Chapter 1: Review of Arithmetic
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Q1) Simplify: 5(4 + 3)
Answer: 5 7 = 35
Q2) A retailer returned 300 defective items to the manufacturer and received a credit for the retail price of $0.75 less a discount of 1/3 of the retail price. What was the amount of the credit received by the retailer?
Answer: Retail value =300($0.75) = $225
Credit = (1-1/3) $225 = (2/3) $225 = $150
Q3) "Save the PST" is a popular advertising gimmick. How much would you save on the purchase of a T-shirt with a list price of $45.00 in a Manitoba store during a "Save the PST" promotion?
Answer: Savings on PST = 7% of $45.00 = 0.07(45.00) = $3.15
Q4) Simplify: 3 + 8 4
Answer: 3 + 32 = 35
Q5) C.O. is paid a semi-monthly salary of $1 250.00. If his regular work week is 35 hours, what is his hourly rate of pay?
Answer: Annual salary = 1250.00 × 24 = 30000.00
Weekly pay = 11ea8930_3279_7f47_b375_cd0707763360_TB4213_11 = 576.92
Hourly rate = 11ea8930_3279_7f48_b375_f59a4043d7d3_TB4213_11 = $16.48
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Chapter 2: Review of Basic Algebra
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Q1) You have three colors of candies a jar - yellow, red and blue. There are 4 times plus 3 as many yellow candies as there are blue candies. There is 5/8 as many minus 6 red candies as there are blue. There are a total of 402 candies in the jar. How many of yellow, blue and red candies are there?
A) y-290, b-73, r-39
B) y-291, b-73, r-38
C) y-291, b-72, r-39
D) y-292, b-72, r-38
E) y-292, b-72, r-37
Answer: C
Q2) Simplify: (-4)<sup>4</sup> ? (-4)
Answer: (-4)<sup>4+1</sup> = (-4)<sup>5</sup> = -1024
Q3) Simplify: (-a3 - 11a2 - 3a) ÷ (-a)
Answer: a2 + 11a + 3
Q4) Evaluate z: z = 5x2 - 5xy - 3y2 for x = -6, y = +5
Answer: z = 5(-6)2 - 5(-6)(5) - 3(5)2 = 5(36) + 150 - 3(25) = 180 + 150 - 75 = 255
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Chapter 3: Ratio, Proportion, and Percent
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Q1) Use Table 3.2 on page 128 of your textbook to convert C$900.00 to euros.
Answer: From the table, the exchange rate for Canadian dollars to euros is 0.7294.
Conversion = 900 × 0.7294 =C$656.46
Q2) Solve: n:6 = 24:42
Answer: n:6 = 24:42
42n = 24 6
n = 11ea8930_32b2_de3a_b375_bd5e22339ce5_TB4213_11 = 3.42857
Q3) At Upscale Corporation, direct selling expense amounted to $3500 while sales volume was $97 500 for last month. What is the ratio of direct selling expense to sales volume?
Answer: 11ea8930_32ae_2319_b375_9930591f418f_TB4213_11 = 11ea8930_32ae_231a_b375_63dcbd234303_TB4213_11 = 11ea8930_32ae_231b_b375_c159d77d95a1_TB4213_11
Q4) The amount of $123 is what percent less than $165?
Answer: Decrease = 42
R = 11ea8930_32c5_2e59_b375_a76dc4f1ebca_TB4213_11 = .2545 = 25.45%
Q5) What percent of $62.50 is $11.25?
Answer: Rate = 11ea8930_32c1_84b9_b375_d704a384dc22_TB4213_11 = .18 = 18%
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Chapter 4: Linear Systems
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Q1) Solve for the following: 2x - 3y = -24 3x + 5y = 45
A) x = 0.789, y = 8.526
B) x = .489, y = 8.526
C) x = 4.789, y = 9.526
D) x = 2.789, y = 7.526
E) x = 0.2789, y = 0.7526
Q2) Graph: y = 8
Q3) Graph: y = -4x + 16
Q4) Solve the system graphically.
