Financial Math – MA 246

Assignment #1
Due Date: Feb. 4th
1) Find the proceeds of a non-interest-bearing-promissory note with a face value of
$2000, discounted 10 months before its due date at 6% compounded quarterly
(2 marks).

- 1903.17 would be the total Discounted amount

2) Find the proceeds of a 3-year promissory note with a face value of $7500 and interest
at 7% p.a. compounded quarterly if it is discounted one and a half years before maturity
at 5% p.a. compounded semi-annually (2 marks).

- Total value at maturity: 9,235.79

- Total paid in 1.5 years: 8576.35

3) Haley’s scheduled loan payments of $5000 due in 8 months and $3000 due in 27
months have been rescheduled as a single payment in 18 months. Determine the size of
the single payment if interest is 7% compounded semi-annually, and the focal date is
when the single payment is due (3 marks).

- 1st payment moves forwards for 5607.52$

- 2nd Payment moves back for 2412.68
- Total Payment: 8020.20

4) James is due to make a payment of $6500 now. Instead, he has negotiated to make
two equal payments, the first in 6 months and the other a year from now. Determine
the size of the equal payments if money is worth 8% compounded quarterly.
Choose today as the focal date for convenience (3 marks).

- X Values: 0.961168781+0.923845426
- 1.88501421/6500
- 3448.25 - Total Payment
5) How many years would it take for ​any​ amount of money to double in value when
accumulating interest at a rate of 9% p.a. compounded semi-annually? (2 marks)

- N = ln2/ln1.045
- N = 0.6931/0.0440
- N= 15.75

Therefore: I’d take Roughly 7-8 years to Double your money using that rate

6) What nominal annual rate of interest compounded monthly would be necessary for
$250 to grow to $337.22 in a period of 5 years? (2 marks)

- I=(337.22/250)^(1/(12*5))-1
- I=0.00500037064
Annual interest: 6%