N = 7 x 12 = 84
I/Y = 7%
PV = 0
PMT = -500
FV = ?
P/Y = 12
C/Y = 12 (compounded monthly, therefore it is 12)
Answer: FV = 53999.45$
How much interest was earned? 53999.45 - $42000 = $11999.45

2) RRSP contributions of $4500 are made at the end of each year for 8 years. What is in the RRSP account at the end of the term if the account pays 9% interest compounded annually?

N = 8 years
I/Y = 9%
PV = 0
PMT = -4500
FV = ?
P/Y = 1
C/Y = 1 (compounded annually, therefore it is 1)
Answer: FV = 49628.14$

3) What is the future value of payments of $1000 made at the end of every 6 months for 8.5 years if the interest rate is 7% compounded semi-annually?

N = 8.5 x 2 = 17
I/Y = 7%
PV = 0
PMT = -1000
FV = ?
P/Y = 2
C/Y = 2
Answer: FV = 22705$

4) How much interest is earned over 7 years if payments of $375 are made at the end of every 3 months and the interest rate is 11% compounded quarterly?

N = 7 x 4 = 28
I/Y = 11%
PV = 0
PMT = -375
FV = ?
P/Y = 4
C/Y = 4
Answer: FV = 15510.4$

5) A $10,000 loan with payments at the end of each month for 4 years has an interest rate of 8% compounded monthly. How much are the monthly payments?

N = 4 x 12 = 48
I/Y = 8%
PV = 10000
PMT = ?
FV = 0
P/Y = 12
C/Y = 12
Answer: PMT = 244.13$

6) A person wants to go to Hawaii in 5 years. At that time, the person will need $25000. How much must he deposit at the end of every quarter for the 5-year time period if the interest rate on the deposit account is 6% compounded semi-annually?

N = 5 x 4 = 20
I/Y = 6%
PV = 0
PMT = ?
FV = -25000
P/Y = 4
C/Y = 2
Answer: PMT = 1082.32

7) A $75000 mortgage has payments at the end of each month for 25 years. If th einterest rate on the mortgage is 7% compounded semi-annually, what is the monthly payment?

N = 25 x 12 = 300
I/Y = 7%
PV = 75000
PMT = ?
FV = 0
P/Y = 12
C/Y = 2
Answer: PMT = 525.31

8) After his retirement, a person transfers $200,000 from his RRSP into his RRIF. How much can be withdrawn from the RRIF at the end of every quarter for 20 years if the interest rate of the fun is 9% compounded quarterly?

N = 20 x 4 = 80
I/Y = 9%
PV = 200,000
PMT = ?
FV = 0
P/Y = 4
C/Y = 4
Answer: PMT = 5412.25

9) A vacation property can be bought for $175,000 with a down payment of 20%. If the balance can be paid off over 25 years at 9% compounded semi-annually and payments are made at the end of each month, what are the monthly payments?

N = 25 x 12 = 300
I/Y = 9%
PV = 140,000
PMT = ?
FV = 0
P/Y = 12
C/Y = 2
Answer: PMT = 1159.17

10) A debt of $150,000 is due today. Both the creditor and debtor agree to settle the debt by making payments at the end of each month for the next 3 years. Using an interest rate of 12% compounded monthly, what should the payments be?

N = 3 x 12 = 36
I/Y = 12%
PV = 150,000
PMT = ?
FV = 0
P/Y = 12
C/Y = 12
Answer: PMT = 4982.15

12) A $15000 loan with payments at the end of each month for 6 years has an interest rate of 7% compounded quarterly, what is the cost of financing?

N = 6 x 12 = 72
I/Y = 7
PV = 15000
PMT = ?
FV = 0
P/Y = 12
C/Y = 4
Answer: PMT = 255.44
Cost of Financing = (72 x 255.44) - 15,000
Cost of Financing = $3391.96

14) What payment made at the end of every year for 18 years will accumulate to $135,000 using: An effective rate of 10%? 9% compounded monthly?

a) 10% Effective

N = 18 years
I/Y = Effective 10%
PV = 0
PMT = ?
FV = 135000
P/Y = 1
C/Y = 1
Answer: PMT = 2960.58

b) 9% Compounded Monthly

N = 18 years
I/Y = 9%
PV = 0
PMT = ?
FV = 135000
P/Y = 1
C/Y = 12
Answer: PMT = 3148.17

15) The amount of an ordinary annuity with monthly payments for 10 years is $123,687.75. What is the size of the monthly payments if the interest rate is 12% compounded monthly?

