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Contemporary Business Mathematics with Canadian Applications 10th edition S. A. Hummelbrunner, Kelly Halliday, K. Suzanne Coombs - Solutions
When the Littles purchased a home, they borrowed $170 000 as a mortgage to be amortized by making monthly payments for 25 years. Interest is 4.89% com- pounded semi-annually for a 3-year term. (a) Compute the size of the monthly payment. (b) Determine the balance at the end of the 3-year term. (c)
For Question 9, produce the mortgage statement for the 6-month term. Assume all payments have been made on time. Compare the balance to the balance in Question 9 and explain why there may be a difference. In Question 9 A $40 000 mortgage taken out on June 1 is to be repaid by monthly payments
For the mortgage in Question 9, develop a mortgage statement for the 6-month term if semi-monthly payments equal to one-half of the monthly payment are made on the 1st day and the 16th day of each month. The first payment is due June 16. Compare the balance to the balances in Question 9 and
For the mortgage in Question 9, develop a mortgage statement for the 6-month term if biweekly payments equal to one-half of the rounded monthly payments are made starting June 16. Compare the balance to the balances in Questions 9, 10, and 11. Explain why it differs significantly from the other
A variable-rate mortgage of $150 000 is amortized over 20 years by equal monthly payments. After 18 months the original interest rate of 6% compounded semiannually was raised to 6.6% compounded semi-annually. Two years after the mort- gage was taken out, it was renewed at the request of the
A $40 000 mortgage is to be repaid over a 10-year period by monthly payments rounded up to the next-higher $50. Interest is 7.15% compounded semi-annually. (a) Determine the number of rounded payments required to repay the mortgage. (b) Determine the size of the last payment. (c) Calculate the
A mortgage balance of $23 960 is to be repaid over a 7-year term by equal monthly payments at 6.8% compounded semi-annually. At the request of the mortgagor, the monthly payments were set at $440. (a) How many payments will the mortgagor have to make? (b) What is the size of the last payment? (c)
A mortgage of $180 000 is amortized over 20 years by semi-monthly payments of $611.31. What is the nominal annual rate of interest compounded semi-annually?
At what nominal rate of interest compounded semi-annually will a $162 000 variable rate mortgage be amortized by monthly payments of $1017.31 over 25 years?
Interest for the initial 4-year term of a $105 000 mortgage is 4.39% compounded semi-annually. The mortgage is to be repaid by equal weekly payments over 20 years. The mortgage contract permits lump-sum payments at each anniversary date up to 10% of the original principal. (a) What is the balance
The Berezins agreed to monthly payments rounded up to the nearest $100 on a mortgage of $36 000 amortized over 10 years. Interest for the first 5 years was 8.75% compounded semi-annually. After 30 months, as permitted by the mortgage agreement, the Berezins increased the rounded monthly payment by
A $40 000 mortgage taken out on June 1 is to be repaid by monthly payments rounded up to the nearest $10. The payments are due on the first day of each month starting July 1. The amortization period is 12 years and interest is 5.5% compounded semi-annually for a 6-month term. Construct an
For the company’s office and equipment base in Winnipeg, the company holds a 20-year mortgage of $360 000 at 4% compounded semi-annually. The current mortgage contract has a term of 3 years and monthly payments. After the first term is completed, renewal of the mortgage includes monthly payments
Sylvie Cardinal bought a business for $45 000. She made a down payment of $10 000 and agreed to repay the balance by equal payments at the end of every three months for eight years. Interest is 8% compounded quarterly.(a) What is the size of the quarterly payments?(b) What will be the total cost of
A contract worth $52 000 provides benefits of $20 000 at the end of each year. The benefits are deferred for 19 years and interest is 11% compounded quarterly. (a) How many payments are to be made under the contract? (b) What is the size of the last benefit payment?
