Exam 11: Ordinary Simple Annuities

The Olfert Contractors, Inc., are saving $958.00 every month in order to purchase a new paving machine in twelve years. Their savings certificates pay 6% p.a. compounded monthly. How much of the maturity value will be interest?

An annuity with periodic payments made at the end of each payment period is called:

A man put aside $5710.00 at the end of every 3 months for seven years. How much will he have six years after the least deposit, if his account earned 5.6% p.a. compounded quarterly?

Jordan is considering building a nuclear power plant, which will be ready for production in 2030. The country's governing body is also considering a decommissioning liability law for the operator to put aside $1 million every month towards decommissioning cost, when the plant is producing electricity. During the 60 years of production life of the plant, the operator will put $1 million at the end of the month in a savings account, earning 7.25% compounded monthly. At the end of the production life of the plant, there are no more contributions and the money is expected to grow at the rate of 6% compounded quarterly for the next 30 years. What will be the value of the decommissioning fund in 2120?

Nuclear power plants are required to have full decommissioning costs accumulated during the useful life of the plant. The new nuclear plant at Darlington is designed for 60 years of operational life starting in 2025. OPG plans to set aside $1 million per month during the operation of the plant. What is the value of this annuity in 2025, if OPG uses Ontario's recommended discount rate of 2.5% compounded monthly?

How much interest is included in the accumulated value of $250 paid at the end of every month for 5 years if the interest rate is 4.0% compounded monthly?

To what will deposits of $47.00 made at the end of each month amount to after seven years if interest is 10.8% compounded monthly?

Calculate the accumulated value of quarterly payments of $100.00 made at the end of each quarter for ten years just after the last payment has been made if interest is 8% p.a. compounded quarterly.

Compute the nominal annual rate of interest (compounded monthly)at which $200.00 deposited at the end of each month for ten years will amount to $30 000.00.

An installment contract for the purchase of a car requires payments of $570.60 at the end of each month for the next three years. Suppose interest is 11.8% p.a. compounded monthly. a)What is the amount financed? b)How much is the interest cost?

The Chretiens bought a rental property valued at $125 000.00 by paying 25% down and mortgaging the balance over 21.5 years through equal payments at the end of each quarter at 8.6% compounded quarterly. What was the size of the quarterly payments?

Ali bought Kia Forte 5 from Durham Kia for $20 078.00 on finance agreement with BMO at 5.99% compounded monthly. Calculate the monthly payment on the loan, if the financing period is 60 months.

You want to be able to travel and withdraw $3750 at the end of every month during your yearlong trip. During your trip your travel fund will earn 6.24% compounded monthly. What is the size of your travel fund if you want to be able to start your trip in 4 years and 7 months?

You have inherited some money and you want to set some of that money aside for ten years. After ten years, you would like to receive $7600.00 at the end of each 6 months for nine years. If the interest is 6.5% compounded semi-annually, how much of your inheritance must you set aside?

Randy bought an annuity to pay him $2700.00 at the end of every six months for twenty years. How much of the total annuity payments is interest, if interest is 6.5% p.a. compounded semi-annually?

A loan of $20 000 is paid over 5 years by monthly payments of $388. What is the nominal rate of interest on the loan?

Planning for their child's college education, David and Carol Roberts opened an account paying 6.36% compounded monthly. If ordinary annuity payments of $700.00 per month are to be paid out of the account for three years starting seven years from now, how much did the Roberts' deposit?

Salem plans to deposit $2200 every 6 months for 15 years to save for his son's higher education. The rate of return will be 4% compounded semi-annually for the first 5 years and 8% compounded semi-annually for the subsequent 10 years. Calculate the future value of this simple annuity.

An installment contract for the purchase of a computer requires payments of $30.00 at the end of each month for the next three years. Suppose interest is 18.00% p.a. compounded monthly. a)What is the amount financed? b)How much is the interest cost?

Doris purchased a piano with $1300.00 down and monthly payments of $214.00 for two years at 9.72% compounded monthly. What was the purchase price of the piano?