ASSIGNMENT 2-3 2

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University of the Fraser Valley *

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201

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Finance

Date

Feb 20, 2024

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Uploaded by ConstableElement5173

Q 1 Calculate the present value of payments of $100.00 made at the beginning of each quarter for ten years if the interest is 6% compounded quarterly. Q 2 What semi-annual payment must be made into a fund at the beginning of every six months to accumulate to $4800.00 in ten years at 7% compounded semi-annually? Q 3 Payments of $500.00 are made at the beginning of each month for four years. The interest rate is 4.5% compounded monthly. If no further deposits are made a) Calculate the accumulated value twelve years after the first deposit. b) Calculate the amount deposited. c) Calculate the interest. Q 4 Determine the accumulated value after 13.5 years of deposits of $470.00 made at the beginning of every three months and earning interest at 7.2% compounded quarterly. Q 5 What is the discounted value of deposits of $250.00 made at the beginning of every three months for 10.5 years if money is worth 6% compounded quarterly? Q 6 Linda contributes $3000.00 at the beginning of every six months into an RRSP paying interest at 6% compounded semi-annually. a) How much will her RRSP deposits amount to in 15 years? b) How much of the amount will be interest? Q 7 Vicki paid for a kitchen set over time, signing an installment contract that requires semi-annual payments of $500.00 for 5 years. The first payment is made on the signing date and interest is 18% compounded semi-annually. What was the cash price? Q 8 What deposit made at the beginning of each month will accumulate to $36 000.00 at 5% compounded quarterly at the end of eight years? Q 9 Paul intends to retire in 15 years and would like to receive $8000.00 every 6 months for 20 years, starting on the date of his retirement. How much must he deposit in an account today if interest is 5% compounded semi-annually? Q 10 What sum of money must be deposited in a trust fund to provide a scholarship of $630.00 payable at the end of each month if interest is 7.8% compounded monthly? Q 11 A $50 000 bond bearing interest at 6.5% bond payable semi-annually matures in 10 years. If it is bought to yield 5.7% compounded semi-annually, what is the purchase price of the bond? Q 12 A $100 000 bond is redeemable at 105 in 20 years. If interest on the bond is 5% payable semi- annually, what is the purchase price to yield 6% compounded semi-annually? Q 13 A $50 000 bond bearing interest at 5.5% payable semi-annually is redeemable at par on August 10, 2033. The bond is sold on the primary market on December 10, 2013, to yield 5% compounded semi-annually. Determine a) calculate the market price; b) the accrued interest; c) the cash price. Q 14 Waterton Motel made equal payments at the end of every six months into a sinking fund for 11 years. If the fund had a balance of $100 000.00 after 11 years and interest is 5.4% compounded semi- annually, what was the accumulated balance in the fund after seven years? Q 15 A $250 000, 6.5% bond with semi-annual coupons redeemable at par is bought 17.5 years before maturity at 78.25. What was the approximate yield rate?

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