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At the end of every 6 months, Marcia deposits $100 in a savings account
T that pays 4%/a compounded semi-annually. She made the first deposit
when her son was 6 months old, and she made the last deposit on her son’s 21st birthday. The money remained in the account until her son turned 25, when Marcia gave it to him. How much did he receive?
Miguel wants to buy an entertainment system as a gift for his sister’s wedding. He estimates that when she marries 1 year from now, the system will cost $2499, plus GST (government sales tax) at 6% and PST (provincial sales tax) at 8%. He knows he can deposit $225 a month into an account earning 3.5%/a compounded monthly. Will he have enough money to buy the gift? Explain.
Carollynne has found her dream home in Pictou, Nova Scotia. It is selling for $500 000. When she retires 2 years from now, she plans to sell her present house for $450 000 and move. She decides to set aside $900 every two weeks until she retires in a fund earning 10.5%/a, compounded every second week. What is the difference between the future value of Carollynne’s investment and the extra $50 000 she needs for her dream home?
A family has inherited $200,000. If they choose to invest the $200,000 in a factory at 8% on quarterly basis, how many quarterly withdrawals of $15,000 can be made from the factory? ( Assume that the first withdrawals is made in the end of the first quarter)
Identify if the following problem describes an interest or an annuity.
Write I for interest and A for annuity.
_____1. Suppose you invest Php10,000 for 3 years at an annual simple interest rate
of 5.5%. How much will be in your account at the end of 3 years?
_____2. Suppose you deposit Php1,000 every six months into an account that pays
6% compounded semi-annually. If you make 6 deposits, one at the end of each
interest payment period, over 3 years, how much money will be in the account after
the last deposit made?
_____3. In order to accumulate enough money for a downpayment on a home, a
couple deposits Php15,000 per month into an account paying 6% compounded
monthly. If payments are made at the end of each period, how much money will be in
the account in 5 years?
_____4. A person wishes to have Php20 million in an account for retirement 15
years from now. How much money should be deposited quarterly in an account
paying 8% compounded quarterly.
_____5. How much should you invest at 6% annual interest rate to obtain a simple
interest of Php72,000 in 3 years?
Mr Hendricks invested R6000 at 7% p.a for 3 years in a fix deposit account. What is the interest earned over 3 years and what is the amount paid to Mr Hendricks on Maturity?
What is the equation for an amount (future value) of an investment that earns simple interest? What is the equation for an amount (future value) of an investment that earns compound interest? Label each variable using arrows.
High Flyer, Inc., wishes to maintain a growth rate of 12 percent per year and a debt-equity ratio of .25. The profit margin is 5 percent, and total asset turnover is constant at 1.20.
a.What is the dividend payout ratio?
Nasir wants to accumulate $1500000 after 10 years. If investment earns interest at the rate of 8 percent per year compounded quarterly, then the amount he must be deposited at the end of each year is
None of the above
$21,900
$22,354
$24,840
$23,220
What is the dividend yield of a stock of current price $35 and dividend paid $10?
