Exam 11: Ordinary Simple Annuities

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?

Find the present value of ordinary semi-annual payments of $810.00 for five years at 5.45% p.a., compounded semi-annually.

Salem plans to deposit $2200 every 6 months for 15 years to save for his son's higher education. The rate of return will be 4% compounded semi-annually for the first 5 years and 8% compounded semi-annually for the subsequent 10 years. Calculate the future value of this simple annuity, if he stops payment after 5 years.

A car was purchased for $4500.00 down and payments of $375.00 at the end of each month for 5 years. Interest is 9.72% compounded monthly. a) What was the purchase price of the car? b) How much will be the amount of interest paid?

An installment contract for the purchase of a computer requires payments of $30.00 at the end of each month for the next three years. Suppose interest is 18.00% p.a. compounded monthly. a) What is the amount financed? b) How much is the interest cost?

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?

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 present value of the balance in the account at the end of the three-year term?

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?

The term of annuity is

Find the amount to which semi-annual deposits of $200.00 will grow in four years at 6.6% p.a. compounded semi-annually.

You currently have $4000 saved towards the purchase of a new car. You want to be able to buy a car for $15000 in 4 years. Your money is earning 5% compounded yearly. What is the size of your yearly deposit?

When the conversion period is different from the payment period, an annuity is called:

Note: The calculations for this question were done using Excel's RATE function. What nominal rate of interest is paid on quarterly RRSP contributions of $573.00 made for 17.75 years if the balance just after the last contribution is $106 000.00?

Mr. and Mrs. Fox have each contributed $1825.00 per year for the last eight years into RRSP accounts earning 6.93% compounded annually. Suppose they leave their accumulated contributions for another five years in the RRSP at the same rate of interest. a) How much will Mr. and Mrs. Fox have in total in their RRSP accounts? b) How much did the Fox's contribute? c) How much will be interest?

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?

The Chretiens bought a rental property valued at $125 000.00 by paying 25% down and mortgaging the balance over 21.5 years through equal payments at the end of each quarter at 8.6% compounded quarterly. What was the size of the quarterly payments?

If a loan was repaid by quarterly payments of $715.00 over 7 years at 8.36% compounded quarterly, how much money had been borrowed?

Keith bought a lakeside cottage for 30% down and monthly mortgage payments of $1224.51 at the end of each month for 20 years. Interest is 4.4% compounded monthly. What is the purchase price of the property?

Pat won a lottery with two options: $1 million per year, at the beginning of the year, for 25 years or a single cash price of $18 million. If low-risk investments can earn 2.5% compounded annually, which option should Pat choose and what is the advantage in terms of current economic value?

Note: The calculations for this question were done using Excel's RATE function. What is the effective annual rate of interest on a loan of $9200.00 repaid in semi-annual installments of $810.00 in nine years?