Questions and Answers of Fundamentals of Business Mathematics in Canada

An annuity consists of payments of $400 at the end of every calendar quarter for 11 years. If the annuity earns 3.5% compounded annually, calculate the annuity'sa. Future valueb. Present value
An annuity consists of 42 payments made at the end of successive calendar quarters. How long is the term of the annuity?
Sabina plans to invest $175 at the end of every month for the next 81 years. What will her investment be worth at the end of the 81-year period if she earns 4.2% compounded monthly?
A retiree will receive retirement pension payments of $1000 at the end of every month for the next 12 years. What is the current economic value of the retiree's pension if money is wortha. 6%
An annuity consists of payments of $1000 made at the end of every year for 27 years. If the annuity earns 8% compounded semiannually, calculate the annuity's a. Future value b. Present value
Sergei celebrated his 22nd birthday today and made the first $2000 contribution to his RRSP. He will continue to contribute $2000 on each birthday until age 60. (No contribution is made on his 60th
An annuity consists of payments at the start of each six-month period. There are 27 payments in the annuity. How long is the term of the annuity?
Jamal is saving for a trip that he'd like to take when he graduates from college in three years. If he invests $200 at the end of every three months for the next three years, how much will he have
Payments of $1240 at the end of every six months will pay off the balance owed on a loan in 9 ½ years. If the interest rate on the loan is 5.9% compounded semiannually, what is the current balance
How much will an investor have at the end of 20 years if he deposits $500 at the end of every month for the next 20 years? Assume money earns 2.5% compounded semiannually.
Juliann has deposited $50 at the end of every month for the last 20 years. Her investment has earned 6% compounded quarterly. How much is Julianna's investment worth today?
You have obtained a personal loan to be repaid by a series of seven equal payments. The payments will be made at the end of every quarter. Draw a time diagram for this annuity. On the diagram,
Markus spends $200 per month on cigarettes. Suppose he quits smoking and invests the same amount at the end of each month for 20 years. If the invested money earns 3.6% com-pounded monthly, how much
Sabrina owns a loan contract that will provide her with payments of $350 at the end of every month for the next 11 years and 5 months. If Sabrina sells this loan contract today, what price would an
How much will an investor have in 20 years from now if she deposits $500 at the start of every month? Assume money earns 5.16% compounded monthly.
Alejandro has graduated from college and obtained his first job. He plans to invest $3500 at the end of every year. If Alejandro can earn 4.5% compounded quarterly on his investments, how much will
Starting today, Giorgio will contribute $2000 to his RRSP at the beginning of every six months. The plan will earn 4% compounded semiannually for the first 11 years and 3.5% compounded semiannually
You are going to contribute a series of eight equal payments to a retirement savings plan. The payments will be made at the start of each six-month period, with the first payment being made today.
In 2016, the maximum contribution limit to a Tax Free Savings Account (TFSA) was $5500. Patrick has decided to make regular, end-of-month contributions to his TFSA for the next 20 years, which he
You can purchase a residential building lot for $64,000 cash, or for $10,000 down and month-end payments of $1000 for five years. If money is worth 4.56% compounded monthly, which option should you
A loan will be repaid with $580 payments at the end of every month for 8 years. The loan carries an interest rate of 8% compounded quarterly. Rounded to the nearest dollar, how much was the original
Keiko has already accumulated $150,000 in her RRSP. She intends to continue to grow her RRSP by making contributions of $500 at the beginning of every month. How much will her RRSP be worth 15 years
On December 31, 2016 Jacob borrowed $15,000 from his mother. They agreed that the loan would carry interest at 9% compounded quarterly, and would be repaid with five equal payments made on December
You have decided to give up a $2-per-day coffee habit, and deposit the money that you saved at the end of every month into a Tax Free Savings Account (TFSA) that will earn 2.52% com-pounded monthly.
The rate of return offered by Reliance Insurance Co. on its 20-year annuities is 3.9% com-pounded monthly. Thom wishes to purchase an annuity from Reliance that will provide him with month-end
Salvatore will contribute $500 to a mutual fund at the beginning of each calendar quarter.a. What will be the value of his mutual fund after 6 1/2 years if the fund earns 4% com-pounded annually?b.
