1. Brian purchased a new bedroom set for his wife's birthday present. The cost of the bedroom set was $1,999 with no payments for six months. However, at the end of six months Brian owes the price of the bedroom set, plus 12% annual interest, compounded monthly. How much interest will Brian pay on his wife's birthday present?

2. Tim put $35,000 in a five-year CD paying 5.75% annual interest, compounded quarterly. What is the total amount Tim will receive when he withdraws his money after five years?

3. Andrew wants to pay off his car. He has a two-year loan at 9% annual interest that is compounded monthly. Andrew must pay $18,700 at the end of the two-year period. How much did Andrew originally borrow?

Please solve each of the following problems showing precision to five decimal places:

1. What is the nominal rate of an investment that returns 9%?

2. What is the periodic rate for a 10% loan compounded monthly?

3. What is the effective rate for each monthly payment of an auto loan when the loan is issued at 13% compounded weekly? (Assume 4.333 weeks per month.)

4. You have decided to start saving for retirement and are making quarterly payments into an account that earns 4.25% with monthly compounding. What effective interest rate is your money earning per quarter?

 

Suppose a toy craze in Canada makes a particular Swiss-produced toy very popular. What effect would this toy have on the balance of trade? It would tend to affect Canada's balance of payments but not its balance of trade. It would tend to increase Canada's balance of trade deficit. It would tend to reduce any existing balance of trade deficit in Canada. It would tend to increase Canada's balance of trade surplus. Suppose the exchange rate between British pounds and Canadian dollars is originally $1.50 per pound. If it then changes to $2 for 1 pound, what will tend to happen to the volume of imports of British goods into Canada? The volume of imports will tend to rise. The volume of imports will tend to change in an indeterminate direction. The volume of imports will tend to fall. The volume of imports will tend to stay the same.