Financial Math – MA 246

Assignment #3

1) A loan of $15000 is amortized with equal end of month payments made for 5
years. It is charged 6% p.a. compounded monthly. (3 marks)
a) What is the amount of each monthly payment?

b) What was the balance remaining after the 20th payment?

c) How much interest was paid from the 10th to 12th payment periods?

2) A contractor’s price for a new building is $94,000. This loan is financed with
equal payments at the end of every month for 5 years. Interest is 7.3%
compounded semi-annually. Construct a partial amortization table detailing
information about the 58th, 59th, and 60th payments. Remember to adjust the final
payment and principal paid. (2 marks)

Amount Paid Principal Paid Interest Paid Remaining

Balance
Payment 58

Payment 59

Payment 60

Totals N/A
3) A loan of $20,000 taken out at 5.8% compounded monthly is amortized over six
years by making equal yearly payments of $4061.72.
Construct a full amortization table for this annuity. Include columns for payment
amount, principal paid, interest paid, and balance remaining for all six payments.
Include rows for each payment. (2 marks)

Amount Paid Principal Paid Interest Paid Remaining

Balance
Payment 1

Payment 2

Payment 3

Payment 4

Payment 5

Payment 6

Total N/A

4) A $1000 bond redeemable at par and bearing interest at 4% payable semi-

annually is purchased two years and 5 months before maturity. Determine the
cash price of the bond. (3 marks)

5) A savings bond with a face value of $1000 bearing interest at 5% payable semi-
annually matures on September 3rd, 2026. What is the purchase price of the
bond on April 24th, 2023 to yield 3.5% compounded semi-annually? What is the
premium or discount? (4 marks)