Questions from Business Mathematics

Q: $30,000 loan bearing interest at 9% compounded monthly

$30,000 loan bearing interest at 9% compounded monthly was repaid, after a period of deferral, by monthly payments of $425.10 for 10 years. What was the time interval between the date of the loan and...

Q: What price will a finance company pay to a merchant for a

What price will a finance company pay to a merchant for a conditional sale contract that requires 12 monthly payments of $249, with the first payment due six months from now? The finance company requi...

Q: If money can earn 6% compounded annually, what percentage more

If money can earn 6% compounded annually, what percentage more money is required to fund an ordinary perpetuity paying $1000 at the end of every year, than to fund an ordinary annuity paying $1000 per...

Q: A company’s preferred shares pay a $1.25 dividend every

A company’s preferred shares pay a $1.25 dividend every three months in perpetuity. What is the fair market value of the shares just after payment of a dividend if the rate of return required by the m...

Q: Mr. Larsen’s will directed that $200,000 be invested

Mr. Larsen’s will directed that $200,000 be invested to establish a perpetuity making payments at the end of each month to his wife for as long as she lives and subsequently to the Canadian Heart Foun...

Q: Mrs. McTavish wants to establish an annual $5000 scholarship in

Mrs. McTavish wants to establish an annual $5000 scholarship in memory of her husband. The first scholarship is to be awarded two years from now. If the funds can earn 6.25% compounded annually, what...

Q: How much will it cost to purchase a 15-year constant

How much will it cost to purchase a 15-year constant growth annuity paying $10,000 at the end of every year if it earns 5.5% compounded annually and is indexed to an inflation rate of 2% annually?

Q: Lola Fritola is planning for her retirement by making quarterly payments to

Lola Fritola is planning for her retirement by making quarterly payments to an annuity with each payment increasing by 0.4% every quarter. Her first payment is $4500 and she plans to contribute for th...

Q: Steel is an alloy of iron and nickel. A steel recycling

Steel is an alloy of iron and nickel. A steel recycling company has two piles of scrap steel. Pile A contains steel with 5.25% nickel content; Pile B contains steel with 2.84% nickel. The company has...

Q: C&D Stereo sold a stereo system on a plan that

C&D Stereo sold a stereo system on a plan that required no down payment and nothing to pay until January 1 (four months away). Then the first of 12 monthly payments of $226.51 must be made. The paymen...