Question 1

The Brick store credit card quotes a rate of 1.75% per month on the unpaid balance. Calculate the effective rate of interest being charged.

Accepted Answer

A)  21% 
B)  9.85% 
C)  10.97% 
D)  51.64% 
E)  23.14% 
A)  21% 
B)  9.85% 
C)  10.97% 
D)  51.64% 
E)  23.14%

Question 2

In how many months will money double at 7.45% compounded semi-annually?

Accepted Answer

PV = 1, FV = 2, i = 0.0745 ÷ 2

Question 3

Calculate the effective annual rate for 10% p.a. compounded quarterly.

Accepted Answer

A)  0.1038% 
B)  1.038% 
C)  10.38% 
D)  10% 
E)  2.5% 
A)  0.1038% 
B)  1.038% 
C)  10.38% 
D)  10% 
E)  2.5%

Question 4

How long will it take Whitby's population to grow from 125 000 (in 2013) to 200 000, if the annual growth rate is 3%? Round your answer to the nearest month.

Accepted Answer

PV = 125 000
FV = 200 000
i =

Question 5

BlackBerry took a loan contract which requires a payment of $40 million plus interest two years after the contract's date of issue. The interest rate on the $40 million face value is 9.6% compounded quarterly. Before the maturity date, the original lender sold the contract to a pension fund for $43 million. The sale price was based on a discount rate of 8.5% compounded semi-annually from the date of sale. How many months before the maturity date did the sale take place?

Accepted Answer

The selling price represents the present

Question 6

A six-year, $1650.00 note bearing interest at 9.51% compounded annually was discounted at 11.2% compounded semi-annually yielding proceeds of $1916.75. How many months before the due date was the discount date?

Accepted Answer

PV = 1650, i = 0.0951, n = 6
Maturity Va

Question 7

How long did it take for $1635 to increase to $2310 if the investment earned interest at a rate of 8.08% compounded quarterly (give your final answer in years and months, e.g., 3 years and 7.23 months)?

Accepted Answer

A)  7 years 7.69 months 
B)  4 years .64 months 
C)  3 years 4.79 months 
D)  4 years 3.84 months 
E)  8 years 1.69 months 
A)  7 years 7.69 months 
B)  4 years .64 months 
C)  3 years 4.79 months 
D)  4 years 3.84 months 
E)  8 years 1.69 months

Question 8

At what nominal rate of interest compounded monthly will $40 000.00 earn $7200.00 interest in three years?

Accepted Answer

A)  6% 
B)  0.461% 
C)  4.879% 
D)  59% 
E)  4.61% 
A)  6% 
B)  0.461% 
C)  4.879% 
D)  59% 
E)  4.61%

Question 9

A financial obligation requires payments of $2000.00 today, $2500.00 in three years, and $3000.00 in five years. When can the obligation be discharged by a single payment equal to the sum of the required payments if interest is 6%p.a. compounded monthly?

Accepted Answer

Let the focal date be now; i = @#IMG-DLM& = 0.005;

Question 10

A loan of $15 000.00 was repaid together with interest of $1089.00. If interest was 5% compounded quarterly, how long was the loan taken out? (Answers are rounded off to years and months)

Accepted Answer

A)  5 years 8 months 
B)  1 year 11 month 
C)  1 year 5 months 
D)  52 years 10 months 
E)  3 years 7 months 
A)  5 years 8 months 
B)  1 year 11 month 
C)  1 year 5 months 
D)  52 years 10 months 
E)  3 years 7 months

Question 11

At what nominal rate of interest compounded quarterly will $2000.00 earn $400.00 interest in three years?

Accepted Answer

PV = 2000, FV = 2000 + 400 = 2

Question 12

If the effective rate of interest on an investment is 7%, what is the nominal rate of interest compounded quarterly?

Accepted Answer

@#IMG-DLM& The nominal annual

Question 13

Musa's parents deposited $20,000 in a long-term savings account as a wedding expenditure for their grand daughter at her birth, expecting it to triple by the time she gets married. Calculate the number of years for money to triple at 5% p.a. compounded monthly.

