Foundations of Math 12 Unit 2 Send-In Assignment On-Line Course SEND - IN ASSIGNMENT UNIT 2 Finance - Borrowing Money Name: _________________________________________ Teacher:________________________________________ School:_________________________________________ Total: / 57 = _________% Show all work or provide rationale for answers if no work is required. Show all financial application inputs from the calculator where appropriate Version 1 2013 Page 1 of 10 Unit 2 Foundations of Math 12 Unit 2 Send-In Assignment On-Line Course 1. Construct an excel spreadsheet to show the repayment of a $3000 loan if the annual interest rate charged was 5.25% compounded monthly. The loan was paid back in 12 monthly payments of $257.17. What was the total in interest paid over the 12 months? Fill in the rows for payment periods 0, 1, 11, 12. 1 2 A Payment Period B Payment ($) C Interest Paid ($) D Principal Paid ($) E Balance ($) 3 4 0 5 1 15 11 16 12 1) _______________________ 6 marks 2. Scott borrowed $3500 to cover the costs of taking a firefighter course in Texas. His bank offered him a simple interest loan at a rate of 4.7% with a single repayment in 6 months. Another bank offered him a loan that was compounded monthly at an annual rate of 4.2% with a single repayment in 6 months. Which option would cost him the least amount of interest and by how much less? 2) _______________________ 3 marks Version 1 2013 Page 2 of 10 Unit 2 Foundations of Math 12 Unit 2 Send-In Assignment On-Line Course 3. Glen wants to purchase new equipment for his landscaping business. He wants to arrange a loan that he will not have to repay for 24 months. The loan he has negotiated has an annual rate of 5.35% compounded quarterly. He only wants to pay back a maximum of $18500 when the loan matures in 24 months. a. What is the maximum he could borrow? a. _______________________ 2 marks b. How much interest would he pay? b. _______________________ 1 mark 4. Janice is an interior designer and wants to borrow $5000 so she can attend a trade show in New York. Her credit union has offered her an unsecured line of credit at an annual rate of 9.25% compounded weekly. Use the finance application of your calculator and fill in the correct inputs. a. If she was able to pay back $200 per month, how long would it take her to pay off the loan? N ________ FV ________ I % _________ P / Y ________ PV ________ PMT __________ C / Y _________ a. _______________________ b. How much interest would she have paid? 1 mark b. _______________________ 1 mark Version 1 2013 Page 3 of 10 Unit 2 Foundations of Math 12 Unit 2 Send-In Assignment On-Line Course c. How much interest would she have paid if she had been able to afford to pay back $300 per month? N ________ FV ________ I % _________ P / Y ________ PV ________ PMT __________ C / Y _________ c. _______________________ 2 marks 5 Ross borrowed $20000 in a secured line of credit to finish his basement. The loan had an annual rate of 4.35% compounded semi-annually and he wanted to pay it off in four years. What would his payments be if he paid: (use your financial application and fill in the appropriate inputs) a. monthly N ________ FV ________ I % _________ P / Y ________ PV ________ PMT __________ C / Y _________ a. _______________________ 1 mark b. bi-weekly N ________ FV ________ I % _________ P / Y ________ PV ________ PMT __________ C / Y _________ b. _______________________ 1 mark c. weekly N ________ FV ________ I % _________ P / Y ________ PV ________ PMT __________ C / Y _________ c. _______________________ 1 mark Version 1 2013 Page 4 of 10 Unit 2 Foundations of Math 12 Unit 2 Send-In Assignment On-Line Course d. Design a spreadsheet to calculate the interest he would have paid with each repayment option. (1 mark each) Monthly repayments: _______________________ Bi-Weekly repayments: _______________________ Weekly repayments: _______________________ e. What formula would you use in the spreadsheet to determine the interest paid per weekly payment? e. _______________________ 2 marks 6. Davis owns a moving business and one of his trucks needs a new transmission along with some other repairs that will cost a total of $4785. He can use his credit card with an annual rate of 15.9% compounded daily that offers 2% cash back on all purchases made on the card or he can sign up with a new card company that is offering a $100 rebate the first time the card is used. This card has an annual rate of 14.2% compounded daily. Which card would be less expensive and by how much less if he can afford to pay back $350 per month? (use your financial application and fill in the appropriate inputs) a. Existing Card (1 mark) N ________ FV ________ I % _________ P / Y ________ PV ________ PMT __________ C / Y _________ b. New Card (1 mark) N ________ FV ________ Version 1 2013 I % _________ P / Y ________ Page 5 of 10 PV ________ PMT __________ C / Y _________ Unit 2 Foundations