3x - 7 = y
6x -2 y = 14
Q5) Find the slope and y-intercept: 3y - 5 = 2(x - 2)
Q6) Solve for x and y: 2x + 1y = 5 4x + 2y =20
A) x = 2, y = 1
B) x = -2, y = -1
C) x = 4, y = 2
D) x = -4, y = -2
E) no solution, the lines are parallel
Q7) Solve the system of equations: 28 - 7x = 4y
36 - 4y = 3x
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Chapter 5: Trade Discount, Cash Discount, Markup, and Markdown
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Q1) The Alpaca Wool Shoppe bought 150 scarves for $4 150.00; 50 scarves were sold at a markup of 175% of cost and 30 scarves at a markup of 125% of cost; 40 of the scarves were sold during a clearance sale for $35.50 each and the remaining Scarves were disposed of at 15% below cost. Assume all scarves had the same cost.
a) What was the markup realized on the purchase?
b) What was the percent markup realized based on cost?
c) What was the gross profit realized based on selling price?
Q2) An invoice dated on March 31 was received on April 2. It was for 30 training manuals at $25.00 each and four posters at $40.00 each. The terms of the invoice were 5/10, 2/30, n/60. What is the invoice payment amount on April 3?
A) 891.80
B) 910.00
C) 750.50
D) 864.50
E) 64.50
Q3) A merchant buys an item listed at $69.00 less 34% from a distributor. Overhead is 44% of cost and profit is 37.5% of cost. For how much should the item be retailed?
Q4) Find the cost of a car sold for $25 000 to realize a markup of 8% based on cost.
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Chapter 6: Break-Even and Cost-Volume-Profit Analysis
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Q1) Victor plans to set up an on-line business selling software applications that he develops and supports. He believes that a price of $130 for his product including the technical support would be competitive. His monthly fixed expenses amount to $850. Victor would hire some college students to provide the technical support of the application paying them for 3 hours at $15 per hour for each client.
a) How many clients does Victor need to acquire to break even?
b) If he wants to achieve a target profit of $500 monthly, how many clients does he need?
Q2) A pen manufacturer makes luxury pens. The pen case costs $7.26 each, the ink holder costs $1.26 each, the spring costs $.07 each and the velvet pen case costs $0.91 each. The plant has general and administrative costs of $55 000 and fixed selling expenses of $37 500. The pens sell of $39.95 each. Plant capacity is 4 000 pens per period. At what percentage of capacity is the break-even point?
A) 75.95%
B) 73.74%
C) 75.77%
D) 61.32%
E) 30.79%
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Chapter 7: Simple Interest
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Q1) Debt payments of $800.00 due now and $1400.00 due in five months are to be repaid by a payment of $1000.00 in three months and a final payment in eight months. Calculate the size of the final payment if interest is 6%.
Q2) Find the maturity value of $832.00 invested at 8.8% from May 20, 2013, to November 23, 2013.
Q3) Debt payments of $1170.00 due two months ago and $1243.00 due today respectively are to be repaid by a payment of $1505.00 in one month and the balance in four months. If money is worth 8.4% p.a. and the agreed focal date is four months from now, what is the size of the final payment?
Q4) What sum of money will accumulate to $1 426.80 in eight months at 7.78%?
Q5) What rate of interest is required for $940.48 to earn $42.49 interest from September 30, 2011, to March 4, 2012?
Q6) What principal will have a maturity value of $100 000 at 5% p.a. in 18 months?
Q7) A loan of $4100 is to be repaid in three equal installments due 110, 197, and 311 days respectively after the date of the loan. If the focal date is the date of the loan and interest is 6.89% p.a., find the size of the installments.
Q8) Determine the date represented by 100 days after March 1, 2012.
Q9) What principal will earn $67.52 at 6.75% in 158 days?
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Chapter 8: Simple Interest Applications
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Q1) You bought a $100,000 91-day T-bill for $99453.67 61 days before maturity. What discount rate was used?
A) 3.29%
B) 2.39%
C) 3.49%
D) 4.39%
E) 3.99%
Q2) You purchase a 182-day treasury bill for $240,000 at a rate of 3.546%. What did you sell it for 111 days before maturity if the new interest rate is 3.778%?
