[1] What will be the amount in an RRSP at the end of 20 years if monthly contributions of $500 are made at the end of each month and the RRSP earns 6% compounded monthly for the first 15 years and 7.5% compounded monthly for the remaining 5 years?
[2] You have $4,000 in your savings account today. You will deposit $500 per month starting one month from now.
(a) How much will you have in your savings account at the end of 5 years if you earn 6% compounded monthly?
(b) How much interest would you earn?
[3] You have just purchased a preferred share for $50.00. The company pays a dividend of $1.00 every quarter. One year later, when you sell the share, the interest rate is 10% compounded quarterly. How much will you gain or lose? (The next dividend is due in three months.)
[4] You purchase a car and finance $10,000. The loan is to be repaid with monthly payments of $200 made at the end of the month for 5 years. What effective rate of interest is being charged?
[5]. You begin a savings plan. Starting now and for ten years, you deposit $100 per month into an account that pays = 6%. After 10 years, how much interest will you have earned?
[6]. Upon graduation, you have a student loan of $15,000. The most you can afford to pay is $550 per month. How long will it take you to repay the loan with payments of $550 per month starting in one month if the interest rate is 6% compounded monthly?
[7] You purchase a car for $25,000 and make a 20% down payment. Interest is charged at 6% compounded monthly, and you will make 6 years of monthly payments. Find the size of the monthly payment if your first payment is in one month. (Round payment up to next cent.)
[8] You have decided to take a passive approach to fitness and order the ‘Ab-Cruncher’ from the shopping network. The Ab-Cruncher can be purchased for four easy monthly payments of $19.95 starting in one month. If interest is charged at 112 = 12%, find the cost of financing.
[9] You are 25 years old and want to retire when you turn 55. Starting today, you will deposit $200 into an RRSP every month for 30 years. You will then use the accumulated funds to purchase a 10-year annuity with the first withdrawal one month after your 55th birthday. Assume that the RRSP and the funds invested in the annuity earn 6% compounded monthly.
(a) Find the size of the monthly withdrawals.
(b) You decide that you will need $3,000 per month to live on when you retire at age 55. How much extra money must you contribute to your RRSP every month, so you can withdraw $3,000 every month for 10 years?
[10] You contribute $2,500 into your RRSP at the end of every quarter for 5 years. If your RRSP earns 8% compounded quarterly, how much interest will you earn in the 5 years?
[11] You borrow $50,000 and agree to make monthly payments for 15 years, with the first payment one month from now. Calculate the size of your monthly payments if the interest rate is 9% effective.
[12] Paula, a BCIT business student, borrowed $5,000 from her parents to cover expenses and agreed to repay the debt with 20 equal monthly payments, with the first payment due in 2 years. The interest rate is 12% compounded monthly.
(a) How large is each payment?
(b) How much interest did Paula pay her parents?
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