Exam 11: Ordinary Simple Annuities

Planning for their child's college education, Sean and Jessica opened an account paying 8.00% compounded yearly. If ordinary annuity payments of $15 000.00 per year are to be paid out of the account for three years starting sixteen years from now, how much did the couple deposit?

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 monthly. If he puts the money in his savings account at the end of each month, what will be the balance in the account at the end of the three-year term?

Calculate the present value of five payments of $1500.00 made at the end of each of five consecutive years respectively if money is worth 6% compounded annually.

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 monthly. How much is the interest cost of the financing?

What payment is required at the end of each month for 5 years to repay a loan of $20 000.00 at 6.0% compounded monthly?

Note: The calculations for this question were done using Excel's RATE function. What is the effective annual rate of interest on a loan of $9200.00 repaid in semi-annual installments of $810.00 in nine years?

Find the amount to which monthly deposits of $100.00 will grow in five years at 4.8% p.a. compounded monthly.

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 monthly.

If a loan was repaid by ordinary yearly payments of $2000.00 in five years at 9.00%, compounded yearly, how much interest was paid?

How many yearly payments will it take for $25 000.00 deposited at the end of each year to amount to $1 000 000.00 at 9% compounded yearly?

Calculate the present value of 120 payments of $50.00 made at the end of each of 120 consecutive months respectively if money is worth 12% compounded monthly.

Note: The calculations for this question were done using Excel's RATE function. A property worth $191 000.00 can be purchased for 15% down and quarterly mortgage payments of $1972.00 for 30 years. What effective rate of interest is charged?

A car was purchased for $4500.00 down and payments of $375.00 at the end of each month for 5 years. Interest is 9.72% compounded monthly. a)What was the purchase price of the car? b)How much will be the amount of interest paid?

In what period of time could you pay back a loan of $13 900.00 by making monthly payments of $296.00 if interest is 6.5% compounded monthly?

A father wants to provide an annuity of $3350.00 payable at the end of each 6 months during the three years his son attends college. It will be six years before his son goes to college. What single deposit must he make today that will finance the annuity, if he can invest his money at 7.84% p.a. compounded semi-annually?

A $5000.00 loan requires payments at the end of each quarter for five years. If the interest rate on the loan is 8% compounded quarterly, calculate the size of each payment.

What is the size of end-of-month monthly deposits which will accumulate to $122 200.00 after six years if interest is 5.7% compounded monthly?

Charter has been contributing $900 at the end of each month for the past 15 months to a savings plan that earns 4% compounded monthly. What amount will he have one year from now, if he continues with the plan?

Find the present value of ordinary semi-annual payments of $810.00 for five years at 5.45% p.a., compounded semi-annually.

Siri plans to retire when her simple annuity savings account has enough money to receive $10 000.00 per month for twenty years starting at the end of the first month after her retirement. She starts saving $4420 per month. Calculate when should Siri retire from today if her savings account pays 4.9% compounded monthly.