A) $238220.20
B) $238320.20
C) $238200.20
D) $238100.20
E) $241469.24
Q3) Bradley purchased a 91-day, $100 000 T-bill on its issue date for $99 237.96. What was the original yield of the T-bill?
Q4) Find the maturity date and the maturity value of a $1 415.00, 5.25%, 220-day note dated February 25, 2012.
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Chapter 9: Compound Interest - Future Value and Present
Value
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Q1) An investment of $2 500.00 accumulates interest at 9.25% compounded quarterly. After 18 months the rate changed to 9.75% compounded semi-annually. Calculate the accumulated value three years after the initial investment.
Q2) Calculate the accumulated value of $1000.00 at 8% compounded monthly for 12 years.
A) $2603.39
B) $1603.39
C) $2600.39
D) $2003.39
E) $603.39
Q3) How much will a registered retirement savings deposit of $13500.00 be worth in 11 years at 8.44% compounded quarterly? How much of the amount is interest?
Q4) Debts of $850 due in six months, $700 due in sixteen months, and $1100 due in three years are to be settled by a single payment one year from now. What is the size of that single payment if interest is 7.5% compounded monthly?
Q5) Determine the proceeds of $5000 four years and nine months before the due date if interest is 8% compounded semi-annually.
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Chapter 10: Compound Interest - Further Topics
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Q1) Determine the effective rate of interest corresponding to 6% p.a. compounded monthly
Q2) Calculate the effective annual rate for 10% p.a. compounded quarterly.
A) 0.1038%
B) 1.038%
C) 10.38%
D) 10%
E) 2.5%
Q3) How long, in compounding periods, will it take for $3327 to increase by $3799 if you are able to earn 6.2% compounded semi-annually?
A) 42.95
B) 24.95
C) 4.56
D) 6.45
E) 4.95
Q4) At what nominal rate of interest compounded semi-annually will $11 800 earn $6 800 interest in six years?
Q5) A principal of $5000.00 compounded monthly amounts to $6000.00 in 7 years. What is the nominal annual rate of interest?
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Chapter 11: Ordinary Simple Annuities
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Q1) What is the discounted value of deposits of $150.00 made at the end of each month for fourteen years if interest is 4.5% compounded monthly?
Q2) Annette bought a vacation property for $22900.00 down and quarterly mortgage payments of $1224.51 at the end of each quarter for six years. Interest is 8.4% compounded quarterly.
a) What was the purchase price of the property?
b) How much interest will Annette pay?
Q3) How many semi-annually payments will it take for $500.00 deposited at the end of each half year to amount to $10000.00 at 6% compounded semi-annually?
Q4) What is the nominal rate of interest on a loan of $6800.00 repaid in semi-annual installments of $1175.00 in six years?
Q5) Find the amount to which monthly deposits of $100.00 will grow in five years at 4.8% p.a. compounded monthly.
Q6) A $5000.00 loan requires payments at the end of each quarter for five years. If the interest rate on the loan is 8% compounded quarterly, calculate the size of each payment.
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Chapter 12: Ordinary General Annuities
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Q1) The loan will have a term of 54 months and monthly payments of $385.13. The interest rate on the loan is 8.84% compounded quarterly. What is the amount of money that was borrowed?
A) $17310.71
B) $17430.71
C) $17030.71
D) $17130.71
E) 20368.27
Q2) Mr. Sepaba accumulated $600 000.00 in an RRSP. He converted the RRSP into an RRIF and started to withdraw $3000.00 at the end of every month from the fund. If interest is 4.5% compounded yearly, for how long can Mr. Sepaba make withdrawals?
Q3) Note: The calculations for this question were done using Excel's RATE function. Compute the nominal annual rate of interest on a loan of $67 000.00 repaid in semi-annual installments of $6540.00 in 11.5 years.
Q4) Calculate the nominal interest rate of interest compounded quarterly if a loan of 43 000.00 is repaid in seven years by payments of $4000.00 made at the end of every six months.