Melissa started a savings program on June 1, 2016 that involves a series of six $500 savings deposits at the start of every quarter. Her savings earned 6% compounded quarterly.a. What type of annuity
For the past five years, Ludmilla has been investing $500 at the end of every month into an investment earning 3% compounded monthly.a. How much is the investment worth today?b. How much of the
Calculate the amount that will be accumulated after 20 years ifa. $1000 is invested at the beginning of every six months at 3.5% compounded semiannually. b. $2000 is invested at the beginning of
A lottery prize consists of annual payments of $5000 at the start of each year for 10 years. (The first payment will be made today.) What single lump sum payment today would represent an equivalent
Alison wants to rent a storage locker to store her possessions while she travels in Europe for the next year. The storage operator has quoted her a price of $118.50 per month, payable at the start of
This problem demonstrates the dependence of the future value of an annuity on the interest rate. Suppose $1000 is invested at the end of each year for 20 years. Calculate the future value if the
Many people make their annual RRSP contribution for a taxation year close to the end of the year. Financial advisors encourage clients to contribute as early in the year as possible. How much more
This problem demonstrates the dependence of the future value of an annuity on the number of payments. Suppose $1000 is invested at the end of each year. Assume the investments earn 5% compounded
The Ottawa Senators fired their coach two years into his five-year contract, which paid him $90,000 at the end of each month. If the team owners buy out the remaining term of the coach's contract for
Calculate the future value after 25 years in each of the following scenarios:a. $6000 is invested at the end of each year earning 6% compounded annually.b. $3000 is invested at the end of each
Marika is shopping for a new cell phone and plan. She can get the phone she wants for an upfront payment of $299 if she signs up for a two-year plan with a major carrier. That plan will cost $75 at
On the day their grandson Jeff was born, Mr. and Mrs. Zolob began an investment plan to help pay for his education. The grandparents contributed $50 at the start of every month, beginning on the day
A piece of equipment sells for $20,000. Alternatively, the same piece of equipment can be leased for three years at $575 per month, payable at the beginning of each month. At the end of the lease,
Mary and Steve are both exactly 20 years old. Mary will deposit $1000 at the end of every year for the next 40 years, until age 60, into her retirement fund. Steve is going to wait until age 40 to
You want to buy a new laptop computer and have obtained pricing information from two major retailer& Retailer A is offering a "no money down no interest" event You would pay $162.50 at the end of
How much would an investor pay for a loan contract that guarantees payment of $249 at the end of each month for the next 12 months? Assume the investor requires a return of 10.2% com-pounded monthly.
You have decided that you can afford to save $100 at the end of every month. You predict that your investments will earn 4.8% compounded monthly.a. How much will you have when you retire at age 65 if
Mick contributed $5000 at the beginning of each year for 25 years to his TFSA. The funds earned 6% compounded annually. What was the TFSA's value after 25 years?