A mortgage for $235 000 is amortized over 25 years. Interest is 4.6% p.a., compounded semiannually, for a 5-year term and payments are monthly.(a) Compute the monthly payment.(b) Compute the balance at the end of the 5-year term.(c) Compute the monthly payment if the mort- gage is renewed for a
A $180 000 mortgage is to be amortized by making monthly payments for 25 years. Interest is 5.62% compounded semi-annually for a 4-year term.(a) Compute the size of the monthly payment.(b) Determine the balance at the end of the 4-year term.(c) If the mortgage is renewed for a 5-year term at 5.30%
An $80 000 mortgage is to be repaid over a 10-year period by monthly payments rounded up to the next-higher $50. Interest is 4.78% com- pounded semi-annually.(a) What is the number of rounded payments required to repay the mortgage?(b) What is the size of the last payment?(c) How much interest was
A $160 000 mortgage is to be repaid over a 20-year period by monthly payments rounded up to the next-higher $100. Interest is 5.44% compounded semi-annually. (a) Determine the number of rounded payments required to repay the mortgage. (b) Determine the size of the last payment. (c) Calculate the
A debt of $6500 is repaid in equal monthly installments over four years. Interest is 9% com- pounded monthly. (a) What is the size of the monthly payments? (b) What will be the total cost of borrowing? (c) What is the outstanding balance after one year? (d) How much of the 30th payment is
Milton Investments borrowed $32 000 at 11% compounded semi-annually. The loan is repaid by payments of $4500 due at the end of every six months. (a) How many payments are needed? (b) How much of the principal will be repaid by the fifth payment? (c) Prepare a partial amortization schedule showing
A mortgage of $95 000 is amortized over 25 years by monthly payments of $573.25. What is the nominal annual rate of interest compounded semi-annually?
At what nominal annual rate of interest compounded semi-annually will a $135 000 mortgages are amortized by monthly payments of $1023.12 over 15 years?
A $28 000 mortgage is amortized by quarterly payments over 20 years. The mortgage is renewable after 3 years and interest is 6% com- pounded semi-annually. (a) What is the size of the quarterly payments? (b) How much interest will be paid during the first year? (c) What is the balance at the end of
Angelo Lemay borrowed $8000 from his credit union. He agreed to repay the loan by making equal monthly payments for five years. Interest is 9% compounded monthly. (a) What is the size of the monthly payments? (b) How much will the loan cost him? (c) How much will Angelo owe after 18 months? (d) How
The Superior Tool Company is repaying a debt of $16 000 by payments of $1000 made at the end of every three months. Interest is 7.5% compounded monthly. (a) How many payments are needed to repay the debt? (b) What is the size of the final payment?
Comfort Swim Limited borrowed $40 000 for replacement of equipment. The debt is repaid in installments of $2000 made at the end of every three months. (a) If interest is 7% compounded quarterly, how many payments are needed? (b) How much will Comfort Swim owe after two years? (c) How much of the
A $198 000 mortgage amortized by monthly payments over 20 years is renewable after 5 years. Interest is 4.65% compounded semi-annually. (a) What is the size of the monthly payments? (b) How much interest is paid during the first year? (c) How much of the principal is repaid during the first 5-year
Pelican Recreational Services owes $27 500 secured by a collateral mortgage. The mortgage is amortized over 15 years by equal payments made at the end of every 3 months and is renewable after 3 years. (a) If interest is 7% compounded annually, what is the size of the payments? (b) How much of the
A debt of $17 500 is repaid by payments of $2850 made at the end of each year. Interest is 8% compounded semi-annually. (a) How many payments are needed to repay the debt? (b) What is the cost of the debt for the first three years? (c) What is the principal repaid in the fifth year? (d) Construct
A debt of $25 000 is repaid by payments of $3500 made at the end of every six months. Interest is 11% compounded semi-annually. (a) How many payments are needed to repay the debt? (b) What is the size of the final payment?
Jane Evans receives payments of $900 at the beginning of each month from a pension fund of $72 500. Interest earned by the fund is 6.3% compounded monthly. (a) What is the number of payments Jane will receive? (b) What is the size of the final payment?
A lease agreement valued at $33 000 requires payment of $4300 every three months in advance. The payments are deferred for three years and money is worth 10% compounded quarterly. (a) How many lease payments are to be made under the contract? (b) What is the size of the final lease payment?
With his financial target to be debt-free, Henrik replaced his credit card debt by borrowing $9000. He is to make equal monthly payments over the next 42 months. What is the outstanding balance of the loan after 22 months if interest is 7.26% compounded monthly?
A loan of $15 000 is repaid by quarterly payments of $700 each at 8% compounded quarterly. What is the principal repaid by the 25th payment?
A $50 000 mortgage is amortized by monthly payments over 20 years. If interest is 4.29% compounded semi-annually, how much interest will be paid during the first 3 years?
A $190 000 mortgage is to be amortized by making monthly payments for 20 years. Interest is 6.5% compounded semi-annually for a 3-year term. (a) Compute the size of the monthly payment. (b) Determine the balance at the end of the 3-year term. (c) If the mortgage is renewed for a 5-year term at
A $140 000 mortgage is to be repaid over a 15-year period by monthly payments rounded up to the next-higher $50. Interest is 4.35% compounded semi-annually. (a) Determine the number of rounded payments required to repay the mortgage. (b) Determine the size of the last payment. (c) Calculate the
A debt of $24 000 is repaid by quarterly payments of $1100. If interest is 6% com- pounded quarterly, what is the size of the final payment?
