Question
1.Nelson borrowed $5000 for 4.5 years. For the first 2.5 years, the interest rate on the loan was 8.4% compounded monthly. Then the rate became
1.Nelson borrowed $5000 for 4.5 years. For the first 2.5 years, the interest rate on the loan was 8.4% compounded monthly. Then the rate became 7.5% compounded semiannually. What total amount was required to pay off the loan if no payments were made before the expiry of the 4.5-year term? (4 marks)
2.What amount would have to be invested today for the future value to be $10,000 after 20 years if the rate of return is:
a. 5% compounded quarterly? b. 7% compounded quarterly? c. 9% compounded quarterly? ( 4 marks)
3.How long did it take $4625 earning 7.875% compounded annually to grow to $8481.61?
( 4 marks)
4.An annuity consists of semiannual payments of $950 for a term of 32 years. Using a nominal rate of 9% compounded quarterly, calculate the ordinary annuity's:
a. Present value. b. Future value. ( 4 marks)
5.If you want to purchase an annuity providing an income of $2000 at the end of each month for five years, how much will it cost if the purchase funds earn 18% compounded monthly? ( 4 marks)
A. $192,429.30
B. $78,760.54
C. $80,681.00
D. $4886.44
E. $818.60
6.Fatima has made investments of $10,000 at the end of every three months for the last 8 years. She has earned 11% compounded quarterly? What is the value of the investments today? (4 marks)
A. $97,427
B. $211,003
C. $320,000
D. $460.792
E. $502,699
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