BUS MATH CH 13
Lee Associates borrowed $60,000. The company plans to set up a sinking fund that will pay back the loan at the end of 12 years. Assuming a rate of 8% compounded semiannually, the amount to be paid into the fund each period is (use the tables in the handbook):
$1,536
How much would Howard Steele need to invest today so that he may withdraw $12,000 each year for the next 20 years, assuming a rate of 8% compounded annually? (Use the tables in the handbook.)
$117,817.20
At the beginning of each year for 14 years, Sherry Kardell invested $400 that earns 10% annually. What is the future value of Sherry's account in 14 years?
$12,309
Jones Co. borrowed money that is to be repaid in 12 years. So that the loan will be paid back at end of the 12th year, the company invests $8,000 at end of each year at 5% compounded annually. The amount of the original loan was (use the tables in the handbook):
$127,336.80
Abby Mia wants to know how much must be deposited in her local bank today so that she will receive yearly payments of $18,000 for 20 years at a current rate of 9% compounded annually. (Use the tables in the handbook.)
$164,313
Scott deposits $5,000 at the end of each year into an account for five years. Assuming 6% interest annually, what is the value of his account in five years?
$28,185.50
At the beginning of each year, Bill Ross invests $1,400 semiannually at 8% for nine years. The cash value of the annuity due at the end of the ninth year is (use the tables in the handbook):
$37,339.68
Bram Johnson invests $500 at the end of each quarter for 10 years. The account earns 12% interest annually. What is the value of the account at the end of 10 years?
$37,700.60
Jorgen Grace made deposits of $250 at the end of each year for 12 years. The rate received was 6% annually. What is the value of the investment after 12 years?
$4,217.48
Joe Sullivan invests $9,000 at the end of each year for 20 years. The rate of interest Joe earns is 8% annually. The final value of Joe's investment at the end of the 20th year on this ordinary annuity is (use the tables in the handbook):
$411,858.00
Ted Williams made deposits of $500 at the end of each year for eight years. The rate is 8% compounded annually. The value of Ted's annuity at the end of eight years is (use the tables in the handbook):
$5,318.30
Nancy Billows promised to pay her son $600 quarterly for four years. If Nancy can invest her money at 20% in an ordinary annuity, she must invest how much today? (Use the tables in the handbook.)
$6,502.68
Connie made deposits of $2,000 at the beginning of each year for four years. The rate she earned is 5% annually. What is the value of Connie's account in four years?
$9,051.20
An annuity is:
A stream of payments
A sinking fund:
Aids in meeting a future obligation
Payments in annuities are made:
All of these
Annuity due payments are made:
At the beginning of the period
In an ordinary annuity the interest on a yearly investment starts building interest:
At the end of the first period
A contingent annuity has a fixed amount of payments.
False
All annuities due are based on a semiannual payment.
False
An annuity due provides a lower final value compared with an ordinary annuity.
False
An annuity due requires that deposits or payments be made at the end of the period.
False
An annuity is one lump sum payment.
False
Insurance companies do not use annuities.
False
Interest is not calculated in ordinary annuities.
False
The amount of money one needs to invest in the future to receive a stream of payments in the present is called the present value of an ordinary annuity.
False
The same table can be used to find the value of an annuity due if two extra periods are added along with the subtraction of one payment.
False
There is only one class of annuities.
False
Contingent annuities:
Have no fixed amount of payments
An annuity due compared with an ordinary annuity results in a:
Higher value
Ed Sloan invests $1,600 at the beginning of each year for eight years into an account that pays 10% compounded semiannually. The value of the annuity due is (use the tables in the handbook):
None of these
An annuity due can use the ordinary annuity table if one extra period is added and:
Subtract one payment from total value
An ordinary annuity results in the deposit or payment being made at end of the period.
True
Annuities can be done manually or by computer.
True
Annuities certain have a specific stated number of payments.
True
Companies that plan to retire bonds in the future could utilize sinking funds.
True
Maturity value is equal to principal plus interest.
True
The maturity value in compounding is like the value of an annuity.
True
The value of an annuity is the series of payments and interest.
True
