Exam 10: Annuities: Future Value and Present Value

Nicola invested a lump sum of $75,000 now along with $150 per month for 15 years. Determine the future value if the rate of interest is 8% compounded semi-annually.

A conditional sale contract between Classic Furniture and the purchaser of a dining room set requires month-end payments of $250 for 15 months. Classic Furniture sold the contract to Household Finance Co. at a discount to yield 19.5% compounded monthly. What price did Household pay Classic Furniture?

A lump sum amount of $8,000 is deposited in an account along with monthly contributions of $400 for 5 years in an investment earning 6.6% compounded quarterly. At the end of this time, the investor begins to withdraw $5,000 semi-annually for 3 years with interest at 7.2% compounded semi-annually. Determine the amount remaining at the end of this time.

You can purchase a residential building lot for $90,000 cash or for $20,000 down and quarterly payments of $5,000 for four years. The first payment would be due three months after the purchase date. If the money you would use for a cash purchase can earn 8% compounded quarterly during the next four years, which option should you choose? What is the economic advantage in current dollars of the preferred alternative?

What is the following prize worth today if money can earn 9% compounded monthly: $5,000 payable two years from now, and a series of eleven $100 monthly payments beginning one month from now?

Calculate the equivalent periodic interest rate per payment interval for the following annuity: Semi-annual payments earning 6% compounded monthly.

Kristina is saving $150 every two weeks into an account that earns 3.75% compounded quarterly. How much will she have in the account after five years? What amount of interest will Kristina earn from this account?

A Government of Canada bond will pay $50 at the end of every six months for the next 15 years and an additional $1,000 lump payment at the end of the 15 years. What is the appropriate price to pay if you require a rate of return of 6.5% compounded semi-annually?

Nathan leased a vehicle with monthly payments of $350 paid at the start of each month for 4 years. The lease agreement also stated that the vehicle had a $4,000 residual value. If the lease interest is at 7.5% compounded quarterly, determine the fair value of the leased vehicle.

How much money could Louie borrow if he can afford to make monthly payments of $350 for four years at an interest rate of 9% compounded monthly?

Determine the future value of an initial deposit of $4,000 and semi-annual contributions of $250 for the 3 years at a 6.3% rate of interest compounded monthly and then another lump sum deposit of $10,000 at the end of year 3 along with $375 quarterly deposits for 2 years at a rate of 5.4% interest compounded semi-annually.

Monty expects to contribute $300 at the end of every month to his RRSP for the next five years. For the subsequent 10 years, he plans to contribute $2,000 at the end of each calendar quarter. How much will be in his RRSP at the end of the 15 years if the funds earn 8% compounded semi-annually?