MATH CLASS 3- HOMEWORK

MATH 3- HOMEWORK
GOBC Real Estate • Mortgage Notes
• PV
• FV
• YIELD (I/YR %)

www.GOBCrealestate.com
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 Homework MATH 3:
1. Practice PV/ FV questions pages 45-49
2. Practice Yield Questions pages 50-51
3. Watch Math 4 Class

PV/ FV QUESTIONS
35. How much should an investor be willing to pay for a property that is expected to sell for $60,000 in three years
if he desires a yield of not less than J2 = 14%?

(1) $40,498.29
(2) $36,648.83
(3) $39,980.53
(4) $48,977.87

36. How much should an investor be willing to pay for a property that is expected to sell for $55,000 in three years
if the investor desires a yield of J2 = 10%?

(1) $40,795.68
(2) $41,041.85
(3) $41,322.31
(4) $47,511.07

37. An investor wants to decide whether to buy a mortgage which calls for monthly payments of $390 for 20 years.
If the investor can earn J12 = 18% in other investments, at what price should the mortgage be purchased?

(1) $29,640.03
(2) $27,810.83
(3) $26,100.37
(4) $25,270.34

38. An investor wants to decide whether to buy a mortgage which calls for monthly payments of $390 for 20 years.
If the investor can earn J2 = 18% on other investments, at what price should the mortgage be purchased?

(1) $29,640.03
(2) $27,810.83
(3) $26,100.37
(4) $28,270.38

Answers: 35(3), 36(2), 37(4), 38(3)

©2022 GOBC Training LTD 45
 MATH CLASS 3- HOMEWORK
39. How much should an investor be willing to pay for a property that is expected to sell for $55,000 in two years if
a minimum yield of J2 = 16% is desired?

(1) $40,873.96
(2) $45,454.55
(3) $40,426.64
(4) $47,153.64

40. An interest accruing mortgage loan requires that $300,000 be paid at the end of a five-year term. If the rate of
interest on the loan is J2 = 8%, calculate the amount of funds advanced.

(1) $246,578.13
(2) $202,669.25
(3) $226,965.28
(4) $364,995.87

41. A holding property was purchased ten years ago for $23,000. How much must it sell for now if the owner is to
realize a pre-tax yield of J2 = 14%?
(1) $85,266.09
(2) $89,002.74
(3) $92,516.82
(4) $83,144.22

42. Allison wants to put aside some money into a savings account to accumulate enough money to go on a trip to
Australia. If she can afford to deposit $250 at the end of every month, and the savings account earns interest at
J12 = 4%, how much money will have accumulated in the savings account by the end of the 3rd year?
(1) $8,467.69
(2) $9,545.39
(3) $7,223.68
(4) $8,993.21

43. An investor deposits $5,700 in a savings account which bears interest at a rate of 15% per annum, compounded
monthly. What amount will be on hand at the end of 50 months?
(1) $10,204.28
(2) $10,413.87
(3) $10,607.83
(4) $11,087.63
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Answers: 39(3), 40(2), 41(2), 42(2), 43(3)
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 MATH CLASS 3- HOMEWORK
44. What will be the purchase price of a mortgage which will provide the purchaser with 60 payments of $950
plus an outstanding balance of $94,374.21 at the end of 60 months, if the purchaser of the mortgage requires an
effective annual yield of 13%?
(1) $93,611.84
(2) $93,582.37
(3) $92,922.78
(4) $93,655.35

45. An investor wants to decide whether to buy a mortgage which calls for monthly payments of $550 for 25 years.
If the investor can earn J2 = 14% in other investments, at what price should the investor purchase the mortgage?
(1) $45,690.13
(2) $48,203.17
(3) $46,857.20
(4) $46,853.31

46. An interest accruing mortgage loan requires that $300,000 be paid at the end of a five-year term. If the rate of
interest on the loan is J12 = 18%, calculate the amount of funds advanced.
(1) $131,132.76
(2) $126,723.24
(3) $122,788.79
(4) $157,894.74

47. A borrower wishes to make monthly payments totalling no more than $625 per month for 300 months. If
interest rates are currently 10 1/2% per annum, compounded semi-annually, what is the maximum amount that
should be lent?
(1) $64,212.47
(2) $67,325.22
(3) $66,194.89
(4) $63,069.39

48. A real estate developer has borrowed $60,000 by way of an interest accruing loan written at J12 = 18%. How
much will the developer owe at the end of 12 months?
(1) $71,737.09
(2) $68,603.40
(3) $71,286.00
(4) $70,800.00

©2021 GOBC Training LTD Answers: 44(4), 45(4), 46(3), 47(2), 48(1)
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 MATH CLASS 3- HOMEWORK
49. Jack & Jill have just received an inheritance of $350,000. Their plans are to immediately leave on around the-
world sailing trip, and upon their return in three years, purchase a house with a $100,000 down payment. They
have found a place to invest their money at 12.75% per annum, compounded annually for a three-year term. What
is the maximum amount of their inheritance that they can spend now to purchase traveller's cheques (which will
be spent on their vacation) while still having a $100,000 down payment in 3 years?
(1) $ 69,767.05
(2) $281,646.83
(3) $244,184.67
(4) $280,232.95

50. An interest accruing mortgage loan requires that $500,000 be paid at the end of a five-year term. If the rate of
interest on the loan is J12 = 12%, calculate the amount of funds advanced.
(1) $283,713.43
(2) $279,197.41
(3) $312,500.00
(4) $275,224.81

51. An investor has decided to establish a bank account in order to accumulate sufficient capital at the end of 7
years to purchase a boat. If the account pays interest at 16% per annum, compounded monthly and the investor
makes deposits of $8,000 at the end of each year, how much capital will the investor have accumulated at the end
of 7 years?
(1) $94,839.29
(2) $31,174.01
(3) $113,920.74
(4) $91,310.99

