Exam 11: Ordinary Simple Annuities

How many yearly payments will it take for $25 000.00 deposited at the end of each year to amount to $1 000 000.00 at 9% compounded yearly?

How much will it cost Shaun to purchase a two-level retirement annuity that will pay $6000 at the end of each month for the first 10 years, and $9000 per month for the next 15 years? The payments represent a rate of return to Shaun of 6% compounded monthly.

On his retirement, Louis received a lump sum of $800 000 from his employer. Taking advantage of existing tax legislation, he invested his money in an annuity that provides for payments of $60 000 at the end of every 3 months. If interest is 6.25% compounded quarterly, how long will the annuity exist?

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?

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 deposit made at the end of each quarter will accumulate to $20 000.00 in four years at 4% compounded quarterly?

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?

To what will deposits of $47.00 made at the end of each month amount to after seven years if interest is 10.8% 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?

Siri plans to retire in 18 years and would like to receive $10 000.00 per month for twenty years starting at the end of the first month after her retirement. Calculate the amount he must invest now every month (at the end of the month) if interest is 4.9% compounded monthly.

Woods has contributed $3600.00 per year for the last ten years into a RRSP account earning 9% compounded annually. His wife Karen, on the other hand, contributed $300 at the end of every month for the same period into a RRSP account earning 9% compounded monthly. Who earns more interest at the end of 10 years and by how much?

Jordan is considering building a nuclear power plant, which will be ready for production in 2030. The country's governing body is also considering a decommissioning liability law for the operator to put aside $1 million every month towards decommissioning cost. If the production life of the plant is 60 years and the operator puts the money at the end of the month in a savings account, earning 7.25% compounded monthly, what will be the value of the decommissioning fund after 60 years of production?

The Savoias bought an investment property valued at $160 000.00 by paying 25% down and mortgaging the balance over 25 years through equal monthly payments at 6% compounded monthly. What was the size of the monthly payments?

A $5000.00 loan requires payments at the end of each quarter for five years. If the interest rate on the loan is 8% compounded quarterly, calculate the size of each payment.

Compute the nominal annual rate of interest (compounded monthly) at which $200.00 deposited at the end of each month for ten years will amount to $30 000.00.

Jordan is considering building a nuclear power plant, which will be ready for production in 2030. The country's governing body is also considering a decommissioning liability law for the operator to put aside $1 million every month towards decommissioning cost, when the plant is producing electricity. During the 60 years of production life of the plant, the operator will put $1 million at the end of the month in a savings account, earning 7.25% compounded monthly. At the end of the production life of the plant, there are no more contributions and the money is expected to grow at the rate of 6% compounded quarterly for the next 30 years. How much interest is included in the future value in 2120?

Yankee Construction agreed to lease payments of $762.79 on construction equipment to be made at the end of each month for six years. Financing is at 15% compounded monthly. a) What is the value of the original lease contract? b) If, due to delays, the first eight payments were deferred, how much money would be needed after nine months to bring the lease payments up to date? c) How much money would be required to pay off the lease after nine months? d) If the lease were paid off after nine months, what would the total interest be? e) How much of the total interest would be due to deferring the first eight payments?

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?

Sam got a job at the Brick. He plans to save $500 every month for 3 years to buy a car. The savings account earns 2.25% compounded monthly. If he puts the money in his savings account at the end of each month, what will be the balance in the account at the end of the three-year term?

What is the nominal rate of interest if a six-year loan of $71 000.00 is repaid by monthly payments of $1701.58?