salvage value for either machine. Which machine should the firm select if interest is 9% compounded annually?

129) A firm is considering two machines. Machine A costs $500,000 and will save the firm an estimated $85,000 per year for ten years. The salvage value after ten years is $75,000. Machine B costs $900,000 and will save the firm $150,000 per year for five years, and $140,000 per year for the remaining five years. The salvage value after ten years is $200,000. Which machine should the firm purchase if interest is 8.5% compounded annually?

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130) An investment of $200,000 will return expected profits of $45,000 per year for seven years. Determine the IRR of the investment to the nearest 0.1%.

131) An investment of $400,000 will yield profits of $45,000 per year for three years, $55,000 for the next four years, and $60,000 for the last three years. The terminal value at the end of 10 years is $50,000. What is the IRR of the investment to the nearest 0.1%? Should the investment be undertaken if the cost of capital is 11%?

132) A new product will cost $350,000 to launch. Expected profits are $55,000, $65,000, and $100,000 in years 2 to 4, and 120,000 in years 5 to 7. What is the IRR of the new product launch to the nearest 0.1%? Would you recommend that the company proceed based on their cost of capital of 10%?

133) A machine costing $500,000 will save the company $60,000 per year for 10 years. The residual value of the machine is $75,000. What is the IRR of the machine to the nearest 0.1%? Should the company purchase the new machine given a cost of capital of 12%?

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134) A machine costing $850,000 will return $250,000 in the first five years, and $400,000 in the remaining five years. The cost to remove the machine at the end of year ten will be $100,000. The machine will require servicing at the end of years three and six costing $400,000 and $500,000 respectively. What is the IRR of the machine to the nearest 0.1%? Should a company purchase the machine if their cost of capital is 13%?

135) An investment requiring an initial outlay of $300,000 expects to yield profits of $70,000 per year for five years. Determine the IRR of the investment to the nearest 0.1%. If the firm's cost of capital is 9%, should the investment be made?

136) Machine A costs $400,000 with returns of $70,000 per year for 10 years. The residual value will be $80,000 at the end of 10 years. Machine B costs $300,000 with returns of $60,000 per year for 10 years, and no residual value.

a) Based on the IRRs, which machine should be purchased? b) If the firm's cost of capital is 8%, which machine should be purchased? c) Based on both the IRRs and the NPVs, which machine should be selected?

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137) A company is considering two projects. Project A requires an initial outlay of $350,000 and expected profits of $90,000 starting in year three until year 10. Project B requires an initial outlay of $200,000 and another $200,000 in two years. Expected profits are $100,000 starting in year three to year ten.

a) Based on the IRRs, which project should the company select? b) If the firm's cost of capital is 10%, which project should the company select? c) Based on both the IRRs and the NPVs, which project should the company select?

138) An investment of $400,000 expects profits of $60,000 per year for ten years. What is the investment's payback period to the nearest 0.1 year?

139) A firm is considering purchasing a machine costing $225,000 which will save the firm $75,000 per year for the first two years, and $60,000 for the next three years. If the firm's payback requirement is five years, will the firm purchase the machine?

140) Project A requires an immediate outlay of $450,000. Profits are forecasted to be $100,000 starting in year two until year seven. The residual value will be $75,000 at the end of year seven. Project B requires an immediate outlay of $550,000, with forecasted profits of $125,000 for seven years. There is no residual value. Which project should be selected based on their payback periods?

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141) A new product will cost $750,000 to launch. Expected profits are $150,000, $200,000, and $300,000 respectively in the first three years, and $250,000 in each of the next four years. If the company has a payback policy of five years, will the company undertake the new product launch?

142) Drug Corporation is evaluating a new drug to be distributed. The R&D is expected to cost $1,000,000 to start the project, $11,000,000 in year two and $2,000,000 in year three. Profits will start in year three and will be $2,500,000 per year for the first ten years. Profit will fall to $1,900,000 for five more years before the removal of the drug from the market. Use the Valuation Principle to determine whether Drug Corporation should make the investment if its cost of capital is 4% compounded annually and what is the NPV of the new drug?

143) The water rights to an underground spring can be purchased for $1,500,000. A small beer company wants to use the spring for their new beer. The upfront cost, on top of the purchase fee will be $800,000 to develop the equipment to collect and transport the water. At the end of the first year, the company believes their profit will be $300,000, $500,000 per year for two years and then $100,000 for one additional year. If the cost of borrowing is 4.5%, should the company proceed with the project and what is the NPV of the project?

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144) MB Hydro wishes to build a mini wind farm in Southern Manitoba. The initial cost to purchase all of the land will be $2,500,000. Costs are as follows: $1,000,000 for year two, $2,000,000 for year three and $4,000,000 for year four. Profits will be $500,000 in year one, $3,000,000 years two through five, $3,500,000 per year for years six through ten. The wind farms will need a technology boost, expected to cost $1,000,000 at the end of year five. Should MB Hydro proceed with the project and what is the value of the project today to MB Hydro? Money costs 4.6% compounded annually.