Accepted Answer

A)  22 years 
B)  22 years 6 months 
C)  25 years 
D)  30 years 
E)  18 years 7 months 
A)  22 years 
B)  22 years 6 months 
C)  25 years 
D)  30 years 
E)  18 years 7 months

Question 14

In how many years will money double at 8% compounded yearly?

Accepted Answer

A)  0.09 years 
B)  0.9 years 
C)  9.01 years 
D)  90.1 years 
E)  2 years 
A)  0.09 years 
B)  0.9 years 
C)  9.01 years 
D)  90.1 years 
E)  2 years

Question 15

A promissory note for $3600.00 dated May 15, 2012, requires an interest payment of $370.00 at maturity. If interest is at 9.6% compounded monthly, determine the due date of the note.

Accepted Answer

PV = 3600, FV = 3600 + 370 = 3970, i = 0

Question 16

In how many years will money triple at 12% compounded semi-annually?

Accepted Answer

PV = 1, FV = 3, i =

Question 17

A financial obligation requires the payment of $1500.00 in nine months, $700.00 in twenty-one months, and $1700.00 in 33 months. When can the obligation be discharged by a single payment of $3900.00 if interest is 8.44% compounded quarterly?

Accepted Answer

Let the focal date be now; i = 0.0844 ÷

Question 18

At what nominal rate of interest compounded quarterly will $ 13 000.00 earn $8407.27 in interest in six years? (nearest hundredth)

Accepted Answer

A)  1.83% 
B)  2.10% 
C)  7.33% 
D)  8.4% 
E)  18.4% 
A)  1.83% 
B)  2.10% 
C)  7.33% 
D)  8.4% 
E)  18.4%

Question 19

Which is the most attractive of the following interest rates offered on a savings account?

Accepted Answer

A)  2.7% compounded annually 
B)  2.68% compounded semiannually 
C)  2.66% compounded quarterly 
D)  2.64% compounded monthly 
E)  All of them offer the same effective rate. 
A)  2.7% compounded annually 
B)  2.68% compounded semiannually 
C)  2.66% compounded quarterly 
D)  2.64% compounded monthly 
E)  All of them offer the same effective rate.

Question 20

Find the equated date at which two payments of $1600.00 due six months ago and $1850.00 due today could be settled by a payment of $4300.00 if interest is 9.48% compounded monthly.

Accepted Answer

Let the focal date be today.
Payments: 1

The Brick store credit card quotes a rate of 1.75% per month on the unpaid balance. Calculate the effective rate of interest being charged.

In how many months will money double at 7.45% compounded semi-annually?

Calculate the effective annual rate for 10% p.a. compounded quarterly.

How long will it take Whitby's population to grow from 125 000 (in 2013) to 200 000, if the annual growth rate is 3%? Round your answer to the nearest month.

A six-year, $1650.00 note bearing interest at 9.51% compounded annually was discounted at 11.2% compounded semi-annually yielding proceeds of $1916.75. How many months before the due date was the discount date?

How long did it take for $1635 to increase to $2310 if the investment earned interest at a rate of 8.08% compounded quarterly (give your final answer in years and months, e.g., 3 years and 7.23 months)?

At what nominal rate of interest compounded monthly will $40 000.00 earn $7200.00 interest in three years?

A financial obligation requires payments of $2000.00 today, $2500.00 in three years, and $3000.00 in five years. When can the obligation be discharged by a single payment equal to the sum of the required payments if interest is 6%p.a. compounded monthly?

A loan of $15 000.00 was repaid together with interest of $1089.00. If interest was 5% compounded quarterly, how long was the loan taken out? (Answers are rounded off to years and months)

At what nominal rate of interest compounded quarterly will $2000.00 earn $400.00 interest in three years?

If the effective rate of interest on an investment is 7%, what is the nominal rate of interest compounded quarterly?

Musa's parents deposited $20,000 in a long-term savings account as a wedding expenditure for their grand daughter at her birth, expecting it to triple by the time she gets married. Calculate the number of years for money to triple at 5% p.a. compounded monthly.

In how many years will money double at 8% compounded yearly?

A promissory note for $3600.00 dated May 15, 2012, requires an interest payment of $370.00 at maturity. If interest is at 9.6% compounded monthly, determine the due date of the note.

In how many years will money triple at 12% compounded semi-annually?

