1. Owning or Leasing
Your Dream Car
Is this for real?

2. Marge invested $2500 at 6.5% per annum HOMEWORK
compounded quarterly. Calculate the value N= 12
of her investment after three years. I%= 6.5
PV= ­2500
PMT= 0
FV= 3033.52
P/Y= 4
C/Y= 4
PMT: END BEGIN
Calculate the effective interest rate. N= 3
I%= 6.66016
PV= ­2500
PMT= 0
FV= 3033.52
P/Y= 1
C/Y= 1
PMT: END BEGIN

3. Credit Card Interest HOMEWORK
Calculate the effective interest rate of $1.00 invested at 18.5%
compounded daily for one year.
N= 365 N= 1
I%= 18.5 I%= 20.31620
PV= ­1 PV= ­1
PMT= 0 PMT= 0
FV= 1.203162 FV= 1.203162
P/Y= 365 P/Y= 1
C/Y= 365 C/Y= 1
PMT: END BEGIN PMT: END BEGIN

4. Shaina wishes to invest $2000 given by her grandfather. She has an
option of a guaranteed investment certificate earning 8.85%,
compounded quarterly, or a savings bond of 9%, compounded semi­
annually. HOMEWORK
Which investment N= 4 N= 2
should she choose? I%= 8.85 I%= 9
PV= ­2000 PV= ­2000
PMT= 0 PMT= 0
FV= 2182.96 FV= 2184.05
P/Y= 4 P/Y= 2
C/Y= 4 C/Y= 2
PMT: END BEGIN PMT: END BEGIN
If each investment term is 5 years, what will be the difference in
their values at the end of the term?
$3105.94 ­ $3098.21 = $7.73

5. Suppose an uncle has left you $100 000 to invest, on condition that
you give one­half of all interest earned to the SPCA. You decide to
invest it in a savings account that pays 5% interest compounded
quarterly. How much will you have given to the animal shelter after:
one month? N= 4 * (1/12) 3 months? N= 4 * (3/12)
I%= 5 I%= 5
PV= ­ 100000 PV= ­ 100000
PMT= 0 PMT= 0
FV= FV=
P/Y= 4 P/Y= 4
C/Y= 4 C/Y= 4
PMT: END BEGIN PMT: END BEGIN
N= 4 * (2/12) 10 years? N= 4 * (10)
2 months?
I%= 5 I%= 5
PV= ­ 100000 PV= ­ 100000
PMT= 0 PMT= 0
FV= FV=
P/Y= 4 P/Y= 4
C/Y= 4 C/Y= 4
PMT: END BEGIN PMT: END BEGIN

6. Determine the monthly payment for a $8250.00 loan with an interest
rate of 8.9% compounded monthly if the loan is repaid in two years
(24 monthly payments). Also determine the total cost of repaying the
loan, and the amount of interest paid.
N=
I%=
PV=
PMT=
FV=
P/Y=
C/Y=
PMT: END BEGIN

7. Mike bought a Chevy truck, and used his older Dodge truck as
trade. The price of the Chevy was $22 500, and the trade­in value
of the Dodge was $3200. How much did Mike have to pay?
Note: PST (7%) and GST (5%) have to be paid on new car
purchases. On used cars only PST is paid.
$22 500 * 0.12 = $2700
$2700 + $22 500 = $25 200
$25 200 ­ $3 200 = $22 000

8. Joyce wants to buy a used Ford Mustang for $16 000 plus tax. She has
$3 000 for a down payment and needs a loan to pay the rest. The bank
charges 9% interest compounded monthly and the loan must be repaid in
3 years.
What is the loan principal?
$16 000 * 0.12 = $1 920
$1 920 + $16 000 = $17 920
$17 920 ­ $3 000 = $14 920
N=36
How much are Joyce's monthly payments? I%=9
PV=14920
PMT=­474.45
FV=0
P/Y=12
C/Y=12
PMT: END BEGIN

10. Dave needs a new computer for university. The purchase price is
$3294.00 before tax with a $0 down payment. Financing is available
at 18.99%, compounded monthly. GST is 5% and PST is 7%.
Calculate the monthly payment to purchase this computer over
48 months. What is the total amount paid for the computer?
What are the monthly payments and total paid if the computer is
financed for 36 months? HOMEWORK
What about 24 months?
N= N= N=
I%= I%= I%=
PV= PV= PV=
PMT= PMT= PMT=
FV= FV= FV=
P/Y= P/Y= P/Y=
C/Y= C/Y= C/Y=
PMT: END BEGIN PMT: END BEGIN PMT: END BEGIN