Questions and Answers of Business Mathematics In Canada 10th

This textbook’s Web site provides an interactive chart for comparing the response of the prices of two bonds to a given change in the bond market’s required rate of return. In Chapter 15 of the
Bond A and Bond B both have a face value of $1000, each carries a 5% coupon, and both are currently priced at par in the bond market. Bond A matures in 2 years and Bond B matures in 10 years. If the
To access this chart, go to the Student Edition of the textbook’s Web site. In Chapter 14, find “Mortgage Payoff Chart.” Over the full amortization period, the chart plots graphs of both the
Follow the instructions in the NET @ssets box at the beginning of Section 14.1 for accessing and using the Loan Amortization Chart in this textbook’s Web site. Use this chart and its associated
Follow the instructions in the NET @ssets box at the beginning of Section 14.1 for accessing and using the Loan Amortization Chart in this textbook’s Web site. Use this chart and its associated
How would you handle cases where successive annuity payments decrease by the same percentage every payment interval?
In this section, does constant growth mean that each successive payment increases by the same dollar amount? If not, what does it mean?
The $219.40 monthly payment on a 48-month lease of a Kia SOUL was based on a down payment of $1545, an interest rate of 3.9% compounded monthly, and a residual value of $6815. What is the full price
In order to accumulate $750,000 after 25 years, calculate the amounts that must be invested at the beginning of each year if the invested funds earn:a. 6% compounded annually.b. 7% compounded
Other variables being the same, how will the size of the residual value affect the size of the car lease payments?
Other variables being the same, how will the amount of the down payment on a car lease affect the size of the lease payments?
If the periodic interest rate for a payment interval is 3%, by what percentage will PV (due) exceed PV?
Other things being equal, why is the present value of an annuity due larger than the present value of an ordinary annuity?
For the present value of an annuity due, where is the focal date located relative to the first payment?
This chart is the annuity due version of the (ordinary annuity) Cool Million chart described in Problem 36 of Exercise 11.1. Go to the Student Edition on this textbook’s Web site. In Chapter 12,
An interactive Future Value (Due) Chart is available on this textbook’s Web site. In Chapter 12 of the Student Edition, find “Future Value (Due) Chart.” Use this chart to solve the following
Other things being equal, why is the future value of an annuity due larger than the future value of an ordinary annuity?
For the future value of an annuity due, where is the focal date located relative to the final payment?
Give three examples of an annuity due.
After selling their Vancouver home and buying another in Saskatoon, the Martels have $120,000 cash on hand. If the funds are used to purchase a deferred annuity providing a rate of return of 7.25%
An interactive “Cool Million” chart in the textbook’s Web site enables you to visualize the growth of your retirement savings over several years. Another teatuie allows you to determine what
What are the distinguishing characteristics of an ordinary general annuity?
For the same n, PMT, and i, would it cost more or less to purchase a deferred annuity than an ordinary annuity? Explain.
What is meant by a deferred annuity?
Go to the Student Edition of the textbook’s Web site. In Chapter 10, find “RRIF Annuities.” Obtain high, low, and mid¬ range interest rate quotes from three financial institutions for a
Go to the Student Edition on this textbook’s Web site. In Chapter 10, find “Stop Smoking and Save.” This calculator allows you to estimate how much you will accumulate over several years if you
The NET @ssets feature earlier in this section describes how to access and use the Future Value Chart available on this textbooks Web site. Use this chart to answer the following problems (rounded to
How would you determine how much of an annuity’s future value is interest earned over the term of the annuity?
If the nominal rate of interest paid on a savings account is 3% compounded monthly, what is the effective rate of interest paid?
If a series of compound percent changes are all positive, is the overall percent increase larger or smaller than the sum of the individual percent changes? Justify your answer.
What is meant by the “total return” from an investment?
What is meant by a “capital loss?”
What is the significance of two nominal interest rates being equivalent?
Is the effective rate of interest ever equal to the nominal interest rate? Explain.
Is the effective rate of interest ever numerically smaller than the nominal interest rate? Explain.
What is meant by the effective rate of interest?
