Questions and Answers of Fundamentals of Business Mathematics in Canada

An investor has determined that she is willing to pay $1951.62 today for an investment that will pay $2000 in seven months from now. What market rate of return has the investor used to determine the
A $100,000, 168-day Government of Canada Treasury bill was purchased on its date of issue to yield 2.1%.a. What price did the investor pay?b. Calculate the market value of the T-bill 85 days later if
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
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)
A trust company offers three-year compound-interest GICs earning 1.8% compounded monthly or 1.0% compounded semiannually. Which rate should an investor choose?
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
Carol has a savings account balance of $2800 on September 1. On September 18, her balance increases to $3500 and remains there until the end of the month. Her account pays 1.05% per annum. Interest
Calculate the fair market value today of an investment that promises to pay $5250 in four months from now if the investor's required rate of return on the investment is 5%.
Calculate the price 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%.
Seth has a savings account balance of $1834.38 on May 1. On May 8 his balance increased to $2400 and remained there until the end of the month. His account pays 1.85% per annum. Interest is
How much interest will be earned on a 91-day $15,000 term deposit that pays an interest rate of 0.2% per annum?
How much should an investor be willing to pay today for an investment that will pay $17,400 in nine months from now if the discount rate is 1.25%?
Calculate the price on its issue date of $100,000 face value, 90-day commercial paper issued by GE Capital Canada if the prevailing market rate of return is 0.932%.
Dr. Robillard obtained a $75,000 operating line of credit at prime plus 1%. Accrued interest up to but not including the last day of the month is deducted from his bank account on the last day of
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
An investment promises to pay $27,500 in 8 months from now. How much should an investor be willing to pay for this investment today if the market rate of return is 4.25%?
a. What will be the maturity value of $15,000 placed in a 120-day term deposit paying an interest rate of 1.25%?b. If, on the maturity date, the combined principal and interest are "rolled over" into
An investment promises two payments of $500, on dates three and six months from today. What is the value of the investment today if the required rate of return on the investment is 9%?
Calculate and compare the issue-date prices of $100,000 face value commercial paper investments with 30-, 60-, and 90-day maturities, all priced to yield 3.5%.
Harjap completed his program at Nova Scotia Community College in December. On June 30, he paid all of the interest that had accrued (at prime plus 2.5%) on his $5800 Canada Student Loan during the
Calculate the price of a $50,000, 91-day Province of Nova Scotia Treasury bill on its issue date when the market rate of return was 1.273%.
BMO Bank of Montreal advertises that it will pay an interest rate of 0.2% on a 30-to-59-day GIC, or 0.4% on a 60-to-89-day GIC. Janette has $12,000 to invest. How much more interest will she receive
An investment promises two payments of $1000, on dates 60 and 90 days from today. What price will an investor pay today if her required rate of return is 3%?
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
For investments between $100,000 and $249,999.99 and terms between 180 and 269 days, Royal Bank pays 1.00% on a non redeemable GlC and 0.75% on a redeemable GlC. Julienne has $185,000 to invest for
Certificate A pays $1000 in four months and another $1000 in eight months. Certificate B pays $1000 in five months and another $1000 in nine months. If the current rate of return required on this
On its issue date, an investor paid $99,760 for a $100,000 face value, 98-day Government of Canada T-bill. What was the investor's required rate of return?
Keesha 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,
Seth had accumulated Canada Student Loans totalling $5200 by the time he graduated from Mount Royal College in May. He arranged with the National Student Loans Service Centre to select the
How much interest will be earned on a 91-day, $65,000 term deposit that pays an interest rate of 1.15%?
For amounts between $10,000 and $24,999, a credit union pays a rate of 0.5% on term deposits with maturities in the 91-to-120-day range. However, early redemption will result in a rate of 0.2% being
A $100,000, 91-day Province of Ontario Treasury bill was issued 37 days ago. What will be its purchase price today in order to yield the purchaser 1.14%?
Mr. Michaluk has a $50,000 personal (revolving) line of credit with the Canadian Imperial Bank of Commerce (UK). The loan is on a demand basis at a floating rate of prime plus 1.5%. On the 15th of
What will be the maturity value of $5500 placed in a 120-day term deposit paying an interest rate of 2.75%?
On a $10,000 principal investment, a bank offered interest rates of 0.65% on 270-w-364-day GICs and 0.6% on 180-to-269-day GICs. How much more will an investor earn from a 364-day GIC than from two
An agreement stipulates payments of $4000, $2500, and $5000 in three, six, and nine months, respectively, from today. What is the highest price an investor will offer today to purchase the agreement
An investor purchased $1 million face value of Honda Canada Finance Inc. 90-day commercial paper 28 days after its issue. What price was paid if the investor's required rate of return was 2.10%?
