Question 1

John bought a house for $135,000,with a down payment of $20,000.He takes out a 20-year mortgage at j2 ­= 8%.What is his monthly mortgage payment?

Accepted Answer

A) $ 952.61 
B) $ 961.91 
C) $ 1118.28 
D) $ 1129.19 
A) $ 952.61 
B) $ 961.91 
C) $ 1118.28 
D) $ 1129.19 A

Question 2

A couple takes out a mortgage for $250,000 at j2 = 6%.They choose a 15 year amortization period and make weekly payments of $R.What is R?

Accepted Answer

A) $396.91 
B) $483.63 
C) $486.26 
D) $524.93 
A) $396.91 
B) $483.63 
C) $486.26 
D) $524.93 B

Question 3

What semi-annual payment for 5 years will pay off a loan of $5,000 with interest at j4 = 13%,if the first payment is made 6 months from now?

Accepted Answer

A) $695.52 
B) $698.97 
C) $702.53 
D) $706.10 
A) $695.52 
B) $698.97 
C) $702.53 
D) $706.10 B

Question 4

An ordinary perpetuity has semi-annual payments of $950 and is purchased for $A.It pays interest at j2 = 9% for the first 5 years,and j2 = 7% thereafter.What is A? (Answer to nearest dollar)

Accepted Answer

A) $26,759 
B) $34,660 
C) $24,995 
D) $28,589 
A) $26,759 
B) $34,660 
C) $24,995 
D) $28,589

Question 5

ACME Industries stock pays quarterly dividends of $2.25 per share,with the next payment today.If j1 = 5%,and dividends are expected to continue forever,what is the share price?

Accepted Answer

A) $ 45.00 
B) $ 45.84 
C) $ 183.34 
D) $ 185.59 
A) $ 45.00 
B) $ 45.84 
C) $ 183.34 
D) $ 185.59

Question 6

A company has set aside $10,000 as an endowment in order to pay a cash award of $R every month to the "employee of the month" forever.If the first award is paid one month from now and the company can earn j12 = 8.4% for the first 24 months and j12 = 6% thereafter,what is R?

Accepted Answer

A) $45.04 
B) $50.14 
C) $52.30 
D) $70.00 
A) $45.04 
B) $50.14 
C) $52.30 
D) $70.00

Question 7

What is the accumulated value of 10 annual deposits of $1200 immediately after the 10th deposit,if j4 = 10%?

Accepted Answer

A) $19,478.09 
B) $19,375.62 
C) $19,124.91 
D) $18,972.32 
A) $19,478.09 
B) $19,375.62 
C) $19,124.91 
D) $18,972.32

Question 8

Fred deposits $50 at the end of every month for 5 years into a fund earning j4 = 12%.What is the value of the fund one month after the final deposit?

Accepted Answer

A) $4030.56 
B) $4070.60 
C) $4110.90 
D) $4151.47 
A) $4030.56 
B) $4070.60 
C) $4110.90 
D) $4151.47

Question 9

You deposit $R every 6 months in a fund earning interest at j4 = 5%.Six months after your 15th deposit,you have accumulated $8650.What is R?

Accepted Answer

A) $469.94 
B) $481.83 
C) $521.36 
D) $527.80 
A) $469.94 
B) $481.83 
C) $521.36 
D) $527.80

Question 10

A person aged 25 will contribute 5% of his annual earnings to a pension plan.Suppose he is currently earning $60,000 per year and will get an annual raise of 3%.He is expecting to retire in 40-years at age 65.If the interest rate is j1 = 7%,how much will he have accumulated at age 65? (Assume salary is paid in one lump sum at the end of each year.Answer to nearest dollar. )

Accepted Answer

A) $939,922 
B) $878,432 
C) $904,784 
D) $868,930 
A) $939,922 
B) $878,432 
C) $904,784 
D) $868,930

Question 11

You deposit $5000 into a fund earning j2 = 6%.Each succeeding semi-annual deposit is increased by 4%.What is the accumulated value immediately after your 15th deposit? (Answer to nearest dollar)

Accepted Answer

A) $96,714 
B) $121,488 
C) $125,133 
D) $148,904 
A) $96,714 
B) $121,488 
C) $125,133 
D) $148,904

Question 12

A couple takes out a mortgage for $135,000 at j2 = 6%.They plan to make payments once every two weeks over 20 years to pay off the mortgage,with the first payment two weeks from now.What is the size of the payment?

Accepted Answer

A) $443.16 
B) $461.01 
C) $462.63 
D) $480.14 
A) $443.16 
B) $461.01 
C) $462.63 
D) $480.14

Question 13

An endowment fund of $20,000 is to pay out $R every year forever,with the first payment made exactly 2 years from now.If j1 = 7%,what is R?

Accepted Answer

A) $1308.41 
B) $1400.00 
C) $1498.00 
D) $1602.86 
A) $1308.41 
B) $1400.00 
C) $1498.00 
D) $1602.86

Question 14

A loan of $150,000 are to be paid out monthly for 10 years,with interest at j12 = 6%.The first payment,paid one month from now,is $R and each succeeding monthly payment is 1% higher than previous one.What is the value of R?

Accepted Answer

A) $931.65 
B) $921.38 
C) $916.79 
D) $912.23 
A) $931.65 
B) $921.38 
C) $916.79 
D) $912.23

Question 15

An investment of $81,000 pays out $1,000 per month forever,starting today.What interest rate,j12,is the money invested at?