Consider the Province of British Columbia strip bond in Table 9.1.a. Calculate the bond’s market price on June 1, 2009, based on the quoted yield of 4.311% compounded semiannually.b. What would the
Access the Globe and Mail’s Web site. When the Globe Investor/Funds page loads, select “Fund Selector” from the links listed at the centre of the page. In the “Option C” area, you can enter
What would be the most convincing way to demonstrate that the replacement stream in Example 8.6A is economically equivalent to the given stream?Example 8.6A:Payments of $2000 and $1000 were
Give two examples of advertisements or news items that routinely ignore the time value of money.
If two payment streams are equivalent at one discount rate, will they be equivalent at another discount rate?
Go to the textbook’s Web site. In Chapter 8 of the Student Edition, find “Canoe Money GICs.” This Web page provides a comprehensive comparison of current rates available on GICs for terms of
Go to the textbook’s Web site and find Canada Savings Bonds.” From there, you should be able to link to a page that will provide interest rates for all outstanding issues of CSBs. Update Table
If a quantity increases by x% per year (compounded) for two years, will the overall percent increase be more or less than 2x%? Explain.
Suppose the future value of $1 after x years is $5. What is the present value of $1, x years before its scheduled payment date? (Assume the same interest rate in both cases.)
Why does $100 due one year from now have less economic value than $100 has today? What do you need to know before you can determine the difference between the economic values of the two payments?
The process of discounting is the opposite of doing what?
Does a smaller discount rate result in a larger or a smaller present value? Explain.
What is the meaning of the term discount rate?
Follow the instructions in the NET @ssets box earlier in this section to access the interactive chart named “Future Value of $100” on the textbook’s Web site. Use the chart to help you answer
If an investment doubles in nine years, how long will it take to quadruple (at the same rate of return)? (This problem does not require any detailed calculations.)
For a given nominal interest rate (say 10%) on a loan, would the borrower prefer it to be compounded annually or compounded monthly? Which compounding frequency would the lender prefer? Give a brief
What is meant by the future value of an investment?
Calculate the missing values for the promissory notes described.
Calculate the missing values for the promissory notes described.
Calculate the missing values for the promissory notes described.
Graham and Stacy are having difficulty stretching their salaries to pay their bills. Before their marriage three months ago, they purchased new furnishings for their apartment. Then they paid for
If the market-determined rate of return on an investment declines, what happens to the investment’s fair market value? Explain. (Assume the expected cash flows from the investment do not change.)
What do you need to know to be able to calculate the fair market value of an investment that will deliver two future payments?
Access the Royal Bank’s Web page for current interest rates. In this page’s navigation bar, select “Redeemable GIC” or “Non-Redeemable GIC” to obtain current rates for these
How can you determine whether two payment streams are equivalent to each other?
How do you determine the economic value on a particular date of a series of payments?
What is meant by the “time value of money?”
What is meant by the “present value” of a payment that is scheduled for a future date?
How can you determine whether two payments are equivalent to each other?
A $25,000 investment earned 1.1% per month simple interest for a three-month term. What total amount of interest was earned?
The textbook’s Web site provides an interactive Contribution Margin Chart. This chart presents a pictorial display of the components of total cost and total revenue from a contribution margin point
Solve using the Contribution Margin approach.A sporting goods manufacturer lost $400,000 on sales of $3 million in a year during the last recession. The production lines operated at only 60% of
Solve using the Contribution Margin approach.A farmer is trying to decide whether to rent his neighbour’s land to grow additional hay for sale to feedlots at $180 per delivered tonne. The land can
Solve using the Contribution Margin approach.Mickey’s Restaurant had a net income last year of $40,000 after fixed costs of $130,000 and total variable costs of $80,000.a. What was the
Solve using the Contribution Margin approach.In the year just ended, a small appliance manufacturer sold its griddle at the wholesale price of $37.50. The unit variable costs were $13.25, and the
Solve using the Contribution Margin approach.This problem is designed to illustrate how the relative proportions of fixed and variable costs affect a firm’s net income when the sales volume
Solve using the Contribution Margin approach.The social committee of a college’s student government is planning the annual graduation dinner and dance. The preferred band can be signed for $1000