52. An inexperienced borrower has agreed to an interest accruing loan at a rate of 0.0675% per day compounded
daily and borrowed $1,000 for one year. What will the borrower owe at the end of that year?
(1) $1,279.27
(2) $1,067.50
(3) $1,000.68
(4) $1,246.38

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Answers: 49(4), 50(4), 51(1), 52(1)
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 MATH CLASS 3- HOMEWORK
53. An investor has decided to establish a bank account in order to accumulate sufficient capital at the end of four
years to purchase a boat. If the account pays interest at 2.5% per annum, compounded annually and the investor
makes deposits of $6,000 at the end of each year, how much capital will she have accumulated at the end of four
years?
(1) $24,915.09
(2) $26,491.51
(3) $28,018.91
(4) $25,357.92

54. A holding property was purchased ten years ago for $23,000. How much must it sell for now if the owner is to
realize a pre-tax yield of J2 = 18%?
(1) $120,378.22
(2) $ 54,449.37
(3) $ 86,684.57
(4) $128,901.45

55. An investor invests $7,200 in a savings account which bears interest at a rate of 20% per annum, compounded
daily. What amount will be on hand at the end of 2 years?
(1) $10,368.00
(2) $10,705.79
(3) $10,541.52
(4) $10,739.96

56. A borrower wishes to make monthly payments of no more than 30% of his monthly income of $2,500 for a
period of 200 months. If interest rates are currently 9% per annum, compounded semi-annually, what is the
maximum amount that should be lent?
(1) $90,582.19
(2) $89,371.22
(3) $77,561.75
(4) $78,374.01

57. Mac O'Rooney plans to build a small restaurant and requires $275,000 in construction financing. First Mortgage
Co. has agreed to lend the funds in the form of an interest accruing loan. Interest is to be charged at a rate of
11.25% per annum, compounded semi-annually. How much will Mac owe at the end of the 12-month term?
(1) $306,807.62
(2) $340,355.45
(3) $305,937.50
(4) unable to determine from the information given.

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Answers: 53(1), 54(4), 55(4), 56(4), 57(1) 49
 MATH CLASS 3- HOMEWORK
Yield (I/YR%)______________________________________________________
58. An investor plans to pay $200,000 for a vacant lot which the investor feels will sell at the end of three years for
$280,985.60. What yield, expressed as an annual rate with semi-annual compounding, will the investor earn?
(Assume that these are the only cash flows for this investment.)

(1) 11.6601048852%
(2) 11.3865515215%
(3) 12%
(4) There is no possible solution for this problem.

59. Calculate the nominal rate of interest, compounded quarterly that is equivalent to 1.5% per quarterly
compounding period.

(1) 18%
(2) 6%
(3) 12%
(4) 10%

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

(1) 1%
(2) 0.975879418%
(3) 12%
(4) 6%

61. Smiling Sue purchased a townhouse in December 1993 for $45,000. In December 1998, it was appraised at
$160,000. In December 2000, Sue sold the townhouse for $90,000. What was the pre-tax yield on her investment
expressed as an effective annual rate?

(1) 10.4089513674%
(2) 14.8698354997%
(3) -25%
(4) 28.8788029955%

62. A private investor expects to receive $281.72 per month for a period of 17 years as a result of a mortgage loan
she has just advanced. Calculate the investor's expected yield (expressed as a nominal rate with semi-annual
compounding) on her investment if the loan was in the amount of $23,250.
(1) 13.3143323752%
(2) 12.8984099285%
(3) 13.6889270786%
(4) 13.2500195344%

©2021 GOBC Training LTD Answers: 58(1), 59(2), 60(4), 61(1), 62(4) 50
 MATH CLASS 3- HOMEWORK
63. A constant payment mortgage is written for $48,951.77 and specifies payments of $520.00 per month for 15
years. The interest rate on this mortgage is:
(1) 12% per annum, compounded semi-annually.
(2) 8% per annum, compounded semi-annually.
(3) 10% per annum, compounded semi-annually.
(4) 11% per annum, compounded semi-annually.

64. An investor plans to pay $200,000 for a vacant lot which he feels will sell at the end of three years for
$300,000. What effective annual interest rate will the investor earn? (Ignore real property taxes)
(1) 13.480354%
(2) 11.169912%
(3) 14.471424%
(4) 12.604314%

65. A constant payment mortgage is written for $48,951.77 and specifies payments of $548.91 per month for 15
years. The interest rate on this mortgage is approximately:
(1) 12% per annum, compounded semi-annually.
(2) 8% per annum, compounded semi-annually.
(3) 10% per annum, compounded semi-annually.
(4) 11% per annum, compounded semi-annually.

66. On an interest accruing mortgage, which one of the following interest rates would result in the lowest
outstanding balance?
(1) J12= 14%
(2) J6 = 14%
(3) J4 = 14%
(4) J2 = 14%

67. Ernie Parent, an investor in mortgages, would prefer to earn which of the following yields?
(1) J2= 20%
(2) J1= 21%
(3) J365= 19.0670143784%
(4) Ernie would be indifferent amongst the 3 yields

68. Two years ago Marie and John invested in a real estate investment fund which required a minimum investment
of $1,000. Marie invested $600 and John invested $400, but they agreed to split the proceeds equally. Today Marie
and John sold their shares and received a total of $1,405 from the investment fund. What effective annual rate of
interest did Marie earn on her investment?
(1) 8.2050522542%
(2) 53.0250524152%
(3) 1.42690658935%
(4) 18.5326959113%

©2021 GOBC Training LTD Answers: 63(3), 64(3), 65(4), 66(4), 67(4), 68(1)
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