George Borrowed $4,000 on Demand from CIBC on January 28

question 166

Short Answer

George borrowed $4,000 on demand from CIBC on January 28 for an RRSP contribution. Because he used the loan proceeds to purchase CIBC's mutual funds for his RRSP, the interest rate on the loan was set at the bank's prime rate. George agreed to make monthly payments of $600 (except for a smaller final payment) on the twenty-first of each month, beginning February 21. The prime rate was initially 3.75%, dropped to 3.5% effective May 15, and decreased another 0.25% on July 5. It was not a leap year. Construct a repayment schedule showing the amount of each payment and the allocation of each payment to interest and principal.

---

Definitions:

Cartel

An agreement among competing firms to control prices or production in a particular market, often with the goal of monopolizing it.

Marginal Cost

The increase in cost that arises from producing one additional unit of a good or service. It's a measure of the cost of producing one more unit of a good.

Fixed Cost

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance expenses.

Profit-Maximizing

The process or strategy used by businesses to achieve the highest possible profit from their operations, often by optimizing production and pricing.