MATH1091_Assignment_4
docx
keyboard_arrow_up
School
Thompson Rivers University *
*We aren’t endorsed by this school
Course
1091
Subject
Mathematics
Date
Apr 3, 2024
Type
docx
Pages
8
Uploaded by adityasehgal1101
MATH 1091: Business Mathematics
1
Student’s Name:
Calculator make and model:
Assignment 4
Total marks: 100
1.
If money is worth 13.5%, compounded semi-annually, what will have accumulated from end-of-monthly deposits of $1600 after 15 years? (6 marks)
2.
Determine the amount that you originally borrowed, if you have been making student loan payments of $525 at the beginning of every third month for 7 years, and if you are being charged 13%, compounded semi-annually. (6 marks)
3.
If I want to save $50,000 for a house down payment in 8 years’ time, how much must I deposit at the end of every month if interest is paid quarterly at 13%? (6 marks)
TRU Open Learning
2
Assignment 4
4. A business valued at $1,500,000 is bought for $175,000 down with payments of $50,000 at the end of every 3 months. How long will payments have to be made if
money is worth 13.5%, compounded monthly? (8 marks)
5. What is the size of the annual scholarships that can be paid out of a $500,000 fund invested at 14.25%, compounded semi-annually? (5 marks)
6. A couple is saving for a sail boat and is depositing $1,000 every 3 months into a bank account that pays 8%, compounded annually. Find the amount the couple will have saved at the end of 5 years. (5 marks)
TRU Open Learning
MATH 1091: Business Mathematics
3
7.
The multi-media department has set up a fund to replace musical instruments as they become obsolete. If $1,500 is deposited at the end of each month in a mutual fund that pays 12.5%, compounded semi-annually, how much will be available for the replacement after 12 years? (5 marks)
8.
What is the cash price for a piece of property that was purchased for $5,000 down
with monthly payments of $600 over a 20-year period if the mortgage has an interest rate of 10%, compounded semi-annually? (5 marks)
TRU Open Learning
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
4
Assignment 4
9. Christy and Bob bought a small cottage for $150,000. They put $15,000 down and negotiated a mortgage with the vendor for the balance of the purchase price. If the vendor charges 6%, compounded semi-annually, and the mortgage is to be repaid over 20 years, provide the requested details below. (12 marks)
a)
The required monthly payment
b)
The amount outstanding on the mortgage after 2 years of payments
c)
The interest paid by Christy and Bob after 2 years of payments
d)
The total interest cost for the mortgage over the 20-year period (a)
(b)
(c)
(d)
TRU Open Learning
MATH 1091: Business Mathematics
5
10. Jason purchased a $15,000 car and financed the purchase with a personal loan from his credit union. If the interest rate is 18%, compounded annually, how long
will it take Jason to repay the loan with monthly payments of $450? (5 marks)
11. A couple purchased a house for $89,000 by way of an $83,000 mortgage and a $6,000 down payment. If there were monthly payments of $926.91 and the interest rate was 13%, compounded semi-annually, how long did it take the couple to repay the full amount of the mortgage? (5 marks)
12. If the couple in Problem 11 had decided to make payments of $1,100 per month instead of $926.91, how much would they have saved? (5 marks)
TRU Open Learning
6
Assignment 4
13. Panco Holdings has purchased a piece of property for $109,000 and agreed to make monthly payments at the beginning of each month. If the interest rate is 12.6825%, compounded annually, what will be the size of each monthly payment
to repay the debt in 10 years? (5 marks)
14. If Panco Holdings from Problem 13 makes payments of $1,200 at the beginning of each month, how long will it take to repay the loan? (6 marks)
TRU Open Learning
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
MATH 1091: Business Mathematics
7
15. Partex Ltd. is considering the purchase of new laser technology. The equipment can be purchased for $500,000 and is expected to last 5 years. At the end of its life, the machine can be sold for scrap parts and should generate $50,000 in revenue. Partex has also been advised that the service contract on the new equipment will cost $2,000 per month. If Partex decides not to undertake the service contract, there will not be any warranty on the new equipment. Another option is to lease the new equipment for $12,500 per month; no other cost is incurred, as the lease includes the service contract.
If Partex can earn 8%, compounded annually, would it be better to buy or to lease? Use present value to evaluate each option, since this would represent today’s value of each option to Partex, and the option with the lowest present value will represent the least cost to the company. (8 marks)
TRU Open Learning
8
Assignment 4
16. Ivan can purchase a piece of property in the crescent neighbourhood, Price George for $450,000. There is a plant on the adjacent property and Ivan views this new parcel as a possible site for an expanded plant in 15 years. If the land taxes are estimated to be 5% of the purchase price, and if Ivan can earn 11%, compounded semi-annually, what must the minimum value of the land be in 15 years to make the purchase worthwhile, regardless of whether or not Ivan actually uses the site for its plant expansion? (8 marks)
TRU Open Learning