Exam 11: Ordinary Simple Annuities

Sofia plans to save for next two years. She plans to put away $1000 every 6 months starting 6 months from now. What will be the value of her savings after two years if her savings accounts earns at a rate of 8% compounded semi-annually?

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. How much interest is included in the future value in 2120?

A trust fund is set up to make payments of $1320.00 at the end of each month for seven years. Interest on the fund is 7.28% compounded monthly. a)How much money must be deposited into the fund? b)How much will be paid out of the fund? c)How much interest is earned by the fund?

Keith bought a lakeside cottage for 30% down and monthly mortgage payments of $1224.51 at the end of each month for 20 years. Interest is 4.4% compounded monthly. What is the purchase price of the property?

The Savoias bought an investment property valued at $160 000.00 by paying 25% down and mortgaging the balance over 25 years through equal monthly payments at 6% compounded monthly. What was the size of the monthly payments?

For the last four years Joe Thiesman has made deposits of $300.00 at the end of every six months earning interest at 5.7% compounded semi-annually. If he leaves the accumulated balance for another ten years at 3.2% compounded quarterly, what will the balance be in Joe's account?

A $15 000.00 loan requires payments at the end of each month for five years. If the interest rate on the loan is 12% compounded monthly, calculate the size of each payment.

Pat won a lottery with two options: $1 million per year, at the beginning of the year, for 25 years or a single cash price of $18 million. If low-risk investments can earn 2.5% compounded annually, which option should Pat choose and what is the advantage in terms of current economic value?

What is the nominal rate of interest on a loan of $6800.00 repaid in semi-annual installments of $1175.00 in six years?

How many monthly payments will it take for $1000.00 deposited at the end of each month to amount to $50 000.00 at 9% compounded monthly?

How many semi-annually payments will it take for $500.00 deposited at the end of each half year to amount to $10 000.00 at 6% compounded semi-annually?

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, how much interest is included in the future value of the annuity?

If a loan was repaid by quarterly payments of $715.00 over 7 years at 8.36% compounded quarterly, how much money had been borrowed?

If a loan was repaid by ordinary monthly payments of $715.00 in seven years at 9.12%, compounded monthly, how much interest was paid?

Calculate the accumulated value of monthly payments of $100.00 made at the end of each month for ten years just after the last payment has been made if interest is 12% p.a. compounded monthly.

You currently have $4541 saved towards the purchase of a home theatre system. You want to be able to buy a system for $6225 plus GST in 4 years. Your money is earning 4.84% compounded monthly. What is the size of your monthly deposit?

Kam expects to retire in 22 years. Beginning one month after his retirement he would like to receive $590.00 per month for 25 years. How much must he deposit into a fund today to be able to do so if the rate of interest on the deposit is 6.12% compounded monthly?

Regular contributions of $200 are made at the end of each month for five years into a savings account earning interest at 4% compounded quarterly. The annuity can be classified as

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, if he stops payment after 5 years.

Woods has contributed $3600.00 per year for the last ten years into a RRSP account earning 9% compounded annually. His wife Karen, on the other hand, contributed $300 at the end of every month for the same period into a RRSP account earning 9% compounded monthly. Who earns more interest at the end of 10 years and by how much?