Unit 6 Exercises Chapter 9 Section 9.1: 2a, 2b, 2c, 2d, 2e, 2f, 4a, 4b, 4c, 4d, 4e, 4f (one mark each) 2. For a sum of money invested at 4.2% compounded semi-annually for 5.5 years, state a) The nominal annual rate of interest (j); b) the number of compounding periods per year (m); c) the periodic rate of interest (i); d) the number of compounding periods in the term (n); e) the compounding factor (l + i)n; f) the numerical value of the compounding factor. 4. For a sum of money borrowed at 16% compounded daily for 2 years, state a) the nominal annual rate of interest (j); b) the number of compounding periods per year (m); c) the periodic rate of interest (i); d) the number of compounding periods in the term (n); e) the compounding factor (l + i)n; f) the numerical value of the compounding factor. Section 9.2: 2, 4, 8, 12, 18 2. A loan for $5000 with interest at 7.75% compounded semi-annually is repaid after 5 years, 10 months. What is the amount of interest paid? 4. A debt of $8000 is payable in 7 years and 5 months. Determine the accumulated value of the debt at 10.8% p.a. compounded annually. 8. An investment of $2500 earns interest at 4.5% p.a. compounded monthly for three years. At that time the interest rate is changed to 5% compounded quarterly. How much will the accumulated value be one-and-a-half years after the change? 12. Terri started an RRSP on March 1, 2016, with a deposit of $2000. She added $1800 on December 1, 2018, and $1700 on September 1, 2020. What is the accumulated value of her account on December 1, 2027, if interest is 7.5% compounded quarterly? 18. A variable rate demand loan showed an initial balance of $9000, payments of $2500 after 6 months, $2500 after 21 months, and a final payment after 4 years. Interest was 8% compounded quarterly for the first 21 months and 7.75% compounded monthly for the remaining time. What was the size of the final payment? Section 9.3: 2, 4, 10 2. Find the present value and the compound discount of $2500 due in 6 years and 3 months, if the interest 6% compounded quarterly. 4. What sum of money will grow to $2000 in seven years at 9% compounded monthly? 10. In negotiating a contract for your business, you have to decide between receiv- ing $50 000 now or $20 000 now and $35 000 three years from now. In terms of today's dollar, which choice is better and by how much? Money is worth 4.25% compounded annually. Section 9.4: (A) 4, (B) 2, 8, 10 A. 4. Find the proceeds of a 15-year promissory note discounted after 6 years at 9% compounded quarterly with a maturity value of $7500. B. 2. Compute the discounted value of $7000 due in three years, five months if money is worth 8% compounded quarterly. B. 8. A $2800 promissory note issued without interest for five years on September 30, 2015, is discounted on July 31, 2018, at 8% compounded quarterly. Find the compound discount. B. 10. A $2800 promissory note issued without interest for five years on September 30, 2015, is discounted on July 31, 2018, at 8% compounded quarterly. Find the compound discount Section 9.5: 2a, 2c, 4, 8, 12 2. A debt payment of $5500 is due in 27 months. If money is worth 8.4% p.a. com- pounded quarterly, what is the equivalent payment (a) now? (c) 27 months from now? 4. Scheduled payments of $600, $800, and $1200 are due in one year, three years, and six years, respectively. What is the equivalent single replacement payment two- and-a-half years from now if interest is 7.5% compounded monthly? 8. Scheduled payments of $2000 due now and $2000 due in four years are to be replaced by a payment of $2000 due in two years and a second payment due in seven years. Determine the size of the second payment if interest is 10.5% com- pounded annually and the focal date is seven years from now. 12. . What is the size of the equal payments that must be made at the end of each of the next four years to settle a debt of $3000 due four years from now and subject to interest at 10% compounded annually