145) A new truck can be leased for four years at $1,200 per month payable at the beginning of each month. Alternatively, it can be purchased for $57,000 and sold for $5,000 after four years. Should the machine be purchased or leased if the firm's cost of borrowing is 4.5% compounded monthly and what is the savings, in today's dollars, by choosing the best option?

146) A new wine company can lease a storefront or purchase a small building. The lease will cost $1,700 per month and run for ten years. The alternative is to purchase a building by taking out a loan for the full amount and making payments of $2,200 per month. The future value of the storefront is estimated to $575,000, when they relocate after ten years. Should the company purchase of lease and what will be the savings if money costs 2.5% compounded annually?

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147) A local school can purchase gym equipment for $17,000 or lease some equipment for five years. The lease has a front-end delivery and setup charge of $2,000 and regular payments of $1500 at the beginning of every quarter (including the first quarter). The equipment is expected to have $500 scrap value. Should the school lease or buy the equipment if it can borrow funds at 3.2% compounded annually and what is the current economic value of the savings with the lower-cost option?

148) Beaver Mountain Buses needs an additional bus for three years to replace the Greyhound bus service that was discontinued. It can lease a bus for $3,000 payable at the beginning of each month, or it can buy a similar bus for $140,000, using financing at the rate of 9.5% compounded monthly. The bus's resale value after three years is expected to be $40,000. On strictly financial considerations, should the company lease or buy the bus and what is the financial advantage in current dollars of the preferred choice?

149) You have accepted your first job in Calgary. You are told it is a three-year contract and you have to decide to purchase a condominium or lease an apartment. You can buy a onebedroom condominium for $170,000 and believe the resale value will be $185,000. Monthly condo fees will cost $750, payable at the start of every month. The other option is to lease an apartment for $1,500 per month, all utilities included. Should you rent or buy the condo if mortgage rates are 4.5% compounded semiannually?

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150) You wish to start a new high-end bus line that will transport people between Toronto and Vancouver. You believe you can profit $200,000 per year for the first five years. You will have to buy one bus for $720,000 and it will have a resale value of $120,000 at the end of year five. Should you create the bus line if the cost of capital is 4% and what is the NPV of the project?

151) A proposed gold mine would require the investment of $2.65 million at the beginning of the first year and a further investment of $4.6 million at the end of the first year. Mining operations are expected to yield annual year-end profits of $2 million starting in year three. The mine will sustain eight years of mining operations, once it reaches profit. At the end of the last year of operations, the mining company would also have to spend $2 million on environmental restoration. Would the project provide the mining company with a rate of return exceeding its 12% cost of capital? If the rate of return was 8%, how much more/less would the NPV be?

152) The development of a new marijuana edible will require the expenditure of $3,000,000 at the beginning of each of the next two years. Once legal, the product will reach the market at the beginning of year three and is expected to increase the firm's annual year-end profit by $800,000 for eight years. Then the product line will be sold for a projected price of $3,000,000. If the firm's cost of capital is 10.5%, should it proceed with the project? If the company can earn $5,000,000 for selling the product line, should they proceed with the project and what is the NPV?

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153) To manufacture a new line of cleaning supplies, a company must immediately invest $775,000 in new equipment. At the end of Years two and six, there will have to be a major overhaul of the equipment at a cost of $150,000 on each occasion. The new product is expected to increase annual operating profits by $150,000 in each of the first four years, and by $125,000 in each of the subsequent three years. The equipment will then be salvaged at the end of year seven to recover about $200,000. Should the product be manufactured if the company's cost of capital is 13% compounded annually?

154) Project

Investment

NPV

$120,000

$40,000

$200,000

$20,000

$80,000

$90,000

155) Project

Investment

NPV

$580,000

$700,000

$400,000

$200,000

$680,000

$900,000

$450,000

$50,000

$300,000

$75,000

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156) A national trucking firm has narrowed down the possible choices for its next warehouse purchase to two alternatives. The Winnipeg warehouse costs $600,000, and would have an estimated resale value of $800,000 after seven years. The Regina warehouse has a $750,000 price, and would have an estimated resale value of $900,000 after seven years. The annual operating profit from the Winnipeg warehouse would be $50,000. Because of its lower provincial costs, the warehouse in Regina's annual profit would be $90,000. Which warehouse should the trucking firm purchase if its cost of capital is 6.5% and in current dollars, what is the economic advantage of selecting the preferred alternative?

157) A printing company requires a new CRM software system for attracting new customers. Model CRM-239 software will last for five years and costs $79,000. This software is believed to generate an annual profit of $22,000. Model CRM-ARC, also with a five year life, costs $97,000 and will return an annual profit of $27,000. Neither piece of software will have resale value. If the company's cost of capital is 5.5%, which model should be purchased and what is the current economic advantage in dollars?

