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Sample Test: Students Must Show All Calculations For Short Answer Questions. Short Answer Sample Questions 1
Sample Test: Students Must Show All Calculations For Short Answer Questions. Short Answer Sample Questions 1
Sample Test: Students Must Show All Calculations For Short Answer Questions. Short Answer Sample Questions 1
1.
Wanda agreed to deposit $600 at the beginning of each year for the next 10 years in an
education fund for her only child. The fund pays interest at 5% p.a. compounded annually.
a) What will the balance of the fund be at the end of the ten years?
Part a Solution:
Beginning mode:
n = 10
I =5
PMT= -$600
P/Y = 1
C/Y = 1
FV=$7,924
b) What would the balance of the fund be at the end of the ten years if interest were
compounded quarterly instead of annually?
c)
Part b Solution:
d)
e) Beginning mode:
f)
g) n = 10
h) I =5
i) PMT= -$600
j) P/Y = 1
k) C/Y = 4
l) FV=$7,966
Sample Test
2.
Simon holds a $10,000 par value bond bearing a semi-annual coupon rate of 5 percent and
maturing in six years. The bond is currently trading for $11,000.
Required:
What is the annualized yield to maturity on this bond?
Solution:
S/A: N=12, PV= -11,000, PMT=250, FV= 10,000, P/Y, C/Y = 1. CPT I% = 1.58%
Annual rate = 1.58% x 2 = 3.16%
Or:
Annual: N=12, PV= -11,000, PMT=250, FV= 10,000, P/Y, C/Y = 2. CPT I% = 3.16%
3.
David lives in Ontario and received $3,000 in 2019 in eligible cash dividends from a taxable
Canadian corporation. The Federal gross-up rate on eligible dividends is 43% and the federal
dividend tax credit on taxable dividends is 16.40%.
Required:
How much can he claim as a federal dividend tax credit in 2019? (Round answer to the nearest
dollar.)
4.
Mary takes out a 5-year fixed mortgage for $300,000. The mortgage bears a rate of 3% and is
amortized over 25 years. Mary elects to make monthly payments on the mortgage.
Required:
How much is the monthly payment on this mortgage (round answer to the nearest dollar).
Solution: