Question 1

What annually compounded rate of return must Thiva earn in her TFSA account in order for month end contributions of $950 to accumulate $1 million after 25 years?

Accepted Answer

A)  0%
B)  8.97%
C)  8.62%
D)  0.716%
E)  7.16% B

Question 2

A 22-year mortgage is amortized by payments of $1761.50 made at the end of each month. If interest is 9.65% compounded semi-annually, what is the mortgage principal?

Accepted Answer

PMT = 1761.50, i = 0.0965 ÷ 2 = 0.04825, n = 22 × 12 = 264, c =  =  p =  - 1 = 0.0078846
PVg = 1761.50  = 1761.50(110.8792971)= $195 313.88

Question 3

What is the accumulated value after 11.25 years of monthly deposits of $415.00 earning interest at 5.56% compounded semi-annually if the deposits are made at the end of each month?

Accepted Answer

PMT = 415, i = 0.0556 ÷ 2 = 0.0278, n = 11.25 × 12 = 135, c =  =  p =  - 1 = 0.0045806
FVg = 415.00  = 415.00(186.2861243)= $77 308.74

Question 4

Don turned 60 years old today and has retired from Hydro One. Current economic value of his pension is his significant asset. He will be receiving pension payments of $7000 at the end of each month. Based on a 22-year life expectancy and money worth 8% compounded semi-annually, calculate the current economic value of Don's pension.

Accepted Answer

The answer of Don turned 60 years old today and...

Question 5

What is the accumulated value of deposits of $1120.00 made at the end of every six months for three years if interest is 8.48% compounded quarterly?

Accepted Answer

The answer of What is the accumulated value of deposits...

Question 6

Note: The calculations for this question were done using Excel's RATE function.
A $345 000.00 mortgage is repaid in 19 years by making monthly payments of $2486.44. What is the nominal annual rate of interest compounded semi-annually?

Accepted Answer

The answer of Note: The calculations for this question were...

Question 7

You make 6 quarterly deposits starting at $135 and increasing at a constant rate of 4.5%. The interest rate is 8.4% compounded quarterly. What is the size of the last deposit?

Accepted Answer

A)  $186.23
B)  $168.23
C)  $128.63
D)  $135.00
E)  $668.23

Question 8

Jordan is considering building a nuclear power plant, which will be ready for production in 2030. The country's governing body is also considering a decommissioning liability law for the operator to put aside $1 million every month towards decommissioning cost, when the plant is producing electricity. During the 60 years of production life of the plant, the operator will put $1 million at the end of the month in a savings account, earning 7.25% compounded semi-annually. At the end of the production life of the plant, there are no more contributions and the money is expected to grow at the rate of 6% compounded quarterly for the next 30 years. What will be the value of the decommissioning fund in 2120?

Accepted Answer

A)  $12.49 billion
B)  $74.57 billion
C)  $11.88 billion
D)  $70.94 billion
E)  $60.90 billion

Question 9

Knowing that the education costs for her kids would be huge, Roberta puts lump sum money from her inheritance in a savings account paying an interest of 4.69% compounded semi-annually. If ordinary annuity payments of $1500.00 per month are to be paid out of the account at the end of each month for four years, how much did Roberta deposit?

Accepted Answer

A)  $65 533
B)  $32 474
C)  $65 592
D)  $32 723
E)  $54 343

Question 10

Sam took a $5000 loan to build a deck in the backyard. The loan requires payments at the end of each quarter or 4 years. If the interest on the loan is 9% compounded monthly, what is the size of each payment Sam is required to make?

Accepted Answer

A)  $447.83
B)  $353.98
C)  $332.80
D)  $1321.64
E)  $376.08

Question 11

Jamal plans to retire in 17 years. He is saving $2000 every month in a retirement savings account paying him a long-term interest of 9% compounded semi-annually. What will be the size of his payments per month from the ordinary annuity for 20 years following his retirement?

Accepted Answer

A)  $957 836
B)  $8721
C)  $8618
D)  $941 547
E)  $8372

Question 12

How much should you invest today into account paying 3.2% compounded quarterly if you want to be able to withdraw at the end of every 3 month the amounts of money growing at a constant rate of 3% for the period of 5 years , if the first withdrawal is to be $100 five years three months from now?

Accepted Answer

The answer of How much should you invest today into...

Question 13

What is the principal from which $279.00 can be withdrawn at the end of each month for 17.5 years if interest is 5.44% compounded quarterly?

Accepted Answer

The answer of What is the principal from which $279.00...

Question 14

A $360 000.00 mortgage is amortized by making monthly payments of $2600. If interest is 7.5% compounded semi-annually, what is the term of the mortgage?

Accepted Answer

The answer of A $360 000.00 mortgage is amortized by...

Question 15

Calculate the nominal interest rate of interest compounded quarterly if a loan of 43 000.00 is repaid in seven years by payments of $4000.00 made at the end of every six months.

Accepted Answer

The answer of Calculate the nominal interest rate of interest...

Question 16

Woods has contributed $3600.00 per year for the last ten years into a RRSP account earning 9% compounded semi-annually. His wife Karen, on the other hand, contributed $300 at the end of every month for the same period into a RRSP account earning 9% compounded quarterly. Who has bigger saving at the end of 10 years and by how much?

Accepted Answer

A)  Wood by $3360
B)  Karen by $3360
C)  Wood by $2580
D)  Karen by $2580
E)  Karen by $2262

Question 17

If a loan was repaid by monthly payments of $9230.00 in 7.5 years at 6.15% compounded annually, how much interest was paid?

Accepted Answer

The answer of If a loan was repaid by monthly...

Question 18

How many deposits of $6100.00 made at the end of every 6 months are needed to accumulate to $172 000.00 at 5.24% compounded quarterly?

Accepted Answer

The answer of How many deposits of $6100.00 made at...

Question 19

Jordan is considering building a nuclear power plant, which will be ready for production in 2030. The country's governing body is also considering a decommissioning liability law for the operator to put aside $1 million every month towards decommissioning cost. If the production life of the plant is 60 years and the operator puts the money at the end of the month in a savings account, earning 7.25% compounded semi-annually, what will be the value of the decommissioning fund after 60 years of production?

Accepted Answer

A)  $12.49 billion
B)  $10.87 billion
C)  $720 million
D)  $11.88 billion
E)  $917.65 million

Question 20

Momin plans to buy a house on cash instead of paying mortgage. He plans to set aside $14 400 at the end of each year for 15 years. He puts his savings in a Tax Free Savings Account (TFSA)and invests them in a high risk mutual fund, which has traditionally earned 12.2% annually. Money decreases in value by 2.5% per annum as well. How long will it take Momin to reach his target?

Accepted Answer

The answer of Momin plans to buy a house on...

Exam 12: Ordinary General Annuities