N = 10 x 12 = 120
I/Y = 12%
PV = 0
PMT = ?
FV = 123687.75
P/Y = 12
C/Y = 12
Answer: PMT = 537.68

16) A retiree has $110,000 in their RRSP. If she decides to transfer this money into an RRIF and withdraw $4000 at the end of every quarter and interest is 8.5% compounded semi-annually, for how long can she make the withdrawals?

N = ?
I/Y = 8.5%
PV = 110,000
PMT = -4000
FV = 0
P/Y = 4
C/Y = 2
Answer: N = 42 quarters

17) A person wants to accumulate $95000, for how long must the person contribute $1200 at the end of each month if the interest rate is 9% compounded monthly?

N = ?
I/Y = 9%
PV = 0
PMT = 1200
FV = -95000
P/Y = 12
C/Y = 12
Answer: N = 63 months

18) A mortgage of $75000 is repaid by making payments of $1000 at the end of each month. If the interest rate on the mortgage is 6% compounded semi-annually, how many payments will it take to pay off the mortgage?

N = ?
I/Y = 6%
PV = 0
PMT = 1000
FV = 75000
P/Y = 12
C/Y = 2
Answer: N = 94 months

19) An annuity bought for $175,000 provides payments of $5500 at the end of every quarter. If the interest rate on the annuity is 6% compounded monthly, how many payments will be made?

N = ?
I/Y = 6%
PV = 175000
PMT = -5500
FV = 0
P/Y = 4
C/Y = 12
Answer: N = 43.66 quarters

20) You begin saving $1500 at the end of each quarter for your retirement. If the interest rate on your savings is 9% compounded quarterly and you need $300,000 for your retirement, how long before you can retire?

N = ?
I/Y = 9%
PV = 0
PMT = 1500
FV = -300,000
P/Y = 4
C/Y = 4
Answer: N = 77 quarters

21) A debt of $39000 is repaid by making payments of $500 at the end of each month. Using an interest rate os 12% compounded monthly, how many payments must be made?

N = ?
I/Y = 12%
PV = 39000
PMT = -500
FV = 0
P/Y = 12
C/Y = 12
Answer: N = 152.16

22) A person requires $40,000 for a trip. He makes payments of $1800 at the end of every 6 months. Using an interest rate of 7% compounded semi-annually, how many payments must he make?

N = ?
I/Y = 7%
PV = 0
PMT = 1800
FV = -40,000
P/Y = 2
C/Y = 2
Answer: N = 16.73

24) After making deposits of $7500 at the end of every 6 months for 12 years, a person has $125,000 in her account. What nominal rate was paid on the account? What effective rate was paid on the account?

N = 12 x2 = 24
I/Y = ?
PV = 0
PMT = 7500
FV = -125000
P/Y = 2
C/Y = 2
Answer: I/Y = 6.71% Nominal Rate

Nom = 6.71%
C/Y = 2
Effective Rate = ? -> 6.82%

25) A $16000 loan is repaid by payment of $525 at the end of every quarter for 10 years. What is the nominal interest rate on the loan?

N = 10 x 4 = 40
I/Y = ?
PV = 0
PMT = 525
FV = -16000
P/Y = 4
C/Y = 4
Answer: I/Y = 5.59%

26) $40,000 loan is repaid by payment of $300 at the end of every month for 25 years. What is the effective rate on the loan?

N = 25 x 12 = 300
I/Y = ?
PV = 0
PMT = -300
FV = -40,000
P/Y = 12
C/Y = 12
Answer: I/Y = 7.95%

27) After making deposits of $1300 at the end of every year for 10 years, a person has $22000 in his account. What effective rate was earned on the deposit?