of Math 12 Unit 2 Send-In Assignment On-Line Course c. Least expensive card c. _______________________ 4 marks 7. Josh needs $320 to pay off his cell phone. He can use his credit card, but the $320 payment will put him at his card limit. His other option is to take out a payday loan. His credit card has an annual rate of 16.8% compounded daily. The payday loan charges a daily rate of 0.75%. Calculate the cost of both options if he will pay both off when he receives his next pay cheque in 3 weeks. Cost pay day loan: _______________________ 2 marks Cost of credit card: _______________________ 2 marks . Version 1 2013 Page 6 of 10 Unit 2 Foundations of Math 12 Unit 2 Send-In Assignment On-Line Course 8. Nate would like to buy a new camper for his truck at a cost of $5250. He has two financing options. The dealership offers financing at an annual rate of 15.5% compounded monthly with $350 worth of free upgrades for the camper. His credit card has a zero balance and has an annual rate of 13.3% compounded daily. He plans to pay off the debt in one year. (use your financial application and fill in the appropriate inputs) a. Which option requires lower payments? Dealership N ________ FV ________ I % _________ P / Y ________ PV ________ PMT __________ C / Y _________ Credit Card N ________ FV ________ I % _________ P / Y ________ PV ________ PMT __________ C / Y _________ a. _______________________ 2 marks b. Which option will charge less interest and how much is that interest? b. _______________________ 2 marks c. Which would you recommend? b. _______________________ 2 marks Version 1 2013 Page 7 of 10 Unit 2 Foundations of Math 12 Unit 2 Send-In Assignment On-Line Course 9. Rani recently took out a $50,000 secured line of credit. The rate is 2.75% compounded semiannually above the Bank of Canada rate which is currently 1%. (use your financial application and fill in the appropriate inputs) a. If Rani could afford to make payments of $700 per month, how long would it take her to pay off the outstanding balance on her line of credit? N ________ FV ________ I % _________ P / Y ________ PV ________ PMT __________ C / Y _________ a. _______________________ 1 mark b. How much total interest would she pay? b. _______________________ 2 marks c. How many fewer payments and less interest would she have to pay if she was able to make monthly payments of $1200? N ________ FV ________ I % _________ P / Y ________ PV ________ PMT __________ C / Y _________ c. _______________________ 2 marks Version 1 2013 Page 8 of 10 Unit 2 Foundations of Math 12 Unit 2 Send-In Assignment On-Line Course 10. Jordan and Mike are both planning on attending university in Calgary. Jordan's parents rent him a one bedroom apartment for $750 per month. Mike's parents bought a 3 bedroom house for $285000 that required a down payment of 10% and offered a mortgage amortized over 20 years at an annual rate of 4.15% compounded semi-annually for a 5 year term. They rented the other two rooms out for $600 each per month. The house depreciated in value by 1.5% a year and the cost of taxes and maintenance averaged $3000 a year. a. How much did Jordan's parents pay in rent over the 5 years? a. _______________________ 1 mark b. What were the monthly mortgage payments on Mike's parents' house? (use your financial application and fill in the appropriate inputs) N ________ FV ________ I % _________ P / Y ________ PV ________ PMT __________ C / Y _________ b. _______________________ 1 mark c. How much was left to pay on the mortgage after 5 years? (use your financial application and fill in the appropriate inputs) N ________ FV ________ I % _________ P / Y ________ PV ________ PMT __________ C / Y _________ c. _______________________ 1 mark d. How much had the house lose in value [money] over the 5 years? d. _______________________ 2 marks Version 1 2013 Page 9 of 10 Unit 2 Foundations of Math 12 Unit 2 Send-In Assignment On-Line Course e. Assuming the house was sold at market value after 5 years, how much would Mike's parents receive from the sale? e. _______________________ f. How much did Mike's parents have to subsidize the rent for the 5 year term? 1 mark f. _______________________ 2 marks 11. In 2008 a major bank in the US borrowed 10 million dollars for the US government at an annual rate of 0.50% compounded annually. They then used that money to purchase US government 30 year bonds that yield 4.65% compounded annually? How much did this cost the US taxpayers in the first year? [It will be the profit the bank makes] (use your financial application and fill in the appropriate inputs) Interest paid by Bank (1 mark) N ________ FV ________ I % _________ P / Y ________ PV ________ PMT __________ C / Y _________ Interest earned by Bank (1 mark) N ________ FV ________ I % _________ P / Y ________ PV ________ PMT __________ C / Y _________ f. _______________________ 2 marks Version 1 2013 Page 10 of 10 Unit 2