Solve using the Contribution Margin approach.Genifax reported the following information for September: a. Determine the unit sales required to break even.b. What unit sales would generate a net
Solve using the Contribution Margin approach.A college ski club is planning a weekend package for its members. The members will each be charged $270. For a group of 15 or more, the club can purchase
Solve using the Contribution Margin approach.The Morgan Company produces two products, G and H, with the following characteristics:Total fixed costs for the year are expected to be $700,000.a. What
Solve using the Contribution Margin approach.In the past year, the Greenwood Corporation had sales of $1,200,000, fixed costs of $400,000, and total variable costs of $600,000.a. At what sales figure
Solve using the Contribution Margin approach.The Kelowna division of Windstream RVs builds the Wanderer model. The division had total revenue of $4,785,000 and a profit of $520,000 on the sale of 165
Solve using the Contribution Margin approach.The Woodstock plant of Goodstone Tires manufactures a single line of automobile tires. In its first fiscal quarter, the plant had total revenue of
Solve using the Contribution Margin approach.Bentley Plastics Ltd. has annual fixed costs of $450,000 and variable costs of $15 per unit. The selling price per unit is $25.a. What annual unit sales
Solve using the Contribution Margin approach.Reflex Manufacturing Corp. manufactures composters at a unit variable cost of $43. It sells them for $70 each. It can produce a maximum of 3200 composters
Solve using the Contribution Margin approach.Valley Peat Ltd. sells peat moss for $10 per bag. Variable costs are $7.50 per bag and annual fixed costs are $100,000.a. How many bags of peat must be
Solve using the Contribution Margin approach.Beta Inc. has based its budget forecast for next year on the assumption it will operate at 90% of capacity. The budget is:a. At what percentage of
Solve using the Contribution Margin approach.Alpha Corp. expects to operate at 80% of capacity next year. Its forecast operating budget is: a. What is Alpha’s break-even revenue?b. What would be
Solve using the Contribution Margin approach.A small manufacturing operation can produce up to 250 units per week of a product that it sells for $20 per unit. The variable cost per unit is $12, and
Solve using the Contribution Margin approach.Jordan is developing a business plan for a residential building inspection service he may start. Rent and utilities for an office would cost $1000 per
Solve using the Contribution Margin approach.Huntsville Office Supplies (HOS) is evaluating the profitability of leasing a photocopier for its customers to use on a self-serve basis at 10₵ per
Solve using the Contribution Margin approach.Clone Computers assembles and packages personal computer systems from brandname components. Its Home Office PC System is assembled from components costing
Solve using the Contribution Margin approach.CD Solutions Ltd. manufactures and replicates CDs for software and music recording companies. CD Solutions sells each disc for $2.50. The variable costs
Solve using the Contribution Margin approach.ChildCare Industries manufactures infant car seats that it sells to retailers for $155 each. The costs to manufacture each additional seat are $65, and
Solve using the Contribution Margin approach.Ingrid processes and bottles jam in her home-based business. Her fixed costs are $250 per month and the variable cost per jar is $1.20. She sells the jam
Solve using the Contribution Margin approach.Reliable Plastics makes containers that it sells for $2.55 each. Its fixed costs for this product are $2000 per month and the variable cost per unit is
Solve using the Contribution Margin approach.Toys-4-U manufactures a toy that it sells for $30 each. The variable cost per toy is $10 and the fixed costs for this product line are $100,000 per
Solve Problems 2, 3, and 4 earlier in this Exercise using the interactive chart and its accompanying report.Problem 2:Clone Computers assembles and packages personal computer systems from brand- name
Leaving other variables unchanged, what effect does increasing the value of FC have on:a. The Fixed Cost (FC) line?b. The Total Cost (TC) line?c. The Total Revenue (TR) line?d. The break-even point?
Leaving other variables unchanged, what effect does increasing the value of S have on:a. The Fixed Cost (FC) line?b. The Total Cost (TC) line?c. The Total Revenue (TR) line?d. The break-even point?
Leaving other variables unchanged, what effect does increasing the value of VC have on:a. The Fixed Cost (FC) line?b. The Total Cost (TC) line?c. The Total Revenue (TR) line?d. The break-even point?
An invoice for $2365 was dated February 25 and had terms of payment l}/10, EOM. A payment on March 9 resulted in a credit to the account of $1421.32. What was the amount of the payment?
Determine the payment required to settle the invoice on the indicated payment date.
An item is marked down by the same percentage as the rate of markup on selling price. Will the reduced operating profit be positive, negative, or zero? Explain.

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