Question 1

Karen obtained a $20,000 loan at 8% compounded semi-annually. What monthly payment will repay the loan in 7½ years? How much interest will Karen pay over the life of the loan?

Accepted Answer

The answer of Karen obtained a $20,000 loan at 8%...

Question 2

Larissa is saving each month to accumulate $10,000 in six years. Her account pays 4.25% compounded quarterly. What amount should Larissa deposit monthly to reach her goal? How much interest does Larissa earn?

Accepted Answer

The answer of Larissa is saving each month to accumulate...

Question 3

Mr. Sandstrom's will directed that $20,000 be placed in each of two investment trusts for his grandchildren, Lena and Axel. On each grandchild's 18^th birthday, he or she is to receive the first of a series of equal quarterly payments running for 15 years. Lena has just turned 13, and Axel's age is 8 years, 6 months. If the funds earn 9.25% compounded semi-annually, what size of payment will each grandchild receive?

Accepted Answer

The answer of Mr. Sandstrom's will directed that $20,000 be...

Question 4

What monthly payment would be required to pay off a loan of $3,000 at 7.25% compounded monthly over three years?

Accepted Answer

The answer of What monthly payment would be required to...

Question 5

What payments can be expected at the end of each quarter from a 10-year annuity purchased for $100,000 if the funds earn
a) 6% compounded quarterly? b) 8% compounded quarterly?

Accepted Answer

The answer of What payments can be expected at the...

Question 6

The interest rate on a four-year $10,000 loan to purchase a car is 7.2% compounded monthly. What is the amount of the monthly payment? (Source: CIFP course on Personal Financial Planning.)

Accepted Answer

The answer of The interest rate on a four-year $10,000...

Question 7

As of Betty's fifty-sixth birthday, she has accumulated $195,000 in her RRSP. She has ceased contributions but will allow the RRSP to grow at an expected 8.4% compounded monthly until she reaches age 65. Then she will use the funds in the RRSP to purchase a 20-year annuity. What will her end-of-month annuity payments be if the money used to purchase the annuity earns 7.2% compounded monthly?

Accepted Answer

The answer of As of Betty's fifty-sixth birthday, she has...

Question 8

Marcie bought a car for $32,000, put $5,000 down, and is making monthly payments at 3.8% compounded semi-annually for five years. What is the amount of Marcie's monthly payment? How much interest will Marcie pay overall?

Accepted Answer

The answer of Marcie bought a car for $32,000, put...

Question 9

Cliff has $25,000 in his savings account now. He wants to accumulate another $25,000 within the next five years, so that he has a total of $50,000 for a down payment on a house. If his account pays 4.75% compounded quarterly, how much should Cliff deposit to his account monthly to reach his goal?

Accepted Answer

The answer of Cliff has $25,000 in his savings account...

Question 10

A personal loan of $15,000 is to be repaid over four years at 7.75% compounded semi-annually. What is the amount of the monthly payment?

Accepted Answer

The answer of A personal loan of $15,000 is to...

Question 11

Elizabeth has been able to transfer a $25,000 retiring allowance into an RRSP. She plans to let the RRSP accumulate earnings at the rate of 7% compounded annually for 10 years and then purchase a 15-year annuity making payments at the end of each quarter. What size of payment can she expect if the funds in the annuity earn 5.2% compounded quarterly?

Accepted Answer

The answer of Elizabeth has been able to transfer a...

Question 12

Jane and Julian borrowed $25,000 for home renovations from their bank at 6.5% compounded semi-annually. What monthly payment will reduce their loan to $10,000 after five years?

Accepted Answer

The answer of Jane and Julian borrowed $25,000 for home...

Question 13

Mr. Bean wants to borrow $7,500 for three years. The interest rate is 9 % compounded monthly. What end-of-quarter payments are required to fully repay the loan over the three year period?

Accepted Answer

The answer of Mr. Bean wants to borrow $7,500 for...

Question 14

Jane wants to save $25,000 in five years. If money earns 3.75% compounded quarterly, how much should she deposit monthly to reach her goal?

Accepted Answer

The answer of Jane wants to save $25,000 in five...

Question 15

A car loan of $20,000 is to be repaid over five years at 6.8% compounded quarterly. What is the amount of the monthly payment?

Accepted Answer

The answer of A car loan of $20,000 is to...

Question 16

Seth is supposed to pay $10,000 to Megan today. What payments at the end of each quarter for the next two years would be economically equivalent to the scheduled payment if money can earn 7.5% compounded quarterly?

Accepted Answer

The answer of Seth is supposed to pay $10,000 to...

Question 17

On the date of his granddaughter's birth, Mr. Parry deposited $5,000 in a trust fund earning 6.2% compounded annually. After the granddaughter's 19^th birthday, the trust account is to make end-of-month payments to her for four years to assist her with the costs of post-secondary education. If the trust account earns 4.8% compounded monthly during these four years, what will be the size of the monthly payments?

Accepted Answer

The answer of On the date of his granddaughter's birth,...

Question 18

Your client will retire this year. Currently she has $560,000 in accumulated capital. She wants to invest this capital to provide equal payments at the end of each year for 20 years, at which time the capital will be fully depleted. If her capital earns 7.5% compounded annually, what annual payment will she receive? (Taken from CIFP course materials.)

Accepted Answer

The answer of Your client will retire this year. Currently...

Question 19

After selling their Vancouver home and buying another in Saskatoon, the Martels have $120,000 cash on hand. If the funds are used to purchase a deferred annuity providing a rate of return of 7.25% compounded annually, what payments will they receive at the end of every six months for a 25-year term starting 8 years from now?

Accepted Answer

The answer of After selling their Vancouver home and buying...

Question 20

Susan bought a car for $25,000 and is making monthly payments at 7.25% compounded quarterly over four years. At the end of four years, Susan will owe $8,000. What is the amount of Susan's monthly payment?

Accepted Answer

The answer of Susan bought a car for $25,000 and...

Quiz 11: Annuities: Periodic Payment, Number of Payments, and Interest Rate