Question 1

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 2

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 3

Compute the discounted value of $5125.00 due in three years, eight months if money is worth 8.24% compounded quarterly.

Accepted Answer

The answer of Compute the discounted value of $5125.00 due...

Question 4

An obligation of $17 320 is due two years from now with interest at 9.2% compounded semi-annually. The obligation is to be settled by a payment of $8000 in seven months and a final payment in sixteen months. What is the size of the second payment if interest is now 10.8% compounded monthly?

Accepted Answer

The answer of An obligation of $17 320 is due...

Question 5

Determine the sum of money that will grow to $18 530 in four years, eleven months at 5.2% compounded quarterly.

Accepted Answer

The answer of Determine the sum of money that will...

Question 6

Find m for the investment of $1000.00 for 2 years at 1.8% compounded semi-annually.

Accepted Answer

A)  4 
B)  2 
C)  0.9% 
D)  1

Question 7

GBC Credit Union expects an average annual growth rate of 10% for the next 10 years. If the assets of the credit union currently amount to $50 million, what will the forecasted assets be in ten years?

Accepted Answer

The answer of GBC Credit Union expects an average annual...

Question 8

You will need three amounts of $14 200 in each year for four years in order to go to school. You are planning on going to school starting in 5 years and ending in 8 years (years 5, 6, 7, 8). You are able to earn 9.64% compounded quarterly. How much money do you have to have today in order to be able to go to school?

Accepted Answer

A)  $30 574.35 
B)  $30 457.35 
C)  $30 754.35 
D)  $30 475.34 
E)  $33 354.35

Question 9

Find the present value and the compound discount of $6 600.00 due in seven years, three months, if interest is 7.2% compounded quarterly.

Accepted Answer

The answer of Find the present value and the compound...

Question 10

Debts of $850 due in six months, $700 due in sixteen months, and $1100 due in three years are to be settled by a single payment one year from now. What is the size of that single payment if interest is 7.5% compounded monthly?

Accepted Answer

The answer of Debts of $850 due in six months,...

Question 11

Find i if an amount is invested at 6.00% compounded every 3 months.

Accepted Answer

A)  3.00% 
B)  2.00% 
C)  6.00% 
D)  1.50% 
E)  0.02

Question 12

Ade has to settle a debt, for which scheduled debt payments of $3800.00 was due seven months ago, $4700.00 was due two months ago, and $8800.00 due in five months. Debt has to be settled by two equal payments now and three months from now respectively. Determine the size of the equal replacement payments at 4.9% p.a. compounded monthly.

Accepted Answer

A)  $8650.00 
B)  $8635.47 
C)  $8688.25 
D)  $17 270.93 
E)  $17 323.72

Question 13

Ontario's recommended discount rate is 2.5% per year, which is the same as rate of inflation in Ontario. What annual income will be needed 17 years from now, to have the same purchasing power as a $134 000 annual income today?

Accepted Answer

The answer of Ontario's recommended discount rate is 2.5% per...

Question 14

Two years after Michelle deposited $25 000 in a TD Bank savings account that earned interest at 2.25% compounded monthly, the rate of interest was changed to 5.75% compounded semi-annually. How much was in the account fifteen years after the deposit was made?

Accepted Answer

A)  $26149.59 
B)  $54641.30 
C)  $61201.27 
D)  $58510.72 
E)  $54629.87

Question 15

A $100 000 face value strip bond has 6 years remaining until maturity. If the current market return rate is 4% compounded semi-annually, what is the fair market value of the strip bond?

Accepted Answer

A)  $78 849 
B)  $79 031 
C)  $88 797 
D)  $100 000 
E)  $126 824

Question 16

An investment of $30 325 is accumulated at 9.45% compounded quarterly for nine and one-half years. At that time the interest rate is changed to 9.45% compounded monthly. How much is the investment worth two years after the change in interest rate?

Accepted Answer

A)  $73646.89 
B)  $88902.62 
C)  $49319.03 
D)  $89520.33 
E)  $88773.12

Question 17

Calculate the accumulated value of $1000.00 at 8% compounded monthly for 12 years.

Accepted Answer

A)  $2603.39 
B)  $1603.39 
C)  $2600.39 
D)  $2003.39 
E)  $603.39

Question 18

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 19

You want to retire with $370 000 in the bank and you are able to earn 4.84% compounded quarterly for the next 25 years. You currently have $175 000 saved up. How much more do you have to invest in 15 years in order to achieve your goal?

Accepted Answer

A)  $100 649.58 
B)  $110 649.58 
C)  $120 649.58 
D)  $130 649.58 
E)  $0.00

Question 20

An investment of $2500.00 accumulates interest at 9.25% compounded quarterly. After 18 months the rate changed to 9.75% compounded semi-annually. Calculate the accumulated value three years after the initial investment.

Accepted Answer

The answer of An investment of $2500.00 accumulates interest at...

Exam 9: Compound Interest - Future Value and Present Value