Accepted Answer

A) 14.8% 
B) 15.0% 
C) 15.9% 
D) 16.1% 
A) 14.8% 
B) 15.0% 
C) 15.9% 
D) 16.1%

Question 16

A $60,000 mortgage is obtained at a rate of j2 = 13%.The mortgage is to be paid off with weekly payments for 20 years (note: 52 weeks in a year).What is the weekly payment?

Accepted Answer

A) $172.13 
B) $162.08 
C) $158.25 
D) $154.60 
A) $172.13 
B) $162.08 
C) $158.25 
D) $154.60

Question 17

An employer wants to pay $400 every 6 months to a deserving employee forever.The company has $A to fund the award and can earn j2 = 8%.If the first award is to be paid out 3 months from now,what is A? (Answer to nearest dollar)

Accepted Answer

A) $9,806 
B) $10,000 
C) $10,198 
D) $10,400 
A) $9,806 
B) $10,000 
C) $10,198 
D) $10,400

Question 18

Deposits are made into an account at the end of every 2 months as follows:
600,575,550,525,… If the fund earns interest at j6 = 6%,what is the accumulated value of this account at the end of 2 years?

Accepted Answer

A) $6262.33 
B) $5962.29 
C) $5903.24 
D) $5622.33 
A) $6262.33 
B) $5962.29 
C) $5903.24 
D) $5622.33

Question 19

You receive an inheritance of $A.You invest this money in a fund that pays j2 = 10%.You wish to make 10 semi-annual withdrawals from this fund,first withdrawal being made today.The first withdrawal is $2000 and each subsequent withdrawal increases by $100.What is A? (Answer to nearest dollar. )

Accepted Answer

A) $21,381 
B) $19,539 
C) $18,828 
D) $18,609 
A) $21,381 
B) $19,539 
C) $18,828 
D) $18,609

Question 20

You have a mortgage of $120,000 at j2 = 5%.You wish to make payments of R every 2 weeks for 25 years to pay off the mortgage.What is R?

Accepted Answer

A) $348.60 
B) $335.48 
C) $323.59 
D) $321.76 
A) $348.60 
B) $335.48 
C) $323.59 
D) $321.76

John bought a house for $135,000,with a down payment of $20,000.He takes out a 20-year mortgage at j₂= 8%.What is his monthly mortgage payment?

A couple takes out a mortgage for $250,000 at j₂ = 6%.They choose a 15 year amortization period and make weekly payments of $R.What is R?

What semi-annual payment for 5 years will pay off a loan of $5,000 with interest at j₄ = 13%,if the first payment is made 6 months from now?

An ordinary perpetuity has semi-annual payments of $950 and is purchased for $A.It pays interest at j₂ = 9% for the first 5 years,and j₂ = 7% thereafter.What is A? (Answer to nearest dollar)

ACME Industries stock pays quarterly dividends of $2.25 per share,with the next payment today.If j₁ = 5%,and dividends are expected to continue forever,what is the share price?

A company has set aside $10,000 as an endowment in order to pay a cash award of $R every month to the "employee of the month" forever.If the first award is paid one month from now and the company can earn j₁₂ = 8.4% for the first 24 months and j₁₂ = 6% thereafter,what is R?

What is the accumulated value of 10 annual deposits of $1200 immediately after the 10^th deposit,if j₄ = 10%?

Fred deposits $50 at the end of every month for 5 years into a fund earning j₄ = 12%.What is the value of the fund one month after the final deposit?

You deposit $R every 6 months in a fund earning interest at j₄ = 5%.Six months after your 15^th deposit,you have accumulated $8650.What is R?

You deposit $5000 into a fund earning j₂ = 6%.Each succeeding semi-annual deposit is increased by 4%.What is the accumulated value immediately after your 15^th deposit? (Answer to nearest dollar)

A couple takes out a mortgage for $135,000 at j₂ = 6%.They plan to make payments once every two weeks over 20 years to pay off the mortgage,with the first payment two weeks from now.What is the size of the payment?

An endowment fund of $20,000 is to pay out $R every year forever,with the first payment made exactly 2 years from now.If j₁ = 7%,what is R?

A loan of $150,000 are to be paid out monthly for 10 years,with interest at j₁₂ = 6%.The first payment,paid one month from now,is $R and each succeeding monthly payment is 1% higher than previous one.What is the value of R?

An investment of $81,000 pays out $1,000 per month forever,starting today.What interest rate,j₁₂,is the money invested at?

A $60,000 mortgage is obtained at a rate of j₂ = 13%.The mortgage is to be paid off with weekly payments for 20 years (note: 52 weeks in a year).What is the weekly payment?

An employer wants to pay $400 every 6 months to a deserving employee forever.The company has $A to fund the award and can earn j₂ = 8%.If the first award is to be paid out 3 months from now,what is A? (Answer to nearest dollar)

Deposits are made into an account at the end of every 2 months as follows: 600,575,550,525,… If the fund earns interest at j₆ = 6%,what is the accumulated value of this account at the end of 2 years?

You receive an inheritance of $A.You invest this money in a fund that pays j₂ = 10%.You wish to make 10 semi-annual withdrawals from this fund,first withdrawal being made today.The first withdrawal is $2000 and each subsequent withdrawal increases by $100.What is A? (Answer to nearest dollar. )

You have a mortgage of $120,000 at j₂ = 5%.You wish to make payments of R every 2 weeks for 25 years to pay off the mortgage.What is R?

Simple Interest and Simple Discount

Compound Interest

Simple Annuities

Repayment of Debts

Bonds

Business Decisions, Capital Budgeting and Depreciation

Contingent Payments

Filters

Exam 4: General and Other Annuities