BUSI 1003: Assignment 4 (Units 7 & 8)

1. What will deposit of $80 made at the end of each month amount to after 4 years if interest is

4.8% compounded monthly?

2. Ali contributed $1,000 per year for the past 9 years into an RRSP account, earning 3.8%

compounded annually. If he leaves the accumulated contributions for another 5 years in the

RRSP at the same rate of interest,

a) How much will Ali have in total in his RRSP account?

b) How much did Ali contribute?

c) How much will be the interest?

3. Sara borrowed funds to buy furniture for her business. Her business paying $200 at the end of

each month for four years. The bank charges interest on the loan at 8% compounded monthly.

a) What was the cash price of the furniture?

b) How much is the cost of financing?

4. What payment is required at the end of each month for 10 years to repay a $200,000 mortgage

if interest is 6.5% compounded monthly?

5. Raj placed $6000 in saving account. For how long can $600 be withdraw from the account at

the end of every month starting one month from now if interest is 4.58% compounded monthly?

6. Cathy saves $25 at the end of each week and deposits the money in an account paying 5%

compounded monthly. How much will she accumulate in 5 years?

7. What is the principal from which $ 225 can be withdrawn at the end of each month 10 years if

interest is 5% compounded quarterly?

8. A business borrowed $50,000 at 8% compounded monthly. If the loan is to be paid in equal

quarterly payments over seven years and the first payment is due three months after the date of

the loan, calculate the size of the quarterly payments.

9. How long will it take to save $20,000 by making deposits of $100 at the end of every month

into an account earning interest at 6% compounded quarterly?

10. What is the nominal annual rate of interest compounded quarterly if a loan of $12,500 is paid

in six years by payments of $1,000 made at the end of every six months?