A financial obligation requires the payment of $1500.00 in nine months, $700.00 in twenty-one months, and $1700.00 in 33 months. When can the obligation be discharged by a single payment of $3900.00 if interest is 8.44% compounded quarterly?

At what nominal rate of interest compounded quarterly will $ 13 000.00 earn $8407.27 in interest in six years? (nearest hundredth)

Which is the most attractive of the following interest rates offered on a savings account?

Find the equated date at which two payments of $1600.00 due six months ago and $1850.00 due today could be settled by a payment of $4300.00 if interest is 9.48% compounded monthly.

Review of Arithmetic

Review of Basic Algebra

Ratio, Proportion, and Percent

Linear Systems

Cost-Volume-Profit Analysis and Break-Even

Trade Discounts, Cash Discounts, Markup, and Markdown

Simple Interest

Simple Interest Applications

Compound Interest - Future Value and Present Value

Ordinary Simple Annuities

Ordinary General Annuities

Annuities Due, Deferred Annuities, and Perpetuities

Amortization of Loans, Residential Mortgages, and Sinking Funds

Bond Valuation

Investment Decision Applications

Filters

Exam 10: Compound Interest - Further Topics

The Brick store credit card quotes a rate of 1.75% per month on the unpaid balance. Calculate the effective rate of interest being charged.

In how many months will money double at 7.45% compounded semi-annually?

Calculate the effective annual rate for 10% p.a. compounded quarterly.

How long will it take Whitby's population to grow from 125 000 (in 2013) to 200 000, if the annual growth rate is 3%? Round your answer to the nearest month.

A six-year, $1650.00 note bearing interest at 9.51% compounded annually was discounted at 11.2% compounded semi-annually yielding proceeds of $1916.75. How many months before the due date was the discount date?

How long did it take for $1635 to increase to $2310 if the investment earned interest at a rate of 8.08% compounded quarterly (give your final answer in years and months, e.g., 3 years and 7.23 months)?

At what nominal rate of interest compounded monthly will $40 000.00 earn $7200.00 interest in three years?

A financial obligation requires payments of $2000.00 today, $2500.00 in three years, and $3000.00 in five years. When can the obligation be discharged by a single payment equal to the sum of the required payments if interest is 6%p.a. compounded monthly?

A loan of $15 000.00 was repaid together with interest of $1089.00. If interest was 5% compounded quarterly, how long was the loan taken out? (Answers are rounded off to years and months)

At what nominal rate of interest compounded quarterly will $2000.00 earn $400.00 interest in three years?

If the effective rate of interest on an investment is 7%, what is the nominal rate of interest compounded quarterly?

Musa's parents deposited $20,000 in a long-term savings account as a wedding expenditure for their grand daughter at her birth, expecting it to triple by the time she gets married. Calculate the number of years for money to triple at 5% p.a. compounded monthly.

In how many years will money double at 8% compounded yearly?

A promissory note for $3600.00 dated May 15, 2012, requires an interest payment of $370.00 at maturity. If interest is at 9.6% compounded monthly, determine the due date of the note.

In how many years will money triple at 12% compounded semi-annually?

A financial obligation requires the payment of $1500.00 in nine months, $700.00 in twenty-one months, and $1700.00 in 33 months. When can the obligation be discharged by a single payment of $3900.00 if interest is 8.44% compounded quarterly?

At what nominal rate of interest compounded quarterly will $ 13 000.00 earn $8407.27 in interest in six years? (nearest hundredth)

Which is the most attractive of the following interest rates offered on a savings account?

Find the equated date at which two payments of $1600.00 due six months ago and $1850.00 due today could be settled by a payment of $4300.00 if interest is 9.48% compounded monthly.

Review of Arithmetic

Review of Basic Algebra

Ratio, Proportion, and Percent

Linear Systems

Cost-Volume-Profit Analysis and Break-Even

Trade Discounts, Cash Discounts, Markup, and Markdown

Simple Interest

Simple Interest Applications

Compound Interest - Future Value and Present Value

Ordinary Simple Annuities

Ordinary General Annuities

Annuities Due, Deferred Annuities, and Perpetuities

Amortization of Loans, Residential Mortgages, and Sinking Funds

Bond Valuation

Investment Decision Applications

Filters