Exam 12: Ordinary General Annuities

One month from now, Shiva will make his first monthly contribution of $250 to a Tax-Free Savings account (TFSA). Over the long run, he expects to earn 8% compounded annually. How long will it take for the contributions and accrued earnings to reach $100 000?

For how long must $179.23 be deposited at the end of each month to accumulate to $9700.00 at 6.18% compounded quarterly?

A mortgage requires payments of $1000.00 at the end of every month for twenty-five years. If interest is 6% compounded semi-annually, calculate the principal of the loan.

You can buy a piece of equipment for $8600. The equipment is expected to last for 9 years and you want to have it completely paid off 3.5 years before it becomes unusable. Current loan rates are 9.5% compounded annually. What is the size of your semi-annual payment?

A loan of $54 000.00 is repaid by making payments of $3000.00 at the end of every three months. If the interest is 9% compounded monthly, calculate how long the payments have to be made.

What is the accumulated value after 15.50 years of deposits of $500.00 earning interest at 4.00% compounded semi-annually if the deposits are made at the end of each quarter?

Calculate the accumulated value after ten years of payments of $1000.00 made at the end of each year if interest is 6% compounded monthly.

What is the payment size of a loan that has semi-annual payments and an interest rate of 5.52% compounded monthly? The loan principal is $1641.12 and the loan is for 48 months.

Sam got a job at the Brick. He immediately finances a car paying $500 every month for 3 years. The interest is 2.25% compounded semi-annually. How much is the interest cost of the financing?

Siri plans to retire in 18 years and would like to receive $10 000.00 per month for twenty years starting at the end of the first month after her retirement. Calculate the amount he must invest now every month (at the end of the month)if interest is 4.9% compounded semi-annually.

A mortgage requires payments of $4000.00 at the end of every six months for twelve years. If interest is 8% compounded quarterly, calculate the principal of the loan.

Ralph Bogita saves $50.00 at the end of each month and deposits the money in an account, paying 3.00% compounded semi-annually. a)How much will she accumulate in 20 years? b)How much of the accumulated amount is interest?

What is the principal invested at 6.76% compounded semi-annually from which monthly withdrawals of $450.00 can be made at the end of each month for 22 .75 years?

A loan was repaid in 6.5 years by quarterly payments of $515.00 at 9.85% compounded semi-annually. What is the value of the loan?

Note: The calculations for this question were done using Excel's RATE function. Compute the nominal annual rate of interest on a loan of $67 000.00 repaid in semi-annual installments of $6540.00 in 11.5 years.

A dealer sold a car to Kristy for $2000 down and monthly payments of $259.50 for 3.5 years, including interest at 7.5% compounded annually. What was the selling price of the car?

Siri plans to retire now and would like to receive $10 000.00 per month for twenty years starting at the end of the first month after her retirement. Calculate the amount he must invest now if interest is 4.9% compounded quarterly.

Calculate the amount of money that must be deposited at the end of every three months into an account paying 6% compounded monthly to accumulate to $12 500.00 in ten years.

Silva is contemplating to buy a 20 year annuity paying $2500 at the end of each month. What amount will be required to purchase the annuity, if the annuity provides a return of 6.75% compounded annually?

Momin plans to buy a house on cash instead of paying mortgage. He targets spending $400 000 on his dream house. He plans to set aside $1200 every month to reach his target. He puts his savings in a Tax Free Savings Account (TFSA)and invests them in a high risk mutual fund, which has traditionally earned 12.2% annually. How long will it take Momin to reach his target?