N = 10
I/Y = ?
PV = 0
PMT = 1300
FV = -22000
P/Y = 1
C/Y = 1
Answer: I/Y = 11.25%

28) Payments of $3000 are made at the beginning of every 6 months into an RRSP account. What is the account after 13.5 years if the interest rate is 7% compounded semi-annually?

N = 13.5 x 2 = 27
I/Y = 7%
PV = 0
PMT = 3000
FV = ?
P/Y = 2
C/Y = 2
BGN ON!
Answer: FV = $135,871.88

29) As an incentive to quit smoking, a person deposits the $300 per month formerly spent on smoking into an investment plan. His deposits are made at the beginning of each month and earn 12% compounded monthly. How much will he accumulate in his plan over 15 years?

N = 15 x 12 = 180
I/Y = 12%
PV = 0
PMT = 300
FV = ?
P/Y = 12
C/Y = 12
BGN ON!
Answer: FV = $151,372

30) Payments of $1500 made at the start of each year earn 7% compounded annually. What is the accumulated value in 8 years? In 20 years?

N = 8
I/Y = 7%
PV = 0
PMT = 1500
FV = ?
P/Y = 1
C/Y = 1
BGN ON!
Answer: FV = $16,467

N = 20
I/Y = 7%
PV = 0
PMT = 1500
FV = ?
P/Y = 1
C/Y = 1
BGN ON!
Answer: FV = $65,798

31) How much interest is earned over 15 years if deposits of $40 are made at the start of each month and interest is 6% compounded semi-annually?

N = 15 x 12 = 180
I/Y = 6%
PV = 0
PMT = 40
FV = ?
P/Y = 12
C/Y = 2
BGN ON!
Answer: FV = $11,617.10

32) What is the present value if payments of $175 made at the start of each month for 10 years using an interest rate of:
- 8% compounded monthly
- 12% compounded semi-annually

8% Compounded Monthly

N = 10 x 12 = 120
I/Y = 8%
PV = ?
PMT = 175
FV = 0
P/Y = 12
C/Y = 12
BGN ON!
Answer: PV = $14519.92

12% Compounded Semi-Annually

N = 10 x 12 = 120
I/Y = 12%
PV = ?
PMT = 175
FV = 0
P/Y = 12
C/Y = 2
BGN ON!
Answer: PV = $12462

33) A lease requires payments of $3000 every 6 months for 10 years payable in advance. If the interest rate is 10% compounded semi-annually, what is the cash value on the lease?

N = 10 x 2 = 20
I/Y = 10%
PV = ?
PMT = -3000
FV = 0
P/Y = 2
C/Y = 2
BGN ON!
Answer: PV = $39255.96

34) A retiree purchases an annuity which provides payments of $5500 at the start of every 6 months for 10 years. What does she pay for the annuity assuring an interest rate of 9% compounded monthly?

N = 10 x 2 = 20
I/Y = 9%
PV = ?
PMT = -5500
FV = 0
P/Y = 2
C/Y = 12
BGN ON!
Answer: PV = 74,274.58

35) What is the purchase price of an annuity which provides payments of $2000 at the start of each month for 7.5 years using an effective rate of 9%?

N = 7.5 x 12 = 90
I/Y = 8.65%
PV = ?
PMT = -2000
FV = 0
P/Y = 12
C/Y = 12
BGN ON!
Answer: PV = $133,050

36) What is the present value of payments of $750 made at the start of every quarter for 10 years using:
- Effective rate of 10%?

2nd -> ICONV (2)
Effective Rate = 10%
C/Y = 4
Nominal Rate ? -> 9.645%

N = 10 x 4 = 40
I/Y = 9.645%
PV = ?
PMT = -750
FV = 0
P/Y = 4
C/Y = 4
BGN ON!
Answer: PV = $19,572.08

37) A stereo can be bought on credit by making monthly payments of $75 for 3 years. If the first payment is made on the date of the sale and interest is 24% compounded monthly, what is the cash price of the stereo?

N = 3 x 12 = 36
I/Y = 24%
PV = ?
PMT = -75
FV = 0
P/Y = 12
C/Y = 12
Answer: PV = $1949.89

38) The semi-annual premium on a 10 year insurance policy is $150 payable in advance. What is the cash value of 10% compounded annually?