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158) A local garage will buy one of three engine diagnosis machines. The initial cost, expected service life, and trade-in value (at the end of the service life) of each model are presented in the table below. The annual profit from these machines is expected to $25,000. Which model should be purchased and what is the NPV of the project? The cost of borrowing is 3.5%. Machine

Cost

Life (Yrs)

Trade-in

TR763

$40,000

$1,000

R7832

$55,000

$3,000

ACM09

$20,000

159) A five-year licence to distribute a new security software should increase the distributor's profit by $100,000 per year. If the licence can be acquired for $97,000, what is the investment's IRR?

160) You wish to purchase a new food cart to make extra money on the weekends. You believe you will do it for five years and can buy a cart for $23,000. You believe you can have an operating profit of $8,000 per year, what IRR will you realize on its investment?

161) A new dining room for a restaurant requires an initial investment of $600,000. It will generate an annual profit of $172,000 for five years and have a residual value of $20,000. If the corporate IRR is 18%, should the project proceed and what is the IRR of the project?

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162) An investment of $250,000 in a new delivery truck will yield annual profits of $57,000 for eight years. The proceeds on disposition at the end of the eight years are estimated at $25,000. On the basis of its IRR and a 6% cost of capital, should the investment be made and what is the IRR?

163) You wish to start a new high-end bus line that will transport people between Toronto and Vancouver. You believe you can profit $200,000 per year for the first five years. You will have to buy one bus for $720,000 and it will have a resale value of $120,000 at the end of year five. Calculate the IRR and should the project proceed if cost of capital is 14%.

164) A proposed gold mine would require the investment of $2.65 million at the beginning of the first year and a further investment of $4.6 million at the end of the first year. Mining operations are expected to yield annual year-end profits of $2 million starting in year three. The mine will sustain eight years of mining operations, once it reaches profit. At the end of the last year of operations, the mining company would also have to spend $2 million on environmental restoration. Calculate the IRR of the project.

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165) The development of a new marijuana edible will require the expenditure of $3,000,000 at the beginning of each of the next two years. Once legal, the product will reach the market at the beginning of year three and is expected to increase the firm's annual year-end profit by $800,000 for eight years. Then the product line will be sold for a projected price of $3,000,000. Calculate the IRR of the project. If the company can earn $5,000,000 for selling the product line, what is the new IRR?

166) To manufacture a new line of cleaning supplies, a company must immediately invest $775,000 in new equipment. At the end of Years two and six, there will have to be a major overhaul of the equipment at a cost of $150,000 on each occasion. The new product is expected to increase annual operating profits by $150,000 in each of the first four years, and by $125,000 in each of the subsequent three years. The equipment will then be salvaged at the end of year seven to recover about $200,000. Calculate the IRR of the project.

167) You wish to start a new high-end bus line that will transport people between Toronto and Vancouver. You believe you can profit $200,000 per year for the first five years. You will have to buy one bus for $720,000 and it will have a resale value of $120,000 at the end of year five. Should you create the bus line if the cost of capital is 4% and what is the NPV of the project?

168) The expected profits from a $40,000 investment are $8000 in year one, $10,000 in each of years two and three and $12,000 in each of years four to seven. What is the investment's payback period in years and months?

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169) A firm is considering the purchase of a $50,000 truck that would save labour costs of $15,000 per year in the first three years and $25,000 per year for the following four years. Will the firm purchase the machine if the payback requirement is five years?

170) The expected profits from a $480,000 investment are $100,000 in year one, $120,000 in years two to five and $140,000 in each of years six to eight. What is the investment's payback period in years and months?

171) The expected profits from a $1,100,000 investment are $200,000 in year one, $250,000 in year two, $300,000 in years three and four and $200,000 for the subsequent five years. What is the investment's payback period in years and months?

172) A firm is considering the purchase of a $120,000 ore processing machine that would save costs of $10,000 per year in the first five years and $25,000 per year for the subsequent five years. Will the firm purchase the machine if the payback requirement is seven years?

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173) A firm is considering the purchase of a $450,000 heavy duty crane that would save costs of $150,000 per year in the first two years and $175,000 per year for the following ten years. Will the firm purchase the machine if the payback requirement is four years?

174) A firm is considering the purchase of a $120,000 ore processing machine that would save costs of $10,000 per year in the first five years and $25,000 per year for the subsequent five years. Will the firm purchase the machine if the payback requirement is seven years? ⊚ ⊚

true false

175) A firm is considering the purchase of a $450,000 heavy duty crane that would save costs of $150,000 per year in the first two years and $175,000 per year for the following ten years. Will the firm purchase the machine if the payback requirement is four years? ⊚ ⊚

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true false

Answer Key Test name: Chap 17_10ce 1) B 2) D 3) D 4) C 5) A 6) A 7) D 8) B 9) D 10) E 11) B 12) B 13) E 14) B 15) B 16) D 17) E 18) A 19) D 20) C 21) A 22) B 23) C 24) D 25) E 26) A Version 1

27) B 28) C 29) D 30) E 31) A 32) B 33) C 34) D 174) TRUE 175) TRUE

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