FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 13: Annuities Due, Deferred Annuities, and Perpetuities

Show Answer

Share

---

All types

Filters

Study Flashcards

Question 21

Multiple Choice

Review LaterAdd Note

Review Later

Sam got a job at the Brick. He plans to save $500 every month for 3 years to buy a car. The savings account earns 2.25% compounded semi-annually. If he puts the money in his savings account at the beginning of each month, what will be the balance in the account at the end of the three-year term?

A) $18 635.22
B) $18 600.50
C) $18 603.37
D) $18 638.25
E) $17 390.19

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

Basim purchased a deferred annuity from an insurance company for $10 971. The money used to purchase the annuity will earn 6% quarterly. The annuity will provide 16 quarterly payments of $1000. If the first payment is to be received on October 1, 2017, when did Basim purchase the deferred annuity?

A) April 1, 2011
B) April 1, 2013
C) October 1, 2017
D) October 1, 2013
E) June 1, 2014

Correct Answer

verified

Show Answer

Question 23

Essay

Review LaterAdd Note

$6420.00 was invested at a fixed rate of 6.5% compounded semi-annually for 5 years. After 5 years, the fund was converted into an ordinary annuity paying $550.00 per month. If interest on the annuity was 6% compounded monthly, what was the term of the annuity?

A retirement gratuity of $123 900.00 is invested in annuity deferred for 10 years. The annuity provides payments of $9600.00 due at the beginning of every six months. If interest is 7.41% compounded annually, for how long will annuity payments be made?

Rob bought a yacht on a contract requiring monthly payments of $2500 for 5 years beginning on the 6th month after the date of purchase. What was the cash value of the yacht, if interest is 6.9% compounded monthly?

Monica would like to receive $3760.00 at the end of every six months for 8 years after her retirement. If she retires ten years from now and interest is 6.5% compounded semi-annually, how much must she deposit into an account every six months starting now?

What is the discounted value of deposits of $250.00 made at the beginning of every three months for 10.5 years if money is worth 6% compounded quarterly?

Robert Bernard deposited $1000.00 in a trust account on the day of his son's birth and every three months thereafter. If interest paid is 8% compounded quarterly, what will the balance in the trust account be before the deposit is made on the son's twenty-first birthday?

Jamal plans to retire in 17 years. He is saving $2000 every start of the month in a retirement savings account paying him a long-term interest of 9% compounded monthly until retirement. The rate changes following the retirement. He wants $7000 per month paid to him at the start of the month for 20 years after the retirement. At what rate should his savings account pay him to fulfill his dream? (Use the Rate function in Excel)

An investment in a lease offers returns of $3713 per month due at the beginning of each month for 4.5 years. What investment is justified if the returns are deferred for two years and the interest required is 6.12% compounded monthly?

Sandra intends to retire in 15 years and would like to receive $3000.00 every six months for 19 years starting on the date of her retirement. How much must Sandra deposit in an account today if interest is 8% compounded semi-annually?

Mike acquired his sister's share of their business by agreeing to make payments of $4711.00 at the end of each year for 8 years. If the payments are deferred for three years and money is worth 5.96% compounded quarterly, what is the cash value of the sister's share of the business?

Goggle Inc. is planning to pay a quarterly dividend of $0.50 on its perpetual preferred share. The market requires a dividend yield of 5% compounded annually on preferred shares of similar risks. What is the fair market value of its perpetual preferred share just after payment of a dividend at the end of the quarter?

Payments of $500.00 are made at the beginning of each month for four years. The interest rate is 4.5% compounded monthly. If no further deposits are made a)Calculate the accumulated value twelve years after the first deposit. b)Calculate the amount deposited. c)Calculate the interest.

Geomax pays $8710.00 at the beginning of each year for using a tract of land. What should the company offer the property owner as a purchase price if interest is 10.18% compounded annually?

What sum of money must be deposited in a trust fund to provide a scholarship of $630.00 payable at the end of each month if interest is 7.8% compounded monthly?

You make six monthly deposits of $125 starting now. The interest rate is 6.36% compounded monthly. How much interest has been earned in total?

Jenni intends to retire in 50 years and would like to receive $3000.00 every month for 10 years starting on the date of her retirement. How much must she deposit in an account today if interest is 12% compounded annually?

Anne-Marie received $445 000.00 from her mother's estate. She wants to set aside part of her inheritance for her retirement 12 years from now. At that time she would like to receive a pension supplement of $2600.00 at the end of each month for 15 years. If the first payment is due one month after her retirement and interest is 3.6% compounded monthly, how much must Anne-Marie set aside?

Quarterly deposits of $2000.00 were made at the beginning of every 3 months for 10 years. If the interest is 6% compounded monthly, what amount can be withdrawn 7 years after the last deposit?