A mortgage of $145 000 is amortized over 25 years by monthly payments of $1297. What is the nominal annual rate of interest compounded semi-annually?
A loan of $12 000 is amortized over 10 years by equal monthly payments at 7.5% compounded monthly. Construct an amortization schedule showing details of the first three payments, the 40th payment, the last three payments, and totals.
A debt is amortized by monthly payments of $250. Interest is 8% compounded monthly. If the outstanding balance is $3225.68 just after a particular payment (say, the xth payment), what was the balance just after the previous payment (i.e., the (x − 1)th payment)?
Captain Sinclair has been posted to Cold Lake, Alberta. He prefers to purchase a condo rather than live on the base. He knows that in 4 years he will be posted overseas. The condo he wishes to purchase will require a mortgage of $130 000, and he has narrowed his choices to two lenders. Trust
Malcolm and Shannon purchased their first house with a $180 000 mortgage. Their 5-year mortgage had a 7.5% semi-annually compounded interest rate, and was amortized over 25 years. Payments were made monthly. After 3 years, interest rates had fallen. Malcolm and Shannon considered that they should
A $500 bond matures on March 1, 2022. Interest is 6% payable semi-annually. Find the purchase price of the bond on September 1, 2016, to yield 7.5% compounded semi-annually.
Bonds with a maturity value of $40 000 in 7.5 years, bearing interest at 8% payable quarterly, are sold to yield 6.8% compounded semi-annually. Determine the purchase price of the bonds.
A $100 000 bond is redeemable at par in 14 years, 10 months. If interest on the bond is 7.5% payable semiannually, what is the purchase price to yield 8% com- pounded semiannually? (a) What is the cash price of the bond? (b) What is the accrued interest? (c) What is the quoted price?
A $25 000, 10% bond redeemable at par on December 1, 2025, is purchased on September 25, 2014, to yield 7.6% compounded semi-annually. Bond interest is payable semi-annually. (a) What is the cash price of the bond? (b) What is the accrued interest? (c) What is the quoted price?
Six $1000 bonds with 2.4% coupons payable semi-annually are purchased three months after a coupon matures, to yield 1.2% compounded monthly. The bonds mature in eight years. (a) What is the purchase price of the bond? (b) What is the accrued interest? (c) What is the market price?
A $100 000 bond redeemable at par on October 1, 2038, is purchased on January 15, 2017. Interest is 5.9% payable semi-annually and the yield is 9% compounded semi-annually. (a) What is the purchase price of the bond? (b) What is the accrued interest? (c) What is the market price?
A $100 000, 8% bond redeemable at par with quarterly coupons is purchased to yield 6.5% compounded quarterly. Find the premium or discount and the purchase price if the bond is purchased (a) 15 years before maturity; (b) 5 years before maturity.
A $5000, 7.5% bond redeemable at par with semi-annual coupons is purchased to yield 6% compounded semi-annually. What are the premium or discount and the purchase price if the bond is bought? (a) 10 years before maturity? (b) 6 years before maturity?
A $25 000, 4% bond redeemable at par with interest payable annually is bought six years before maturity. Determine the premium or discount and the purchase price if the bond is purchased to yield (a) 2% compounded annually; (b) 6% compounded annually.
A $1000, 8% bond redeemable at par in seven years bears coupons payable annually. Compute the premium or discount and the purchase price if the yield, compounded annually, is (a) 6.5%; (b) 7.5%; (c) 8.5%.
A $5000 000 issue of 10-year bonds redeemable at par offers 7.25% coupons payable semi-annually. What is the issue price of the bonds to yield 8.4% compounded monthly?
A $15 000, 2.5% bond is purchased six years and six months before maturity to yield 3% semi-annually. If the bond interest is payable semi-annually, what is the purchase price of the bond?
A $3000 issue of nine-year bonds redeemable at par offers 1.5% coupons paid semi-annually. What is the issue price of the bonds to yield 2.0% semi-annually?
Twenty $5000 bonds redeemable at par bearing 8.4% coupons payable quarterly are sold eight years before maturity to yield 8.0% compounded annually. What is the purchase price of the bonds?
Sixty $1000 bonds redeemable at par bearing 4.0% coupons payable semi-annually are sold seven years before maturity to yield 5.5% compounded semiannually. What is the purchase price of the bonds?