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
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
An Investment Savings account offered by a trust company pays a rate of 0.50% on the first $1000 of daily closing balance, 1.00% on the portion of the balance between $1000 and $3000, and 1.5% on any
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
A $100,000, 182-day Province of New Brunswick Treasury bill was issued 66 days ago. What will it sell at today to yield the purchaser 2.48%?
Calculate the missing values for the promissory notes described in problem. Issue date Face value ($) Term Interest rate (%) Maturity value ($) April 30 1000 4 months 4.50 ?
An investment promises to pay a single future payment of $9000. At a market rate of return of 2.15%, the fair market value of this investment is $8872.82. How many months from today is the $9000
Over the past 35 years, the prevailing market yield or discount rate on 91-day T-bills has ranged from a low of 0.17% in February 2010 to a high of 20.82% in August 1981. (The period from 1979 to
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
An Investment Savings account offered by a trust company pays a rate of 0.25% on the first $1000 of daily closing balance, 0.5% on the portion of the balance between $1000 and $3000, and 0.75% on any
Calculate the missing values for the promissory notes described in problem. Issue date Face value ($) Term Interest rate (%) Maturity value ($) Feb. 15 3300 60 days 6.75 ?
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
Twenty-seven days ago, The Hatfield Corporation issued $300,000 face value 90-day commercial paper. How much will a investor pay for the commercial paper today if the required market rate of return
Ms. Wadeson obtained a $15,000 demand loan from TD Canada Trust 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
Joan has savings of $12,000 on June 1. Since she may need some of the money during the next three months, she is considering two options at her bank. (1) An Investment Builder account earns a 0.25%
Calculate the missing values for the promissory notes described in problem. Issue date Face value ($) Term Interest rate (%) Maturity value ($) July 3 90 days 10.20 2667.57
Claude Scales, a commercial fisherman, bought a new navigation system for $10,000 from Coast Marine Electronics on March 20. He paid $2000 in cash and signed a conditional sale contract requiring a
An investor purchased a 182-day, $25,000 Province of Alberta Treasury bill on its date of issue for $24,812 and sold it 60 days later for $24,875.a. What rate of return was implied in the original
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
For principal amounts of $5000 to $49,999, a bank pays an interest rate of 0.65% on 180-to-269-day non-redeemable GICs, and 0.70% on 270-to-364-day non-redeemable GICs. Ranjit has $10,000 to invest
Calculate the missing values for the promissory notes described in problem. Issue date Face value ($) Term Interest rate (%) Maturity value ($) Aug. 31 3 months 7.50 7644.86
Paul has $20,000 to invest for six months. For this amount, his bank pays 1.3% on a 90-day GIC and 1.5% on a 180-day GIC. If the interest rate on a 90-day GIC is the same three months from now, how
Calculate the missing values for the promissory notes described in problem. Issue date Face value ($) Term Interest rate (%) Maturity value ($) Jan. 22 6200 120 days 6388.04
A 168-day, $100,000 T-bill was initially issued at a price that would yield the buyer 0.446%. If the yield required by the market remains at 0.446%, how many days before its maturity date will the
Suppose that the current rates on 60- and 120-day GICs are 1.50% and 1.75%, respectively. An investor is weighing the alternatives of purchasing a 120-day GIC versus purchasing a 60-day GIC and then
Calculate the missing values for the promissory notes described in problem. Issue date Face value ($) Term Interest rate (%) Maturity value ($) Nov. 5 4350 75 days 4445.28
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 of
A conditional sale contract requires two payments three and six months after the date of the contract. F:aeh payment consists of $1900 principal phis interest at 10.5% on $1900 from the date of the
Calculate the missing values for the promissory notes described in problem. Issue date Face value ($) Term Interest rate (%) Maturity value ($) Dec. 31 5200 ? days 11.00 5275.22
A $25,000, 91-day Province of Newfoundland Treasury bill was originally purchased at a price that would yield the investor a 1.438% rate of return if the T-bill is held until maturity. Thirty-four
Calculate the missing values for the promissory notes described in problem. Issue date Face value ($) Term Interest rate (%) Maturity value ($) March 30 9400 ? days 9.90 9560.62
Duncan Developments Ltd. obtained a $120,000 line of credit from its bank to subdivide a parcel of land it owned into four residential lots and to install water, sewer, and underground electrical
Calculate the missing values for the promissory notes described in problem. Face Issue date Interest Date of sale Discount Proceeds value ($) rate (%) Term rate (%) ($) 1000 March 30 50 days April 8 5
George borrowed $4000 on demand from CIBC on January 28 for an RRSP contribution. Because he used the loan proceeds to purchase CIBC's mutual funds for his RRSP, the interest rate on the loan was set
Calculate the missing values for the promissory notes described in problem. Face value ($) Issue date Interest Date of sale Discount Proceeds rate (%) Term rate (%) ($) 6000 May 17 3 months June 17 9
Calculate the missing values for the promissory notes described in problem. Face Issue date Interest Date of Discount rate (%) Proceeds value ($) rate (%) Term sale ($) 2700 Sep. 4 6 182 days Dec. 14
Calculate the missing values for the promissory notes described in problem. Face Issue Interest rate (%) Date of sale Discount Proceeds value ($) date Term rate (%) ($) 3500 Oct. 25 10 120 days Dec.
