Exam 10: Annuities: Future Value and Present Value

Kent sold his car to Carolynn for $2,000 down and monthly payments of $295.88 for 3½ years, including interest at 7.5% compounded monthly. What was the selling price of the car?

Your client is scheduled to receive $2,000 at the end of each year for the next 10 years. If money is currently worth 7% compounded annually, what is the present value of the annuity? (Taken from CIFP course materials.).

What minimum amount of money earning 7% compounded semi-annually will sustain withdrawals of $1,000 at the end of every month for 12 years?

Kerry's mortgage loan will require payments of $855 at the end of every month for four years and at that time her loan balance outstanding will be $78,591. The interest rate is 7.7% compounded semi-annually. How much did she borrow?

Juan has two investment accounts. The first had Juan make monthly deposits of $375 per month over 5 years at a rate of 4.4% compounded semi-annually. The second investment required Juan make an initial $5,000 deposit along with $125 quarterly deposits over a 5-year period at a rate of 3.5% compounded monthly. Determine the combined future value of both investments at the end of five years.

Harold and Patricia Abernathy made a loan to their son, Jason. To repay the loan, Jason will make payments of $2,000 at the end of each of the next 10 years. If the interest rate on the loan is 7% compounded annually, what was the amount of the original loan? (Taken from CIFP course materials.)

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

What is the present value of $300 monthly loan payments for two years if money earns 7.5% compounded quarterly?

Jane won a prize: the right to receive 36 payments of $100 per month with the first payment one month from today. If money is worth 6% compounded monthly, what is the economic value of these payments three years from today?

Calculate the difference in the current economic values of the following two annuities: Annuity "A": Payments of $50 made at the end of each month for the next 30 years, using 9.6% compounded monthly. Annuity "B": Payments of $600 made at the end of every year for the next 50 years using 9.6% compounded annually.

Determine the present value of the ordinary annuity:

Calculate the periodic interest rate of quarterly payments earning 4.5% compounded annually correct to five decimal places.

An annuity consists of payments of $450 made at the beginning of every month for 5 years. If the annuity earns 6% compounded semiannually, calculate present value.

What is the future value of deposits of $250 monthly for five years into an account that pays 3.75% compounded quarterly?

An annuity consists of payments of $700 made at the beginning of every quarter for 5 years. If the annuity earns 8% compounded semiannually, calculate present value.

Determine the present value (accurate to the cent) of the ordinary general annuity:

Determine the present value of payments of $100 at the end of each month for 20 years. Use a discount rate (interest rate) of 6% compounded monthly.

Annuity G has the same i and PMT as Annuity H. G has twice as many payments as H. Is G's present value (pick one): (i) double, (ii) more than double, or (iii) less than double the amount of H's present value? Give the reason for your choice.

How much more interest will be earned by $1,000 monthly deposits over 10 years if interest was at 6% compounded monthly versus 6.2% compounded quarterly.

James already has $13,000 in his Home Ownership Savings Plan (HOSP) and he is going to invest $700 more at the end of every three months for five more years. In total, how much will he have in five years if his HOSP earns 11% compounded annually?