Exam 11: Ordinary Simple Annuities

You want to save $710 per quarter for 15.5 years towards the purchase of a motor home. You think that you can earn 6.56% compounded quarterly for this period of time. If your first deposit is in 3 months, what is the most expensive motor home that you will be able to purchase?

Leanne Simon made ordinary annuity payments of $81.00 per month for fourteen years earning 9% compounded monthly. How much interest is included in the future value of the annuity?

What is the size of end-of-month monthly deposits which will accumulate to $122 200.00 after six years if interest is 5.7% compounded monthly?

A loan was repaid in 7.25 years by end-of month monthly payments of $472. If interest was 6.12% compounded monthly, how much interest was paid?

What payment is required at the end of each month for 3 years to repay a loan of $8000.00 at 6.4% compounded monthly?

You have inherited some money and you want to set some of that money aside for ten years. After ten years, you would like to receive $7600.00 at the end of each 6 months for nine years. If the interest is 6.5% compounded semi-annually, how much of your inheritance must you set aside?

Bonny converted an RRSP balance of $176 875.67 into an RRIF that will pay her $2720.00 at the end of every month for 8 years. What is the nominal rate of interest?

How many monthly payments will it take for $1000.00 deposited at the end of each month to amount to $50000.00 at 9% compounded monthly?

Doris purchased a piano with $1300.00 down and monthly payments of $214.00 for two years at 9.72% compounded monthly. What was the purchase price of the piano?

What is the term of a mortgage of $235 000.00 repaid by monthly payments of $2475.00 if interest is 7.55% compounded monthly?

An installment contract for the purchase of a car requires payments of $570.60 at the end of each month for the next three years. Suppose interest is 11.8% p.a. compounded monthly. a) What is the amount financed? b) How much is the interest cost?

Note: The calculations for this question were done using Excel's RATE function. A property worth $191 000.00 can be purchased for 15% down and quarterly mortgage payments of $1972.00 for 30 years. What effective rate of interest is charged?

A man put aside $5710.00 at the end of every 3 months for seven years. How much will he have six years after the least deposit, if his account earned 5.6% p.a. compounded quarterly?

What payment made at the end of each month for 13 years will amount to $17 520.00 at 9.66% compounded monthly?

Planning for their child's college education, Sean and Jessica opened an account paying 8.00% compounded yearly. If ordinary annuity payments of $15 000.00 per year are to be paid out of the account for three years starting sixteen years from now, how much did the couple deposit?

Planning for their child's college education, David and Carol Roberts opened an account paying 6.36% compounded monthly. If ordinary annuity payments of $700.00 per month are to be paid out of the account for three years starting seven years from now, how much did the Roberts' deposit?

What is the size of semi-annual deposits that will accumulate to $113 200.00 after 9.5 years at 6.5% compounded semi-annually?

Mr. Hughes has contributed $4000.00 per year for the last ten years into a RRSP account earning 9.00% compounded annually. Suppose he leaves the accumulated contributions for another five years in the RRSP at the same rate of interest. a) How much will Mr. Hughes have in total in his RRSP account? b) How much did Mr. Hughes contribute? c) How much will be interest?

Janice plans to retire in 10 years and would like to receive $3000.00 per month for fifteen years starting at the end of the first month after her retirement. Calculate the amount she must invest now if interest is 7.5% compounded monthly.

The term of annuity is