Math (Periodic Rate)

Question 1

Calculate the semi-annual periodic rate of interest that is equivalent to 12% per annum, compounded semi- annually.

(1) 1%
(2) 0.975879%
(3) 12%
(4) 6%

Answer 1

4

j2=12%

12%/2
6%

Question 2

Joanne Carmichael borrows $15,000 at a periodic interest rate of 0.5% per month. She agrees to repay $450 per month. For how many FULL years will Joanne have to make payments?

(1) 3
(2) 9
(3) 27
(4) 37

Answer 2

1

j12=.5%
n=?

15,000 -450 0

=2.79 (3)

Question 3

Joe Carmichael borrows $11,000 at a periodic interest rate of 0.75% per month. He agrees to repay $335 per month. For how many FULL years will Joe have to make payments?

(1) 3
(2) 9
(3) 27
(4) 37

Answer 3

1

i12=.75% X 12 (J12 = 9)

j12=9%
n=?
11,000   -335   0
=37.83 
THEN DIVIDED BY 12 
= 3 FULL YEARS

Question 4

A local mortgage broker has arranged a mortgage in the amount of $240,000. The borrower has agreed to pay a brokerage fee of $5,000 which is to be added to the loan amount, giving a face value of $245,000 for the loan.

The mortgage bears interest at a contract rate of 8% per annum, compounded quarterly. The mortgage has a term and amortization period of 25 years. The loan is to be repaid using monthly payments. The equivalent periodic interest rate, expressed as a rate per month on the funds advanced is:

(1) 0.682361%
(2) 0.821546%
(3) 0.752513%
(4) 0.514235%

Answer 4

1

j4=8%
n=25(12)=300

245,000 ? 0
=1,882.39

j12=?
n=25(12)=300
240,000 -1,882.39 0
j12=8.188266/12

=0.682355