MATH 1003 YU Annual & Nominal Rate of Interest & Retirement Savings Worksheet

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Assignment 3 Questions

Unit 6

• For a sum of money interested at 4% compounded semi-annually for 5 years.
  • the nominal annual rate of interest (j).
  • The number of compounding periods per year (m).
  • The periods rate of interest (i)
  • The number of compounding periods in the term (n)
  • The compounding factors (1+i)ⁿ
  • The numerical value of the compounding factors.
• What is the nominal rate of interest compounded quarterly if the effective rate of interest on an investment is 5.3%?
• How much will a registered retirement savings deposit of $13 500.00 be worth in 11 years at 8.44% compounded quarterly? How much of the amount is interest?
• To what future value will a principal of $7100.00 amount in three years at 7.6% p.a. compounded:
• Suppose $4320.00 is invested for five years, eight months at 8.25% compounded annually. What is the compounded amount?
• The Rob U Blind Bank advertises capital savings at 7.128% compounded semi-annually while Take Your Money Trust offers premium savings at 7.1% compounded monthly. Suppose you have $4400.00 to invest for two years.
• An investment of $5000.00 earns interest at 6% p.a. compounded monthly for two years. At that time the interest rate is changed to 8% compounded semi-annually. How much will the accumulated value be three and a half years after the change?
• Determine the proceeds of $19 000 three years and three months before the due date if interest is 7.6% compounded semi-annually.
• A debt can be repaid by payments of $1000.00 today, and $3000.00 in two years. What single payment would settle the debt three years from now if money is worth 16% p.a. compounded semi-annually?
• Debts of $400.00, $450.00 and $500.00 are due in one year, eighteen months and thirty months from now respectively. Determine the single payment now that would settle the debts if interest is 8% p.a. compounded quarterly.
• Debts of $850 due in six months, $700 due in sixteen months, and $1100 due in three years are to be settled by a single payment one year from now. What is the size of that single payment if interest is 7.5% compounded monthly?
• Calculate the number of years for money to triple at 3.6% p.a. compounded monthly.
• A loan of $4500.00 was repaid together with interest of $1164.00. If interest was 12 .4% compounded quarterly, for how many months was the loan taken out?

a) annually

b) semi-annually

c) quarterly

d) monthly

a) Which deposit will earn more interest?

b) What is the difference in the amount of interest?