Question 1

A ten-year promissory note discounted after seven years at 10% compounded quarterly has a maturity value of $40 000. Find the proceeds.

Accepted Answer

The answer of A ten-year promissory note discounted after seven...

Question 2

A ten-year promissory note dated April 1, 2011, with a face value of $700.00 bearing interest at 7% compounded semi-annually, discounted six years later when money was worth 8.5% compounded monthly. What are the proceeds?

Accepted Answer

A) $1392.85 
B) $992.58 
C) $998.38 
D) $498.84 
E) $250.70

Question 3

For a nominal interest rate of 9%, what is the compounding frequency if the periodic interest is 0.75%?

Accepted Answer

A) 8 
B) 12 
C) 6 
D) 1 
E) 24

Question 4

A $25 641.00 investment matures in seven years, two months. Find the maturity value if interest is 6.11% p.a. compounded quarterly.

Accepted Answer

The answer of A $25 641.00 investment matures in seven...

Question 5

Alflah Islamic bank issued $9300.00 promissory note issued without interest for nine years on September 30, 2001, is discounted on July 31, 2006, at 5.5% compounded quarterly. Find the compound discount.

Accepted Answer

A) $15 205.27 
B) $12 110.06 
C) $9300.00 
D) $7406.88 
E) $1893.12

Question 6

Determine n if an amount is invested for 3.5 years at 2.25% compounded quarterly.

Accepted Answer

A) 14 
B) 5 
C) 10.5 
D) 0.5625% 
E) 56.25

Question 7

Determine the discounted value now of $7700.00 due in forty-four months at 7.5% compounded quarterly.

Accepted Answer

The answer of Determine the discounted value now of $7700.00...

Question 8

Saeed has taken a loan such that debts of $4000.00, $4500.00 and $5000.00 are due in one year, eighteen months and two years from now respectively. He won a lottery and would like to make a single payment now that would settle the debts if interest is 5.99% p.a. compounded quarterly.

Accepted Answer

A) $13 500.00 
B) $12 324.59 
C) $14 796.16 
D) $13 079.58 
E) $13 880.82

Question 9

Sagheer received two offers for his property that he is selling. Offer 1 consists of $700 000 immediately and offer 2 consists of $500 000 now and $110,000 per annum for the next 2 years. If money earns 6% compounded semi-annually, which offer has a better economic advantage and by how much. Assume no inflation or discount?

Accepted Answer

A) Offer 1 is better by ~$1600 
B) Offer 2 is better by ~$1600 
C) Offer 1 is better by ~$5100 
D) Offer 2 is better by ~$5100 
E) Offer 2 is better by ~$20 000

Question 10

Determine the proceeds of $19 000 three years and three months before the due date if interest is 7.6% compounded semi-annually.

Accepted Answer

The answer of Determine the proceeds of $19 000 three...

Question 11

A five-year promissory note with a face value of $3500, bearing interest at 11% compounded semiannually, was sold 21 months after its issue date to yield the buyer 10% compounded quarterly. What amount was paid for the note?

Accepted Answer

A) $3500 
B) $5978.51 
C) $4336.93 
D) $6021.50 
E) $4251.71

Question 12

Find the compound amount of $5700.00 at 11.2% p.a. for seven years compounded monthly.

Accepted Answer

The answer of Find the compound amount of $5700.00 at...

Question 13

You invest $8500 in a savings account that pays interest of 4.8% compounded monthly. What is the value of your account after 19 months?

Accepted Answer

A) $9169.79 
B) $9669.79 
C) $9119.79 
D) $9219.79 
E) $9999.79

Question 14

The Rob U Blind Bank advertises capital savings at 7.128% compounded semi-annually while Take Your Money Trust offers premium savings at 7.1% compounded monthly. Suppose you have $4400.00 to invest for two years.
a)Which deposit will earn more interest?
b)What is the difference in the amount of interest?

Accepted Answer

The answer of The Rob U Blind Bank advertises capital...

Question 15

ICICI quotes nominal annual interest rate of 6.6% compounded annually, 6.5% compounded semi-annually and 6.4% compounded monthly on 5 year compound interest GICs. What rate should an investor choose?

Accepted Answer

A) 6.6% compounded annually 
B) 6.5% compounded semi-annually 
C) 6.4% compounded monthly 
D) Any, as all alternatives are same 
E) Insufficient data to make a decision

Question 16

The Get What You Pay For Bank advertises capital savings at 12% compounded monthly while Give Me Your Money Trust offers premium savings at 12.36% compounded yearly. Suppose you have $500.00 to invest for two years.
a)Which deposit will earn more interest?
b)What is the difference in the amount of interest?

Accepted Answer

The answer of The Get What You Pay For Bank...

Question 17

On April 15, 2005, a ten-year note dated June 15, 2001, is discounted at 8.2% compounded quarterly. If the face value of the note is $4000.00 and interest is 7.2% compounded quarterly, find the compound discount.

Accepted Answer

The answer of On April 15, 2005, a ten-year note...

Question 18

You lend a friend $800 and they agree to make quarterly payments for 1 year. You charge your friend 8.52% compounded quarterly. What is the size of the payments?

Accepted Answer

A) $120.76 
B) $210.76 
C) $220.76 
D) $200.76 
E) $212.76

Question 19

Jenni started a registered retirement savings plan on January 1, 2008, with a deposit of $2000. She added $3000 on January 1, 2009, and $2000 on January 1, 2010. What is the accumulated value of her RRSP account on July 1, 2010, if interest is 12% compounded quarterly?

Accepted Answer

The answer of Jenni started a registered retirement savings plan...

Question 20

Keith took a loan of $20 000 to buy a car at an interest of 4% compounded quarterly, with no monthly payments. On first, second and third anniversary of the loan, he made payments of $5000. What payment on the fourth anniversary will eliminate the debt?

Accepted Answer

The answer of Keith took a loan of $20 000...

Exam 9: Compound Interest - Future Value and Present Value