Questions from Mathematics of Business & Finance, Vretta Inc., 4th ed., have page numbers.
1. How much should Jasnoor pay for an annuity that would give her $5000 at the end of every the first seven years and $8000 at the end of every year for the next four years, if the interest is 6% compounded semi-annually throughout the time period? (pg. 465, question: 29)
2. Sean contributes $200 at the beginning of every month into an account that earns 7.25% cc monthly. What is the accumulated value of the fund after ten years of contributions? (pg. 47)
3. Solomon has accumulated $12,500 in his savings account. In addition, he plans to deposit at the beginning of every six months into the account for three years. If the account earns 3.9% cc semi-annually, what will be the balance after three years? (pg. 473, question: 7)
4. Yi-soo saved $150 at the beginning of every month in a savings account for ten years monthly? (pg. 473, question: 9)
5. Rita can purchase a new car for $30,000. Alternatively, in addition to a down payment of can make lease payments of $500 at the beginning of each month for three years to lea The car has a residual value of $15,000. Assume that the cost of borrowing is 4.25% cc monthly. (pg. 474, question: 25)
a) Which option is economically better for Rita? b) In the lease option, what will be the buyback value of the vehicle at the end of two years?
6. Sapna agrees to make 48 lease payments of $450 each at the beginning of every month car. If the rate charged was 4.75% compounded monthly, what is the residual value of the end of the lease? What is the buyback value of the car at the end of three years? (pg. 474)
7. As part of his New Year's resolution, Clive committed to save $500 per month in a mutual fu He deposited the money at the beginning of every month and projected that he would be compounded annually on the funds. At the end of 12 months, how much did Clive a pg. 479, question: 3
8. A grandmother opened a savings account for her granddaughter on the day she was bc (she did not make a deposit on the 16th birthday). If the account earned 4.38% compou how much was in the account on her granddaughter's 21st birthday and what was the intere pg. 479, question: 5
9. Nina leased a car for four years by making a down payment of $1500 and lease payments If money is worth 4% compounded daily, calculate the lease amount of the car. (pg. 480, question: 10)
10. Keiko has already accumulated $150,000 in her RRSP. She intends to grow her RRSP contributions of $500 at the beginning of every month. How much will her RRSP be worth from now if the RRSP earns 8% compounded annually?
11. You have a choice of either receiving $15,000 at the beginning of every year for ten years annually, which choice is economically better (in current value, and by what amount? pg. 484, question: 29)
PRACTICE SET ANSWERS
1. $46,111.88
2. $35,309.39
3. $17,247.21
4. $6930.87
