LAB 10

2) Samuel secured a lease on a machine by paying $1,550 as a down payment and then $300 at the beginning of every quarter for 4 years. Assume that the cost of financing is 4.23% compounded quarterly.

a.What was the principal amount of the loan?

b.What was the cost of the machine?

c.What was the amount of interest paid over the term?

3) Since the birth of his daughter, 19 years ago, Hui has deposited $125 at the beginning of every month into a Registered Education Savings Plan (RESP). The interest rate on the plan was 3.90% compounded monthly for the first 12 years and 4.50% compounded monthly for the next 7 years.

c.What is the amount of interest earned during the 19 year period?

5) Shelby deposited $16,000 into a fund at the beginning of every quarter for 16 years. He then stopped making deposits into the fund and allowed the investment to grow for 4 more years. The fund was growing at 3.35% compounded monthly.

c.What is the total amount of interest earned over the 20-year period?

6) What should be the amount in an RRSP that is earning 6.50% compounded semi-annually if it can be converted to an RRIF that will provide $350 at the beginning of each quarter for 7 years?

7) A contract requires lease payments of $500 at the beginning of every month for 7 years.

a.What is the present value of the contract if the lease rate is 5.67% compounded annually?

b.What is the present value of the contract if the lease rate is 5.67% compounded daily?

9) Julia's retirement fund has an accumulated amount of $45,000. If it has been earning interest at 5.65% compounded monthly for the past 18 years, calculate the size of the equal payments that he deposited at the beginning of every 3 months.