Nina, just turned 30, has already accumulated $10,000 in her Registered Retirement Savings Plan. She intends to continue to make deposits of $150 at the end of every month until age 62. She plans to
Dakota intends to save for major travel holidays by contributing $300 at the end of each month to an investment plan. At the end of every three years, she will withdraw $10,000 for a major trip
Isaac wishes to purchase a 25-year annuity providing payments of $1000 at the end of each month for the first 15 years and $1500 at the end of each month for the remaining 10 years. If he requires a
A life insurance company quoted an annual premium of $387.50 (payable at the beginning of the year) for a $250,000 term insurance policy on a 35-year-old male nonsmoker. Alternatively, the insured
You have received two offers on the used car you wish to sell. Mr. Lindberg is offering $8500 cash, and Rosie Senario's offer is five semiannual payments of $1900, including a payment on the purchase
Marika has already accumulated $18,000 in her RRSP. If she contributes $2000 at the end of every six months for the next 10 years, and $300 at the end of each month for the subsequent five years,
Michael purchased a computer today during a "no money down" event. He will make payments of $226.51 at the end of each month for the next 12 months. These payments include interest at a rate of 16.5%
Sebastian has made contributions of $2000 to his RRSP at the end of every six months for the past eight years. The plan has earned 5.5% compounded semiannually. He has just moved the funds to another
A 20-year loan requires semiannual payments of $808.15 including interest at 3.8% com-pounded semiannually.a. What was the original amount of the loan?b. What is the loan's balance 81 years later
A mortgage broker offers to sell you a loan contract that would provide you with end-of-month payments of $900 for the next 21 years. In addition, at the end of the 4 year period, you will also
What is the appropriate price to pay for a contract guaranteeing payments of $1500 at the end of each quarter for the next 12 years? You require a rate of return of 6% compounded quarterly for the
The required payment on an eight-year loan (bearing interest of 8% compounded quarterly) is $385 at the end of every calendar quarter.a. What was the original principal amount of the loan?b. What is
What amount is required to purchase an annuity that pays $4000 at the end of each quarter for the first five years and then pays $2500 at the beginning of each month for the subsequent 15 years?
A lottery offers the winner the choice between a $250,000 cash prize or month-end payments of $1000 for 121 yews, increasing to $1500 per month for the subsequent 124 years. Which alternative would
How much larger will the value of an RRSP be at the end of 20 years if the contributor makes month end contributions of 8500, instead of year-end contributions of $6000? In both cases the RRSP earns
The British Columbia Teachers' Pension Plan allows a teacher to begin collecting a retirement pension before age 60, but the pension is reduced by 3% for each year the retiring teacher's age is under
Charlene has made contributions of $3000 to her RRSP at the end of every half-gear for the past seven gears. The plan has earned 7% compounded semiannually. She has just moved the funds to another
A rental agreement requires the payment of $1000 at the beginning of each month.a. What single payment at the beginning of the rental year should the landlord accept instead of 12 monthly payments if
Suppose Evan contributes $2000 to his RRSP at the end of every quarter for the next 15 years, and then contributes $1000 at each month's end for the subsequent 10 years. How much will he have in his
Rim Suppose you contribute $2500 to an RRSP at the beginning of every six months for the next 15 years, and then increase the contributions to $3000 at the beginning of every six months for the
Suppose that Sam invests $5000 at the beginning of each gear for 25 years to an RRSP that earns 6% compounded annually. Monika makes exactly the same contributions for the same amount of time, but
A court-ordered award for family support calls for payments of $800 at the end of each month for the next five years, followed by payments of $1000 at the end of each month for the subsequent ten
Calculate the future value of investments of $800 at the end of each calendar quarter for seven years. The rate of return will be 7% compounded quarterly for the first 30 months and 6% com-pounded
What will be the amount in an RRSP after 30 years if contributions of $4000 are made at the beginning of each gear for the first 10 gears, and contributions of $6000 are made at the beginning of each
Calculate the amount that must be invested at the end of every six months at 4.75% compounded semiannually in order to accumulate $500,000 after 20 years.
Marissa intends to make contributions to a Tax Free Savings Account (TFSA) such that the account will accumulate to $150,000 after 20 years. What end-of-quarter contributions must be made if the TFSA
flow much must be invested at the beginning of each year in order to accumulate $750,000 after 25 years? The invested funds ean1 6% con1pounded annually.
If $400,000 accumulated in an RRSP is used to purchase an annuity earning 3.9% compounded monthly and paying $3750 at the end of each month, what will be the term of the annuity?
A $50,000 loan was advanced today. What payment is required at the end of every month for the next seven years to fully repay the debt if the interest rate on the loan is 7.5% compoundeda. Monthly?b.
The future value of an annuity is $100,000. To achieve this total, an investor made end-of-year investments of $1658.87 earning 5.2% compounded annually. How many annual investments were made?
What beginning-of-month withdrawals can a $400,000 RRIF (Registered Retirement Income Fund) sustain for 20 years if the investments within the RRIF earn 3.6% compounded monthly?
