A 15-year term life insurance policy requires premiums of $45 per month. The first payment is made on the day that the policy is written. The insurance company immediately pays $4,000 into a fund to cover potential claims and this money cannot be recovered by the company. Using an interest rate of 6.6% compounded monthly, what is the present value of the policy to the insurance company?
▸ $9,162.26
▸ $5,133.39
▸ $1,836.21
▸ $1,161.62
▸ $844.60
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C&D Stereo sold a stereo system on a plan that required no down payment and nothing to pay until January 1 (four months away). Then the first of 12 monthly payments of $226.51 must be made. The payments were calculated to provide C&D Stereo with a return on the account receivable of 16.5% compounded monthly. What was the selling price of the stereo system?
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What is the present value of a trust fund that earns 8.8% compounded annually and pays out $3,500 every three months? The next payment is due to be made today.
▸ $164,249
▸ $745,820
▸ $167,749
▸ $529,722
▸ $526,222
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A lease on an office building calls for a payment of $3,500,000 today and annual payments of $5,000,000 for 40 years. The first of the annual payments will be payable 30 months from now when the building becomes ready for occupancy. Using a discount rate of 9% compounded semiannually, calculate the present value of the lease.
▸ $18,488,526
▸ $29,436,771
▸ $135,440,848
▸ $56,227,005
▸ $49,704,495
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A stereo priced at $1057.53 was paid for by 12 monthly payments of $100 with the first payment made one month after the date of purchase. What monthly compounded nominal interest rate was charged?
▸ 2.00%
▸ 2.33%
▸ 27.97%
▸ 24.00%
▸ 24.96%
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Grandpa Smith has $200,000 in a bank account, which pays him interest at 4%. What is the largest amount of money that he could take out now and still leave enough in the account so that he can earn $500 per month in interest?
▸ $60,000
▸ $50,000
▸ $120,000
▸ $150,000
▸ $30,000
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You invest $125,000 today at a rate of return of 3.4% compounded quarterly. Rounded to the nearest month, how long will it take the investment to grow to $225,000?
▸ 17 years and 6 months
▸ 17 years and 9 months
▸ 17 years and 1 months
▸ 17 years and 4 months
▸ 17 years and 11 months
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Captain Sanders of the Canadian Armed Forces has a $25,000 personal (revolving) line of credit with the Armed Forces Bank. The loan is on a demand basis at a floating rate of prime plus 1%. On the 1st of each month, a payment equal to the greater of $100 or 2% of the combined principal and accrued interest is deducted from his paycheque. The principal balance after a payment on September 15 stood at $4,598. If Captain Sanders received another $500 from his line of credit on September 20, what was his paycheque deduction on October 1? Assume the prime rate remains at 3.25%.
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Captain Sanders of the Canadian Armed Forces has a $25,000 personal (revolving) line of credit with the Armed Forces Bank. The loan is on a demand basis at a floating rate of prime plus 1%. On the 1st of each month, a payment equal to the greater of $100 or 2% of the combined principal and accrued interest is deducted from his paycheque. The principal balance after a payment on September 15 stood at $4,598. If Captain Sanders received another $500 from his line of credit on September 20, what was his paycheque deduction on October 1? Assume the prime rate remains at 3.25%.
▸ $101.15
▸ $101.79
▸ $102.01
▸ $102.14
▸ $102.41
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