Exam 10: Annuities: Future Value and Present Value

If you want to purchase an annuity providing an income of $2,000 at the end of each month for five years, how much will it cost if the purchase funds earn 18% compounded monthly?

Calculate the future value of an ordinary annuity consisting of quarterly payments of $1,200 for five years, if the rate of interest is 10% compounded quarterly for the first two years and 9% compounded quarterly for the last three years.

A student loan is to be repaid with 30 payments at the end of each quarter. What is the term of the loan?

Determine the future value:

Derek contributed $200 per month for twenty years at an interest rate of 3.9% compounded semi-annually. Determine how much interest was earned over the twenty year period.

Sam will contribute $200 to his RRSP at the end of each month for 15 years and then raise his monthly contribution to $500 at the end of each month for the subsequent 20 years. If his investments earn 11.7% compounded monthly, what will be the value of the investments after the last $500 contribution is made 35 years from now?

LeVero's end-of-month payments of $1167.89 will pay off his mortgage loan in 4 years and 7 months. The interest rate on his mortgage is 6.6% compounded semi-annually. What is the current balance on the loan?

Calculate the periodic interest rate that matches the payment interval for each annuity (to the nearest 0.001%):

Markus spends $160 per month on cigarettes. Suppose he quits smoking and invests the same amount at the end of each month for 20 years. If the invested money earns 7.5% compounded monthly, how much will Markus accumulate after 20 years?

Calculate the periodic interest rate that matches the payment interval for each annuity (to the nearest 0.001%):

Calculate the difference in the current economic values of the following two annuities: Annuity "X": Payments of $10,000 made at the end of each year for the next 35 years. Annuity "Y": Payments of $10,000 made at the end of each year for the next 55 years. Use an interest rate of 13% compounded annually for both annuities.

Nick can purchase an annuity that in 5 years (end of 5^th year) will pay him $8,500 per year for 10 years. If interest is 5.7% compounded annually, determine how much Nick will pay now to purchase the annuity.

Sara quit smoking and saves $80 per month previously spent on cigarettes. She invests the money at 5% compounded monthly. How much will she have in 10 years?

Determine the future value of $150 made at the end of every quarter for 15 years, given an interest rate of 4.5% compounded monthly.

What amount would you borrow at 15% compounded annually if your loan payments are $3,800 per month for 10 years?

Calculate the equivalent periodic interest rate per payment interval for the following annuity: Monthly payments discounted at 11% compounded annually.

Mr. and Mrs. Krenz are contributing to a Registered Education Savings Plan (RESP) they have set up for their children. What amount will they have in the RESP after eight years of contributing $500 at the end of every calendar quarter if the plan earns 6% compounded monthly? How much of the total amount is interest?

Determine the present value of the ordinary annuity:

Classify the type of annuity described in the following scenario. An investor deposits $600 at the beginning of every month into an investment earning 7% compounded quarterly.

Jacqueline is considering investing a lump sum of $100,000 along with monthly payments of $1,600 per month over a 15-year period at an interest rate of 5.4% compounded semi-annually. Determine how much larger will the investment be in the 15^th year if payments were at the beginning of the month compared to the end of the month.