Question 1

Dominion Contracting invested surplus funds in term deposits. All were chosen to mature on April 1 when the firm intends to purchase a new grader.  
What total amount will be available from the maturing term deposits on April 1 (of a leap year)?

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Question 2

What amount of money paid today is equivalent to $560 paid five months from now if money can earn 10¾ % per annum?

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Question 3

What amount, seven months from now, is equivalent to $1215 today if money can be invested to earn 8½ %?

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Question 4

What payment, 174 days from now, is equivalent to $5230 paid today? Assume that money is worth 9.25% per annum.

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Question 5

What amount should be accepted as equivalent, 60 days before an obligation of $1480 is due, if money can earn 6¾ %?

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Question 6

What amount paid on September 24 is equivalent to $1000 paid on the following December 1 if money can earn 5%?

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Question 7

What amount received on January 13 is equivalent to $1000 received on the preceding August 12 if money can earn 9.5%?

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Question 8

Rasheed wishes to postpone for 90 days the payment of $450 that he owes to Roxanne. If money now earns 6.75%, what amount can he reasonably expect to pay at the later date?

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Question 9

Avril owes Value Furniture $1600, which is scheduled to be paid on August 15. Avril has surplus funds on June 15 and will settle the debt early if Value Furniture will make an adjustment reflecting the current short-term interest rate of 7.25%. What amount should be acceptable to both parties?

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Question 10

What is the time interval (in months) separating equivalent payments of $3500.00 and $3439.80 if money is worth 5¼ % per annum?

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Question 11

An early payment of $4574.73 was accepted instead of a scheduled payment of $4850.00, allowing for interest at the rate of 8¾ %. How many days early was the payment?

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Question 12

How many days separate equivalent payments of $2755.20 and $2740.00 if money can earn 4½ %?

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Question 13

If money can be invested at 0.6% per month, which has the greater economic value: $5230 on a specific date or $5500 exactly five months later? At what rate (per month) would the two amounts be economically equivalent?

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Question 14

Compare the economic values of $1480 today vs. $1515 in 150 days. Assume money can earn 6.75%. At what rate would the two amounts be equivalent?

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Question 15

To settle a $570 invoice, Anna can pay $560 now or the full amount 60 days later. Which alternative should she choose if money can earn 10¾ %? What rate would money have to earn for Anna to be indifferent between the alternatives?

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Question 16

Jonas recently purchased a one-year membership at Gold's Gym. He can add a second year to the membership now for $1215, or wait 11 months and pay the regular single-year price of $1280. Which is the better economic alternative if money is worth 8.5%? At what rate would the alternatives be equivalent?

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Question 17

During its 50-50 Sale, Marpole Furniture will sell its merchandise for 50% down, with the balance payable in six months. No interest is charged for the first si months. What 100% cash price should Marpole accept on a $1845 chesterfield and chair set if Marpole can earn a rate of return of 10.75% on its funds?

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Question 18

Calculate the combined equivalent value, six months from now, of $500 due today and $300 due in three months. Assume that money can earn 9½ %.

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Question 19

A payment stream consists of $1000 payable today and $1500 payable in five months. What is the equivalent value of the payment stream two months from now if money is worth 5.5%?

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Question 20

Payments of $900 and $1000 are due in 30 days and 210 days, respectively. If money can be invested at 7¾ %, what single payment 90 days from now is equivalent to the payment stream?

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Quiz 6: Simple Interest

Dominion Contracting invested surplus funds in term deposits. All were chosen to mature on April 1 when the firm intends to purchase a new grader. What total amount will be available from the maturing term deposits on April 1 (of a leap year)?