New York Series C bonds with a face value of $120 000 mature January 1, 2015, and pay interest at 5% semi-annually. On January 1, 2013, the bonds were sold at a price of 109.007 to yield 0.470%. (a) Calculate the amount paid for the bonds. (b) For these bonds, how much interest must be paid each
New York City Transitional Series S-2 bonds with a face value of $50 000 mature January 1, 2034, with a coupon rate of 4.25% annually. On January 1, 2014, the bonds were sold for a total of $52 998.(a) Calculate the price of the bonds.(b) For these bonds, how much interest must be paid each
A $5000, 6% bond is purchased 13 years before maturity to yield 6.5% semi-annually. If the bond interest is payable semi-annually, what is the purchase price of the bond?
A $2000, 5.5% bond is purchased six years before maturity to yield 7.5% semi- annually. If the bond interest is payable semi-annually, what is the purchase price of the bond?
A $10 000, 3% bond is purchased nine years and six months before maturity to yield 2% semi-annually. If the bond interest is payable semi-annually, what is the purchase price of the bond?
A $25 000, 7% bond is purchased 12 years before maturity to yield 5% compounded semi-annually. If the bond interest is payable semi-annually, what is the purchase price of the bond?
A $1000, 5% bond is purchased 8.5 years before maturity to yield 4% compounded semiannually. If the bond interest is payable semi-annually, what is the purchase price of the bond?
A 25-year bond issue of $5000 000 and bearing interest at 4.25% payable annually is sold to yield 4.5% compounded semi-annually. What is the issue price of the bonds?
A $100 000 bond bearing interest at 6.75% payable semi-annually is bought eight years before maturity to yield 7.35% compounded annually. If the bond is redeem- able at par, what is the purchase price?
A $5000, 6% bond redeemable at par in three-and-a-half years with semi-annual coupons is purchased to yield 6.5% compounded semi-annually. For the bonds, compute the premium or discount and the purchase price, and construct the appropriate bond schedule.
A $25 000 bond with interest at 2.4% payable quarterly, redeemable at par, is bought two years before maturity to yield 2% compounded quarterly. For the bonds, compute the premium or discount and the purchase price, and construct the appropriate bond schedule.
A $1000, 5% bond with semi-annual coupons redeemable at par on September 1, 2019, is bought on March 1, 2016, to yield 4% compounded semi-annually. For the bonds, compute the premium or discount and the purchase price, and construct the appropriate bond schedule.
For the bonds, compute the premium or discount and the purchase price, and construct the appropriate bond schedule. A $10 000, 7.75% bond with annual coupons redeemable at par in seven years is bought to yield 7.25% compounded annually.
A $25 000, 6.5% bond redeemable at par with semi-annual coupons bought 10 years before maturity to yield 7% compounded semi-annually is sold 4 years before maturity at 99.25. Find the gain or loss on the sale of the bonds without constructing a bond schedule.
Four $5000 8.5% bonds with interest payable semi-annually, redeemable at par were bought 20 years before maturity to yield 7.5% compounded semi-annually. The bonds were sold 3 years later at 103.625. Find the gain or loss on the sale of the bonds without constructing a bond schedule.
A $5000 bond with 8% interest payable semi-annually redeemable at par on June 1, 2027, was bought on December 1, 2013, to yield 9% compounded semi-annually. The bond was sold on September 22, 2017, at 101.375.Find the gain or loss on the sale of the bonds without constructing a bond schedule.
Three $10 000, 10.5% bonds with quarterly coupons redeemable at par on August 1, 2023, were bought on May 1, 2009, to yield 12% compounded quarterly. The bonds were sold on January 16, 2017, at 93.5.Find the gain or loss on the sale of the bonds without constructing a bond schedule.
Use the method of averages to find the approximate yield rate for each of the six bonds shown in the table below. All are redeemed at par.