N = 10 x 2 = 20
I/Y = 10%
PV = ?
PMT = -150
FV = 0
P/Y = 2
C/Y = 1
BGN ON!
Answer: PV = $1888.35

39) A $15000 loan with payments at the start of each month for 6.5 years has an interest rate of 12% compounded monthly. How much are the monthly payments?

N = 6.5 x 12 = 78
I/Y = 12%
PV = 15000
PMT = ?
FV = 0
P/Y = 12
C/Y = 12
BGN ON!
Answer: PMT = $275.12

40) A debt of $12500 is issued today. Both the creditor and debtor agree to settle the debt by making payments at the start of every 3 months for the next 2 years. Using an interest rate of 10% compounded semi-annually, what should the payments be?

N = 2 x 4 = 8
I/Y = 10%
PV = 12500
PMT = ?
FV = 0
P/Y = 4
C/Y = 2
BGN ON!
Answer: PMT = $1699.12

41) A $23000 loan with payments at the start of each year for 7 years has an interest rate of 10% compounded annually. What is the cost of financing?

N = 7
I/Y = 10%
PV = 23000
PMT = ?
FV = 0
P/Y = 1
C/Y = 1
BGN ON!
Answer: PMT = $4294.84

43) A retiree has $150,000 in their RRSP. The retiree decides to transfer this money into an RRIF and then make withdrawals at the start of every month for 25 years. Using an effective rate of 9%, how much will the withdrawal be?

2nd -> ICONV (2)

Effective Rate = 9%
C/Y = 12
Nominal Rate ? -> 8.648%

N = 25 x 12 = 300
I/Y = 8.648%
PV = 150,000
PMT = ?
FV = 0
P/Y = 12
C/Y = 12
BGN ON!
Answer: PMT = $1214.17

44) What payment made at the start of every 6 months for 10 years will have a future value of $29681.37 at:
- 6% compounded semi-annually

N = 10 x 2 = 20
I/Y = 6%
PV = 0
PMT = ?
FV = 29681.37
P/Y = 2
C/Y = 2
BGN ON!
Answer: PMT = $1072.44

45) A motor home can be purchased for $95000 with a down payment of 15% If the balance can be paid off over 10 years at 9% compounded monthly and payments are made at the start of each month, what will the monthly payments be?

N = 10 x 12 = 120
I/Y = 9%
PV = 80750
PMT = ?
FV = 0
P/Y = 12
C/Y = 12
BGN ON!
Answer: PMT = $1015.29

46) A loan of $17,500 is repaid by making payments of $3750 at the start of each year. If the effective rate on the loan is 17%, how many payments must be made?

N = ?
I/Y = 17%
PV = 0
PMT = +3750
FV = 17500
P/Y = 1
C/Y = 1
BGN ON!
Answer: N= 7.22 payments

47) A debt of $41000 is repaid by making payments of $600 at the start of each month. Using an interest rate of 8% compounded monthly, how many payments must be made?

N = ?
I/Y = 8%
PV = 0
PMT = 600
FV = 41000
P/Y = 12
C/Y = 12
BGN ON!
Answer: N = 90.67 payments

48) A person requires $250,000 to buy a house. She makes payments of $12500 at the start of every 6 months. Using an interest rate of 10% compounded monthly, how many payments must she make?

N = ?
I/Y = 10%
PV = 0
PMT = 12500
FV = 250,000
P/Y = 2
C/Y = 12
BGN ON!
Answer: N = 71.43 payments

49) An annuity can be purchased for $275,000. The annuity provides payments of $2000 at the start of each month for 25 years. What is the nominal rate paid on the annuity?

N = 25 x 12 = 300
I/Y = ?
PV = 225,000
PMT = -2000
FV = 0
P/Y = 12
C/Y = 12
Answer: I/Y = 7.39%

50) After depositing $5000 at the start of every 6 months for 20 years, a person has $325,000 in his account. What nominal rate was paid on the account?

N = 20 x 2 = 40
I/Y = ?
PV = 0
PMT = 5000
FV = 325,000
P/Y = 2
C/Y = 2
BGN ON!
Answer: I/Y = 4.47%