Question 1

Enermax offers to acquire a right-of-way from a property owner who receives annual lease payments of $3725.00 due in advance. What is a fair offer if money is worth 6.5% compounded quarterly?

Accepted Answer

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Question 2

Note: The calculations for this question were done using Excel's RATE function.
A vacation property valued at $62 000.00 was bought for 40 payments of $2150.00 due at the beginning of every six months. What nominal rate of interest was charged?

Accepted Answer

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Question 3

What sum of money must be deposited in a trust fund to provide a scholarship of $1520.00, payable at the beginning of each 3 months, if interest is 6.72% compounded quarterly?

Accepted Answer

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Question 4

Carla plans to invest in a property that after 6.25 years will yield $1457.00 at the end of each month indefinitely. How much should Carla be willing to pay if an alternative investment yields 12.96% compounded monthly?

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Question 5

Note: The calculations for this question were done using Excel's RATE function.
What is the effective rate of interest charged on a lease valued at $17 040.00 if payments of $1180.00 are made at the beginning of each 3 months for four years?

Accepted Answer

The answer of Note: The calculations for this question were...

Question 6

Calculate the amount of money that needs to be invested today at 7% compounded semi-annually to provide monthly payments of $2000.00 in perpetuity starting:
a)one month from today
b)one year from today

Accepted Answer

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Question 7

A rental property provides a monthly income of $1472.00 due at the beginning of every month. What is the cash value of the property if money is worth 7.32% compounded monthly?

Accepted Answer

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Question 8

Triad is considering a medical process that is expected to reduce annual costs by $43 000.00. What is the maximum amount of money that could be invested in the process to be economically feasible if interest is 7.44% compounded quarterly?

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Question 9

Aaron Perry bought an income property for $41 321.00 three years ago. He has held the property for the three years without renting it. If he rents the property now, what should be the size of the monthly payment due in advance be if money is worth 6.24% compounded monthly?

Accepted Answer

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Question 10

A lease valued at $47 600.00 requires payments of $4500.00 every three months. If the first payment is due 2 years after the lease was signed and interest is 6.88% compounded quarterly, what is the term of the lease?

Accepted Answer

The answer of A lease valued at $47 600.00 requires...

Question 11

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?

Accepted Answer

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Question 12

A debt of $23 900.00 is repaid by making payments of $3617.00 at the beginning of every six months deferred for three years. If interest is 9.6% compounded monthly, for how long will payments have to be made?

Accepted Answer

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Question 13

What monthly lease payment due in advance should be charged for a tract of land valued at $135 000 if the agreed interest is 8.15% compounded semi-annually?

Accepted Answer

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Question 14

Geomax pays $8710.00 at the beginning of each year for using a tract of land. What should the company offer the property owner as a purchase price if interest is 10.18% compounded annually?

Accepted Answer

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Question 15

A fund to provide an annual scholarship of $5700.00 is to be set up. If the first payment is due in three years and interest is 6.4% compounded quarterly, what sum of money must be deposited in the scholarship fund today?

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Question 16

You bought a camper priced at $15 660.00 on February 1. You agreed to make monthly payments of $575.00 beginning December 1 of the same year. For how long will you have to make these payments if interest is 8.5% compounded monthly?

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Question 17

Calculate the amount of money that needs to be invested today at 4.8% compounded semi-annually to provide monthly payments of $500.00 in perpetuity starting:
a)one month from today
b)one year from today

Accepted Answer

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Question 18

A retirement gratuity of $123 900.00 is invested in annuity deferred for 10 years. The annuity provides payments of $9600.00 due at the beginning of every six months. If interest is 7.41% compounded annually, for how long will annuity payments be made?

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Question 19

Carla Craig invested a retirement gratuity of $17 570.00 in an RRSP paying 6.5% compounded semi-annually for 11.5 years. At the end of 11.5 years, she rolled the RRSP balance over into an RRIF paying $1500.00 at the beginning of each month starting with the date of rollover. If interest on the RRIF is 9.5% compounded monthly, for how long will Carla receive monthly payments?

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Question 20

The sum of $59 760.00 is invested at 9.5% compounded monthly for four years. After the four years, the balance in the fund is converted into an annuity due paying annually $15 240.00. If interest on the annuity is 9.57% compounded annually, what is the term of the annuity?

Accepted Answer

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Quiz 13: Annuities Due, Deferred Annuities, and Perpetuities