Calculate the missing values for the promissory notes described in problem. Face Issue date Interest rate (%) Date of sale Discount value ($) Proceeds ($) Term rate (%) 9000 July 28 8 91 days Sep. 1
Calculate the missing values for the promissory notes described in problem. Face Issue date Interest Date of sale Discount Proceeds value ($) rate (%) Term rate (%) ($) 4000 Nov. 30 75 days Jan. 1
Determine the legal due date fora. A five-month note dated September 29, 2016b. A 150-day note issued September 29, 2016
Determine the legal due date fora. A four-month note dated April 30, 2017b. A 120-day note issued April 30, 2017
Calculate the maturity value of a 120-day, $1000 face value note dated November 30, 2017, and earning interest at 4.75%.
A six-month non-interest-beating note issued on September 30, 2016 for $3300 was discounted at 5.25% on December 1. What were the proceeds of the note?
The payee on a three-month $2700 note earning interest at 4% 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
A six-month note dated June 30 for $2900 bears interest at 8%. Determine the proceeds of the note if it is discounted at 4.75% on September 1.
If money can be invested to earn 1.5% compounded annually, how much would have to be invested today to grow to $10,000 aftera. 10 years?b. 20 years?c. 30 years?
By calculating the maturity value of $100 invested for three years at each rate, determine whether an investor would prefer to earn 3.9% compounded annually or 3.65% compounded quarterly for a three
Krista invested $18,000 in a three-year regular-interest GIC earning 2.2% payable semiannually. What is each semiannual interest payment?
Determine the periodic interest rate for a nominal interest rate of 2.4% compounded a. Semiannually.b. Quarterly.c. Monthly.
What is the future value of $8500 after 5 1/2 years if it earns 1.2% compounded quarterly?
GandaIf was scheduled to make payments of $4500 in 1 ½ years from now, and $6000 in 3 ½ years from now. He is proposing an alternative arrangement that would involve a payment in 6
What amount would have to be invested today for the future value to be $10,000 after 20 years if the rate of return isa. 4% compounded quarterly?b. 6% compounded quarterly?c. 8% compounded quarterly?
Kate invested $5300 at 3.6% compounded monthly for seven years. What was the maturity value of her investment?
Determine the periodic interest rate for a nominal interest rate of 3.2% compoundeda. Annually.b. Semiannually.c. Monthly.
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
What amount invested today would grow to $10,000 after 25 gears if the investment earnsa. 4% compounded annually?b. 4% compounded semiannually?c. 4% compounded quarterly?d. 4% compounded monthly?
How much would an investor need to deposit today into an investment earning 3.75% compounded quarterly if her goal is to have a total of $35,000 in eight years from now?
Mr. Dickson purchased a seven-year, $30,000 compound-interest GIC with funds in his RRSP. If the interest rate on the GIC is 1.75% compounded semiannually, what is the GIC's maturity value?
Mrs. Sandhu placed $11,500 in a four-year compound-interest GIC earning 3.75% com-pounded monthly. What is the GIC's maturity value?
Calculate the compounding frequency for a nominal rate of 3.3% if the periodic rate of interest isa. 0.825%.b. 1.65%.c. 0.275%.
Assume that a $10,000 investment can earn 4% compounded quarterly. What will be its future valuea. After 15 years?b. After 20 years?c. After 25 years?d. After 30 years?
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
Josie invested $24,000 in a five-year regular-interest GIC earning 4% payable semiannually. What is each semiannual interest payment?

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