Reference no: EM131716663

Q1. If 8% is compounded quarterly for 3 years then the number of periods used in a time-value money calculation would be

None of the other alternatives are correct

12 periods

4 periods

3 periods

8 periods

Q2. Your grand-mother puts $1,000 per year in a TD Bank account for you. She started doing this ten years ago to save for a big graduation trip after completion of high school and before starting university. Money is worth 8%. How much is sitting in the TD bank account as of now? Please round to the nearest whole number.

$10,000

$46,320

$14,487

$6,710

$21,589

Q3. If you set yourself a goal of investing X amount today, earning interest at 5%, in order to withdraw $10,000 at the end of each year for the next three years, how much is X?

$31,525

None of the other alternatives are correct

Between $25,000 and $26,000

$30,000

$27,232

Q4. What number of periods and rate per compounding period would you use from the Tables if provided with the following situation:

i. 12% per annum, for 5 years, compounded annually

ii. 12% per annum, for 5 years, compounded quarterly

i) n = 5, r = 6% and ii) n = 5, r = 3%

ii) n = 5, r = 12% and i) n = 20, r = 3%

ii) n = 5, r = 48%, i) n = 5, r = 12%

i) n = 5, r = 12% and ii) n = 20, r = 3%

i) n = 5, r = 12% and ii) n = 20, r = 48%

Q5. If you set yourself a goal of investing X amount today, earning interest at 10%, in order to withdraw $32,321 at the end of each year for the next five years, how much is X?

$122,522

$8,526

$102,454

None of the other alternatives are correct

$27,027

Q6. Which of the following is true about compounded interest?

Compounded interest is used in theory but not in real life.

None of the other alternatives are correct

Compounded interest is interest paid only on the principal.

Compounded interest is interest paid only on the interest.

Compounded interest is interest paid on both principal and interest.

Q7. In four years Allan Chu plans to enroll in the masters program at York University. He estimates that tuition will be $40,000 and living expenses will be the same amount. His best investment opportunity is paying 6% compounded semi-annually. How much must Allan invest now to have sufficient funds to cover his education?

$36,590.30

$37,770.22

$63,152.80

$66,128.44

None of the above