John has $100,000 available to purchase an annuity. What end-of-month payments can he expect if the funds earn 4.2% compounded monthly and the payments run fora. 10 years?b. 20 years?
If money in a new Tax Free Savings Account earns 2.25% compounded monthly, how long will it take for the plan to reach a future value of $30,000 based on end-of-month contributions of $273.03?
A car loan with a present value of $28,000 will be repaid with end-of-month payments of $472.01 for six years. What monthly compounded nominal rate and effective rate were paid on this loan?
How much would you need to deposit at the end of every month to reach your goal of having $5000 in two years from now? Assume your funds earn 6% compounded monthly.
Maya will make end-of quarter payments of $642.73 to repay a $10,000 loan. How many loan payments will he make in total if he is being charged interest at 6% compounded quarterly?
An annuity earning 3.5% compounded semiannually has a present value of $50,000. How many payments of $3425.81 at the end of every six months will the annuity sustain?
Sarah has been making regular, equal deposits at the end of every three months into a Tax Free Savings Account (TFSA) for the last four years. Her funds have earned 4.2% compounded quarterly. Sarah's
Halima will deposit $500 at the end of every six months into a savings plan that earns 3% compounded semiannually. After how many deposits will Halima have surpassed her savings goal of $7000?
What nominal rate of interest compounded semiannually would allow deposits of $500 at the end of every six months for the next 10 years to grow to be worth $13,685?
The interest rate on a $100,000 loan is 6% compounded monthly. How much longer will it take to pay off the loan with end-of month payments of $1000 than with end-of-month payments of $1050?
Aden is scheduled to make a lump payment of $25,000, 11 months from now, to complete a real estate transaction. What end-of-month payments for the next 11 months should the vendor be willing to
For $200,000, Jamal purchased an annuity that delivers end-of-quarter payments of $3341.74. If the funds in the annuity earn 4.5% compounded quarterly, what is the term of the annuity?
An endowment fund is set up with a donation of $100,000. If it earns 3% compounded monthly, for how long will it sustain end-of-month withdrawals of $1000? (Include the final, smaller withdrawal.)
Heather wants to accumulate $4000 for a trip to Hong Kong that she will take in two years from now. Her investment account earns 4.2% compounded monthly. What amount must Heather deposit at the
Rounding up the number of contributions to the next integer, how long will it take an RRSP to surpass $100,000 if the investor makes end-of-quarter contributions of $3500 and the plan earns 5%
What maximum annual withdrawals will a $200,000 fund earning 5% compounded annually sustain for 20 years if the withdrawals are made a. At the beginning of each year?b. At the end of each year?
For how long has Vickram been making end-of-quarter contributions of $1200 to an RESP for his son's education if the RESP has earned 4.75% compounded annually and is presently worth $60,727?
An annuity purchased for $175,000 pays $4000 at the end of every quarter. How long will the payments continue if the funds earn 3% compounded semiannually?
The interest rate on a $100,000 loan is 4.8% compounded monthly. What end-of-month payment amount will repay the loan ina. 5 years?b. 10 years?c. 15 gears?d. 20 pears?Also calculate the total
Assume that the investments within an RRSP will earn 6% compounded annually. What contribution must be made at the end of each month in order for the RRSP to grow to $750,000 ina. 15 years?b. 20
RRSP contributions of $500 are made at the beginning of every six months. How many more contributions will it take to reach $750,000 if the RRSP earns 4% compounded semiannually than if it earns 5%
Calculate the amount that must be invested at the end of each year at 5% compounded annually in order to accumulate $500,000 aftera. 25 years.b. 30 years.In each case, also determine what portion of
Silas is about to begin regular month-end contributions of $500 to a bond fund. The fund's long-term rate of return is expected to be 3% compounded semiannually. Rounded to the next-higher month, how
If $100,000 will purchase a 20-year annuity paging $632.65 at each month's end, what monthly compounded nominal rate and effective rate of interest are earned by the funds?
Farah has $600,000 in her RRSP and wishes to retire. She is considering using the funds to purchase an annuity that earns 3% compounded annually and pays her $3500 at the end of each month. If she

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