Hein Engineering expects to expand its plant facilities in six years at an estimated cost of $75 000. To provide for the expansion, a sinking fund has been established into which equal payments are made at the end of every three months. Interest is 5% compounded quarterly. (a) What is the size of
The City of Chatham has borrowed $80 000 to expand a community centre. The city must pay the interest on the loan at the end of every month and make equal payments at the time of the interest payments into a sinking fund until the loan is retired in 12 years. Interest on the loan is 6% compounded
Kirk, Klein & Co. requires $100 000 fifteen years from now to retire a debt. A sinking fund is established into which equal payments are made at the end of every month. Interest is 7.5% compounded monthly.(a) What is the size of the monthly payment?(b) What is the balance in the sinking fund
The Town of Keewatin issued debentures worth $120 000 maturing in 10 years to finance construction of water and sewer facilities. To redeem the debentures, the town council decided to make equal deposits into a sinking fund at the beginning of every three months. Interest earned by the sinking fund
The Township of Langley borrowed $300 000 for road improvements. The debt agreement requires that the township pay the interest on the loan at the end of each year and make equal deposits at the time of the interest payments into a sinking fund until the loan is retired in 20 years. Interest on the
Ontario Credit Union borrowed $225 000 at 13% compounded semi-annually from League Central to build an office complex. The loan agreement requires payment of interest at the end of every 6 months. In addition, the credit union is to make equal payments into a sinking fund so that the principal can
To redeem a $100 000 promissory note due in 10 years, Cobblestone Enterprises has set up a sinking fund earning 7.5% compounded semi-annually. Equal deposits are made at the beginning of every six months.(a) What is the size of the semi-annual deposits? (b) How much of the maturity value of the
Equal deposits are made into a sinking fund at the end of each year for seven years. Interest is 5.5% compounded annually, and the maturity value of the fund is $20 000. Find the size of the annual deposits and construct a sinking fund schedule showing totals.
A sinking fund amounting to $15 000 is to be created by making payments at the beginning of every six months for four years. Interest earned by the fund is 12.5% compounded semi-annually. Determine the size of the semi-annual payments and prepare a sinking fund schedule showing totals.
For Question 3, calculate the increase in the fund for the fourth year. Verify your answer by checking the sinking fund schedule.In Question 3Equal deposits are made into a sinking fund at the end of each year for seven years. Interest is 5.5% compounded annually, and the maturity value of the fund
For Question 4, compute the interest earned during the fifth payment interval. Verify your answer by checking the sinking fund schedule.In Question 4A sinking fund amounting to $15 000 is to be created by making payments at the beginning of every six months for four years. Interest earned by the
HY Industries Ltd. plans to replace a warehouse in 12 years at an anticipated cost of $45000. To pay for the replacement, a sinking fund has been established into which equal payments are made at the end of every quarter. Interest is 10% com- pounded quarterly.(a) What is the size of the quarterly
To provide for expansion, Champlain Company has established a sinking fund earning 7% semi-annually. The fund is anticipated to reach a balance of $72 000 in 15 years. Payments are made at the beginning of every 6 months.(a) What is the size of the semi-annual payment?(b) What is the accumulated
Winooski Lamp Co. has borrowed $95 000 for capital expansion. The company must pay the interest on the loan at the end of every 6 months and make equal payments at the time of the interest payments into a sinking fund until the loan is retired in 20 years. Interest on the loan is 9% compounded
The company plans to raise $500 000 by issuing 10-year corporate bonds that pay interest at 6% annually. The cash will be used in the expansion of offices and an equipment base in Windsor, Ontario.a. How much bond interest is to be paid each year?b. Current financial market conditions have resulted
A $5000, 4% bond with interest payable semi-annually is redeemable at par in 12 years. What is the purchase price to yield?(a) 3% compounded semi-annually?(b) 5% compounded semi-annually?
A $1000 bond bearing interest at 8% payable semi-annually redeemable at par on February 1, 2020, was purchased on October 12, 2013, to yield 7% compounded semi-annually. Determine the purchase price.
A $50 000, 11% bond with semi-annual coupons redeemable at par on April 15, 2022, was purchased on June 25, 2015, at 92.375. What was the approximate yield rate?
A $1000, 8.5% bond with interest payable annually is purchased six years before maturity to yield 10.5% compounded annually. Compute the premium or discount and the purchase price, and construct the appropriate bond schedule.
A $5000, 4% bond with interest payable annually, redeemable at par in seven years, is purchased to yield 4.75% compounded annually. Find the premium or discount and the purchase price, and construct the appropriate bond schedule.
Three $25 000, 11% bonds with semi- annual coupons redeemable at par were bought eight years before maturity to yield 12% com- pounded semi-annually. Determine the gain or loss if the bonds are sold at 89.375 five years later.
A $10 000 bond with 5% interest payable quarterly, redeemable at par on November 15, 2030, was bought on July 2, 2014, to yield 9% compounded quarterly. If the bond was sold at 92.75 on September 10, 2020, what was the gain or loss on the sale?
A $25 000, 9.5% bond with semi-annual coupons redeemable at par is bought 16 years before maturity at 78.25. What was the approximate yield rate?
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