1. How long did it take $4,625 earning 7.875% compounded annually to grow to $8,481.61?
2. The current balance on a loan is $3,837.30. If the interest rate on the loan is 10% compounded
monthly, how long ago was the $2,870 loan made?
3. What is the remaining time until the maturity date of a $10,000 strip bond if it is purchased for
$4,011.33 to yield 6.4% compounded semiannually until maturity?
4. A few years ago, Avtar invested $6,000 in a compound-interest GIC that earned 4.5%
compounded semiannually. He recently received the maturity value of $7,168.99. What was the
term of the GIC?
5. Rounded to the nearest month, how long will it take an investment to double if it earns:
a. 8.4% cm?
b. 10.5% csa? 6. Rounded to the nearest month, how long will it take an investment to quadruple if it earns:
a. 8% ca?
b. 9% csa?7. Which interest rate would you prefer to earn on a three-year GIC: 6% compounded monthly,
6.1% compounded quarterly, 6.2% compounded semiannually or 6.3% compounded annually?8. What is the effective rate of interest on a credit card that calculates interest at a rate of 1.8%
per month?9. If the nominal rate of interest paid on a savings account is 2% compounded monthly, what is the
effective rate of interest?10. If a $5,000 investment grew to $6450 in 30 months of monthly compounding, what effective
rate of return was the investment earning? 11. Lisa is offered a loan from a bank at 7.2% compounded monthly. A credit union offers similar
term, but at a rate of 7.4% compounded semiannually. Which loan should she accept? Present
calculations that support your answer.