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Chapter 13: Annuities Due, Deferred Annuities, and Perpetuities
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Q1) A sum of money is deposited at the end of every month for 9 years at 8.5% compounded monthly. After the last deposit, interest for the account is to be 8.1% compounded quarterly and the account is to be paid out by end-of-quarter quarterly payments of $1800.00 over 7 years. What is the size of the monthly deposit?
Q2) What monthly lease payment due in advance should be charged for a tract of land valued at $135 000 if the agreed interest is 8.15% compounded semi-annually?
Q3) Linda contributes $3000.00 at the beginning of every six months into an RRSP paying interest at 6% compounded semi-annually.
a) How much will her RRSP deposits amount to in 15 years?
b) How much of the amount will be interest?
Q4) A sum of $15700.00 is invested at 6.48% compounded semi-annually for eight years. After the eight years, the balance in the fund is converted into an annuity paying equal payments at the end of every 6 months for 5.5 years. If interest on the annuity is 7.95% compounded monthly, what is the size of the equal payments?
Q5) Geomax pays $8710.00 at the beginning of each year for using a tract of land. What should the company offer the property owner as a purchase price if interest is 10.18% compounded annually?
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Chapter 14: Amortization of Loans, Including Residential Mortgages
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Q1) Angelina has agreed to purchase her partner's share in the business by making payments of $1720.00 every three months. The agreed transfer value is $19 500.00 and interest is 9.11% compounded annually. If the first payment is due at the date of the agreement, what is the size of the final payment?
Q2) A investor's price for a townhouse was $160,000.00. Sepaba Investments., the buyers of the rental unit, paid $40 000.00 down and financed the balance by making equal payments at the end of every six months for 25 years. Interest is 6% compounded semi-annually.
a) What is the size of the semi-annual payment?
b) How much will Sepaba Investments. owe after 20 years?
c) What is the total cost of the building for Sepaba Investments?
d) What is the total interest included in the payments?
Q3) A loan of $19 000.00 is repaid by quarterly payments of $900.00 each at 8% compounded quarterly. What is the principal repaid by the 21st payment?
Q4) John has agreed to purchase his partner's share in real estate by making payments of $5000.00 every three months. The agreed transfer value is $40000.00 and interest is 10% compounded annually. If the first payment is due at the date of the agreement, what is the size of the final payment?
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Chapter 15: Bond Valuation and Sinking Funds
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Q1) What is the amount of premium/discount amortized or accumulated in the first payment interval for a bond that has a face value of $6000 and it sold for $5700? The coupon rate is 9% compounded semi-annually and the market rate is 10.1% compounded semi-annually.
A) $18.75
B) $17.85
C) $11.85
D) $15.75
E) $14.75
Q2) A $50 000, 4% bond with semi-annual coupons is purchased three years before maturity. Calculate the discount or premium if the bond is sold to yield 6% compounded semi-annually.
Q3) Twenty $5 000 bonds redeemable at par bearing 6% coupons payable quarterly are sold eight years before maturity to yield 5.5% compounded annually. What is the purchase price of the bonds?
Q4) Bonds in denominations of $100 000 redeemable at 104 are offered for sale. If the bonds mature in ten years and six months and the coupon rate is 5.5% payable quarterly, what is the market price of the bonds to yield 7.2% compounded quarterly?
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Chapter 16: Investment Decision Applications
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Q1) What is the IRR for the following net annual cash flows today -$45000, Year 1 +$12000, Year 2 +$37000, Year 3 +$12000, Year 4 +$17000?
A) 26.722%
B) 16.722%
C) 6.722%
D) 36.722%
E) 46.722%
Q2) Replacing old equipment at an immediate cost of $75 000 and an additional outlay of $10 000 six years from now will result in savings of $3120 per quarter for 11 years. The required rate of return is 8% compounded annually. Use the net present value method to determine whether the company should replace old equipment or not.
Q3) A project requires an initial outlay of $350 000 and a further outlay of $100 000 after one year. Net returns are $105 000 per year for five years. What is the net present value of the project at 9.9%?
Q4) You win a lottery and have a choice of taking $200 000.00 immediately or taking payments of $8000.00 at the end of every three months for ten years. Which offer is preferable if interest is 8% compounded quarterly?
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